The online trading industry found last quarter that average commission rates had stabilized from previous declines, a realization that likely spurred Fidelity's move.
Under the new pricing plan, which will become effective July 17, investors who execute trades between 12 and 35 times annually will be charged $14.95 per trade, compared with $19.95. Previously, only investors making 36 or more trades a year received the lower rate.
For infrequent online traders, defined as customers who execute transactions 11 times or less per year, commissions will rise to $25 a trade for up to 1,000 shares, compared with the previous rate of $19.95 per trade.
Customers with $100,000 or more in mutual fund assets also will qualify for the lower rate, and rates for automated phone trades will decrease slightly.
"We have 1 million online accounts and a significant number would qualify [for the lower rate]," said John Stevens, a Fidelity spokesman.
Fidelity's move comes as the online trading industry has seen the average commission rates charged by the top ten players stabilize, with a 1.1 percent increase during the first quarter over the previous quarter. That's a vast improvement over the fourth quarter, during which the average commission rate plummeted 24 percent over the previous quarter, according to a report released this week by Piper Jaffray.
According to the report, online trades averaged 192,000 a day during the first quarter, up 100 percent over year-ago figures and up 26 percent over the previous quarter.
Tim Klein, a Piper Jaffray analyst, said that, as a result, an increasing number of brokerages are expected to adopt multiple pricing plans for online trading.
"In terms of the landscape, there will be a lot of segmentation going on," he said. "It's part of the evolution of the industry, and a recognition of the habits of customers."
He added that, although it likely will become more difficult to track changes in average commission rates as the industry moves toward more segmented pricing, commission rates likely will continue to decline for more active traders.
While the report confirmed that online trading is a growing area, it cautioned that the area also is becoming increasingly more competitive, as new players enter the market.
Charles Schwab held the greatest market share during the first quarter, with 32 percent, followed by E*Trade, with 12 percent. Waterhouse Securities ranked third, with 9 percent of the market, while Fidelity came in fourth, with 8 percent.
Fidelity jumped into the fourth-place spot from a fifth-place ranking during the previous quarter. The company swapped places with Datek, which had 7 percent of the market share during the first quarter, according to Piper Jaffray's report.
However, it was Ameritrade that made the greatest gains during the quarter, moving from an eighth-place ranking to sixth. The discount online brokerage held 6 percent of the market share, according to the report.
Looking to attract more customers, Fidelity also announced today that it is launching a travel promotion that will run through August 14. Fidelity customers who use the company's Web site or automated phone service before then will receive a voucher for two round-trip tickets to London, Mexico, or Hawaii when purchasing a seven-night stay at a hotel affiliated with the program.