Further escalating an ongoing price war among brokers, San Francisco-based Charles Schwab will slash online stock-trading commissions by 35% for small investors.

The news raised fears that it would adversely impact Schwab's revenue. The largest online brokerage said it expects the price cut to trim consolidated revenue by about 1% from current levels during the first 12 months, Reuters reports. But Schwab did affirm its target of generating a 25% pretax operating profit margin this year and at least a 15% return on stockholders equity.

According to Schwab, U.S. investors with household assets of between $50,000 and $1 million with the firm will now pay $12.95 per trade, down from $19.95. It also applies to clients who trade nine to 29 times a quarter, company officials said. The new rates take effect on Feb. 8.

Traders who make at least 30 equity or option trades per quarter, as well as clients with more than $1 million in household assets at the firm will continue to pay $9.95 per trade. Schwab also said it plans to unveil a comparable pricing model in the second quarter for clients who trade through its 5,000 affiliated financial advisors who enroll in electronic delivery of client reports.

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