May 1st Marks 30th Anniversary of Brokerage Commission Deregulation Birth of 'Discount Brokerage' SAN FRANCISCO, April 28 /PRNewswire-FirstCall/ -- The Securities Acts Amendments of 1975 ushered in the most comprehensive securities legislation in decades. A key change included in the amendment was ending fixed trade commissions, a practice that had been in place for over 183 years. On May 1, 1975 negotiated trade commissions became law, a day known within the brokerage industry as "May Day." 1975 was an important fork in the road for financial services firms. In the face of deregulation, many brokerages took the occasion to leave alone or even raise commissions for smaller individual clients, while reducing commissions for large institutional clients. For many individual investor clients of those firms, trade commissions stayed at their high levels for years to come. Charles Schwab & Co., Inc. and a handful of other start-ups seized the opportunity to pursue a new kind of brokerage that provided lower cost transactional services, ushering in the birth of what came to be known as "discount brokerage." "We probably didn't know it at the time, but May 1st 1975 was a watershed moment for individual investors and for the markets," said Charles R. Schwab, Founder and CEO of The Charles Schwab Corporation. "With the sudden arrival of negotiated stock trades that were less than half the cost they had been, a major barrier to investing went away for the average American." According to Schwab: "It took some time, but a radical transformation took place and a flood of new investors -- most of them independent-minded investors -- began entering the markets and changing the landscape forever. The impact can't be overstated. In 1975 there were approximately $1.75 trillion of investable assets held by individuals, with less than 45 percent of it invested in securities. Trading was fixed-price, done through highly paid intermediaries, and very expensive. Today that number has grown tenfold to $17 trillion, with 73 percent of it invested in securities and over half of the adult U.S. population now holding equities in some form." The discount brokerage category itself evolved, to the point that today many of the distinctions between them and old-line full commission brokerages have disappeared. At Schwab, for example, in addition to low priced trades, clients have access to personal service and investment help, portfolio guidance and stock recommendations, thousands of mutual funds at their disposal, as well as referrals to special expertise such as independent investment advisors, wealth managers, and trust services. Clients also get the same level of value and service in banking, mortgages, and credit card through Charles Schwab Bank. "The power that the competitive marketplace unleashed is simply remarkable, and hasn't stopped," said Mr. Schwab. "For example, on May 1st, 1975, the discounted broker assisted trade at Schwab was $70 compared to hundreds of dollars at Wall Street firms. Today a client with household assets of $50,000 or more at Schwab pays just $12.95 per online equity trade, up to 1000 shares. In 1975 only 2 percent of the nation's investable assets were held in mutual funds, today it is nearly a quarter. Back then, 55 percent of investable assets were held in bank deposits, today only 2 percent. In 1975 there were virtually no assets in IRAs, today there are over $3 trillion, with 40 percent of the adult population having an IRA. The number of registered investment advisors has skyrocketed from just a few thousand to near 14,000 in 2003." "These last thirty years have been marked by constant innovation and improvement of services for individual investors," said Mr. Schwab. "The choice today isn't either or -- either low cost or high quality investment service. Today, investors can get both. It is exciting to consider what the next 30 years will bring." About Charles Schwab The Charles Schwab Corporation (NYSE / Nasdaq: SCH), through its operating subsidiaries, provides securities brokerage and financial services to individual investors and the independent investment advisors who work with them. With over 7 million individual investor accounts and more than $1 trillion in client assets, The Charles Schwab Corporation is one of the nation's largest financial services firms. Its subsidiary Charles Schwab & Co., Inc. (member SIPC) provides a complete range of investment services and products, including an extensive selection of mutual funds; financial planning and investment advice; retirement plans; referrals to independent fee-based investment advisors; and custodial, operational and trading support for independent fee-based investment advisors. Its subsidiary Charles Schwab Bank, N.A. (member FDIC and Equal Housing Lender) provides deposit and lending services and products. The corporation's other operating subsidiaries include U.S. Trust Corporation (member FDIC) and CyberTrader(R), Inc. (member SIPC). These companies' Web sites can be reached at http://www.schwab.com/, http://www.schwabbank.com/, http://www.ustrust.com/, and http://www.cybertrader.com/. (0005-7375) DATASOURCE: Charles Schwab CONTACT: Glen Mathison of Charles Schwab, +1-415-636-5448, or Web site: http://www.schwab.com/

Copyright