Vanguard, the index fund giant founded by discount investing guru John Bogle in 1975 launched its discount brokerage in 1983. The trading subsidiary joined other online brokers in extending commission-free online trading for equities to all of its clients as of January 2, 2020. The base per-leg fee for trading options is eliminated, though clients will pay $1 per contract.

Vanguard customers have been able to trade exchange-traded funds (ETFs) with no commission since August 2018, but this new pricing structure extends commission-free trading to all equities. The previous pricing structure levied different commissions based on the size of a client's balance held with Vanguard, ranging from $2 to $7 for an equity trade, and $2 to $7 plus $1 per contract for options trades for those with less than balances of $1 million. Clients with over $1 million held in Vanguard accounts were eligible for 25-100 free trades per month.

A Focus on Buy and Hold

Historically, Vanguard's brokerage clients trade infrequently and tend to hold Vanguard-managed assets in their accounts, focusing on the firm's mutual funds and ETFs which carry very low management fees. The brokerage is aimed at those philosophically aligned with Vanguard’s approach to investing, enabling clients to complement their mutual fund holdings with stocks and bonds.

Though Vanguard was slow to join the commission-free party, spokespeople have noted in the past that their platform does little to encourage trading. Options trading is very limited, intended only for single-leg transactions. There is a large inventory of secondary market fixed-income assets that can be traded online for $1 per $1,000 face value.

Vanguard's fee structure includes a $20 annual account service fee, which is seldom charged. Only clients with relatively low balances, or less than $10,000 in Vanguard products, who also request paper delivery of brokerage and mutual fund confirmations, statements, the annual privacy policy notice, prospectuses, and proxy materials are subject to this fee.

Cash Sweep Program

Clients holding cash can opt into the sweep program. The firm offers a money market fund (Vanguard Federal Money Market Fund, which has a .11% yield at as of July 2020, and a 0.11% expense ratio) as the default brokerage sweep option.

Vanguard has big plans afoot for 2020, geared towards their small number of active traders and power users. The most frequently-used pages on the website are being redesigned, and the mobile apps are undergoing complete overhauls.