Modern finance · 1950s–1990s
1975
May Day: commissions go free-market
The SEC ends fixed brokerage commissions, and discount brokers appear.
On 1 May 1975, fixed commissions on US stock trades ended, 183 years after the Buttonwood Agreement. Discount brokers such as Charles Schwab soon offered cheap trades.
💡 Why it made sense then
Big institutions wanted to negotiate fees, and regulators wanted competition.
Ideas it gave us
- 📈 Commission
A commission is a fee a broker charges for placing a trade. Most US brokers have charged $0 commission on stock trades since 2019.
- 📈 Broker
A broker is a licensed firm that places trades on an exchange for you and holds your investments in an account, like Fidelity, Schwab or Robinhood.
Practise with $10,000 in play money
Free. No real money involved.