Discount brokerages increasingly aren't deriving a major portion of their revenues from traditional trading commissions, but from businesses related to banking and mutual funds, BusinessWeek reports.
The shift towards non-trading revenue stems from intense price wars among brokerages, even as investors' return to the markets drives up the volume of retail trading. In 1994, for instance, Charles Schwab earned 51% of its revenues from trading commissions. This year, the firm expects to earn merely 16% of its revenues from commissions. Similarly, rival E*Trade, whose trading commissions accounted for 88% of its revenues in 1994, will see that component drop to 37% this year.