US Brokers May Charge Distribution Fees from ETF Managers Amid Shift to Commission-Free Trading

US brokerage firms and custodians may charge distribution fees from ETF managers as commission-free trading takes a toll on revenue. The US ETF management fee pool is estimated to be $21 billion, with brokers targeting 10% to 20% of total expense ratios, implying $2 billion to $4 billion a year in new distribution costs. The shift in the competitive landscape has prompted legacy players to slash trade commissions, but the discounts have started to weigh on revenue as investors move from mutual funds to ETFs.