TD Ameritrade Holding Corp. (NYSE:AMTD) said late Tuesday that it will eliminate commissions payable on stock, exchange-traded funds and option trades with effect from October 3, hot on the heels of a similar announcement by discount brokerage rival Charles Schwab Corp. (NYSE:SCHW)

In a statement, Tim Hockey, president and chief executive officer of TD Ameritrade said: “We’ve been taking market share with a premium price point, and with a $0 price point and a level playing field, we are even more confident in our competitive position, and the value we offer our clients.”

READ: Charles Schwab to eliminate commissions for online trading of stocks, ETFs and options listed on US or Canadian exchanges

Shares of TD Ameritrade tumbled over 25% on Tuesday, and other online brokerage firms saw similar big falls after Schwab said it would reduce the commission it charges for online trading of stocks, ETFs and options listed on US or Canadian exchanges  to zero from $4.95 per trade, starting October 7.

Schwab said its decision to remove “the final pricing barrier to investing online” was being made in conjunction with the publication of ‘Invested’, the latest book from its founder and chairman Chuck Schwab.

Schwab himself said: “From day one, my passion has been to make investing easier and more affordable for everyone. Eliminating commissions ensures my ultimate vision is realized – making investing accessible to all.”

The news also put a dent in Schwab’s shares, which shed around 10% on Tuesday, albeit with the market under severe pressure after September’s US ISM manufacturing activity index posted its worst reading for a decade.

That slide continued on Wednesday, with the Dow Jones Industrial Average almost matching Tuesday’s 1.3% drop in early morning trade, down 313 points, or 1.2% to 26,259, while the broader S&P 500 index and the tech-laden Nasdaq Composite both shed 1.2% as well.

Private jobs growth disappoints

Worries over the health of the world’s biggest economy continued Wednesday after a private-sector employment report from Automatic Data Processing showed a modest 135,000 jobs were created in September, below the consensus forecast for 152,000 jobs.

The average monthly job growth for the past three months also fell to 145,000 from 214,000 for the same time period last year, ADP said. The numbers come ahead of Friday’s closely-watched monthly non-farm payrolls report.

Further signs of weakness in the US economy may prompt the Federal Reserve to lower interest rates again at its next meeting in late October following two back-to-back quarter percentage point cuts in August and September, which were the first easings in monetary policy by the Fed in over a decade.

Discount brokerage stocks continued to fall on Wednesday, with TD Ameritrade down 1.5% and Charles Schwab off 1.3% in early-morning trading.

Contact the author at jon.hopkins@proactiveinvestors.com