(Reuters) - Shares in discount brokerages TD Ameritrade AMTD.O, E*Trade ETFC.O and Charles Schwab SCHW.N fell as investors bet Schwab's slashing of trading commissions would be the start of a price war.

A TD Ameritrade sign is seen outside a branch in Schaumburg, Illinois, U.S., October 24, 2016. REUTERS/Jim Young

Schwab announced earlier on Thursday that it would reduce its online equity and ETF trade commissions to $6.95 from $8.95 and claimed to have the lowest commission among competitors.

Shares in TD Ameritrade were hit the hardest as it derives about 42 percent of revenue from trading fees, the biggest exposure of the three companies.

Its shares fell as much as 11 percent and were last down 9.3 percent at $41.79, on track for its biggest one-day percentage decline since Dec. 2008. Trading volume was 7.5 times the 10-day moving average.

“You’re going to continue to see downward pricing pressure on transaction-based business,” Matt Lynch, Managing Partner at Strategy & Resources LLC in Dayton, Ohio. “Throughout the industry I think there’s a heightened sensitivity to those fees.”

TD Ameritrade Chief Executive Tim Hockey told CNBC that he was not surprised by the Charles Schwab price move and that he would look and see what his company would do.

“We think it’s much more around the tools, the capabilities and the experiences,” Hockey said.

Shares in E*Trade fell 9.7 percent to $33.97 after hitting a low of $33.33 earlier in the session. It was on track for its biggest one-day decline since June. Trading volume for E*Trade was 4 times its 10-day moving average.

Schwab, which derives about 11 percent of its revenue from trading fees, saw its shares fall 4.9 percent at $39.33. Trading volume for Schwab was twice its 10-day moving average.

William Katz, analyst at Citigroup, said in a research note that the move “raises commoditization risks for the online trading model as it could lead to a further round of price cuts.”