One of Canada’s biggest banks is eliminating trading commissions for self-directed investors, raising the pressure on its rivals to rethink what Canadians should pay to buy and sell stocks.
BMO InvestorLine will eliminate commissions on all stock and exchange-traded fund trades beginning September 14. The bank is also removing brokerage account administration fees and reducing the per-contract fee for options trades from $1.25 to $0.90.
The change makes BMO the first direct investing brokerage owned by one of Canada’s five largest banks to eliminate commissions on all stock and ETF trades. For an industry that has traditionally charged investors for each transaction, the move represents a significant shift.
BMO previously charged $9.95 for most online stock and ETF trades, although more than 100 ETFs were already available without commissions. The new pricing removes that charge across all stocks and ETFs for BMO InvestorLine Self-Directed clients.
The change reflects a broader transformation in how Canadians invest. Online brokerages and investing apps have made it easier for individuals to manage their own portfolios, while lower-cost competitors have challenged the traditional fee structures offered by major financial institutions.
For BMO, eliminating commissions is about more than making individual trades cheaper. It gives the bank another way to attract and retain customers who may also hold savings accounts, credit cards, mortgages and other financial products.
That relationship can be particularly valuable as younger Canadians become investors. Someone who opens a self-directed account in their twenties or thirties could remain a banking customer for decades, making the loss of a trading commission relatively small compared with the potential value of the broader relationship.
BMO is also betting that it can compete on more than price. InvestorLine offers research, market data and advanced trading tools alongside its basic self-directed platform. The bank has expanded features for active traders, including multi-leg options trading, screening tools and paper trading that allows users to test strategies without putting real money at risk.
Removing commissions allows BMO to combine those services with one of the biggest attractions offered by lower-cost competitors: free trades.
That could put pressure on Canada’s other major banks. Investors who hold accounts with multiple institutions can compare fees easily, and a $9 or $10 commission becomes more noticeable when a major competitor charges nothing.
The effect can be even greater for people investing relatively small amounts. A $10 commission has little impact on a $10,000 transaction, but it represents 2% of a $500 investment before the investor has earned anything. Removing that cost makes frequent or smaller purchases more practical.
Commission-free does not mean completely free. Foreign exchange costs and other fees can still apply depending on the transaction, and options traders will continue to pay the $0.90 per-contract charge. Investors also still face the normal risks associated with buying and selling securities.
The bigger question for Canada’s banking industry is whether trading commissions can remain a meaningful source of revenue once a major competitor has decided to eliminate them.
Canadian banks have long benefited from customers keeping many financial products under one roof. BMO’s move suggests that attracting those customers may now be more valuable than collecting a fee every time they make a trade.
If other large banks reach the same conclusion, commission-free stock trading could quickly move from a competitive advantage to something Canadian investors simply expect.
