By Steve Gelsi, MarketWatch

Last Update: 4:11 PM ET Feb. 4, 2005

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NEW YORK (MarketWatch) -- Charles Schwab & Co. Inc. Friday said it`s cutting its online equity commission for domestic retail investors with household assets of between $50,000 and $1 million.

Shares of online brokers fell as Wall Street eyes the possibility of lower profit margins from price discounting.

Schwab shares slid slipped about 3 percent to close at $10.38. Ameritrade dropped 3.9 percent to $11.50 and E-Trade gave up 2.9 percent to finish at $13.

Effective Feb. 8, Schwab (SCH: news, chart, profile) will charge $12.95 per trade, down from $19.95, for these customers in the latest move in the price war between online brokerage firms.

The 35 percent discount by Schwab comes as Ameritrade (AMTD: news, chart, profile) and E-Trade (ET: news, chart, profile) attempt to attract customers and increase assets under management.

The move may illustrate that commissions are becoming a less important part of the business mix for online brokers, in favor of banking and assets under management.