The U.S. retail brokerage industry may face further consolidation amid heightened competition and a push to build market share, suggests a report from Fitch Ratings.

The dynamics of the U.S. retail brokerage business, which have sparked consolidation and trading commission cuts among the major players, may lead to further mergers in the months ahead, the report from the credit rating agency notes.

“Additional consolidation could take place over the near to intermediate term which could alter current industry dynamics,” says Justin Fuller, senior director at Fitch, in a statement.

For example, E-Trade Financial Corp.’s efforts to wind down its legacy exposures increases “the likelihood that it will be acquired to drive scale efficiencies for the acquirer,” the Fitch report says.

At the same time, the report notes that industry competition has intensified as firms seek to gain a greater share of clients’ assets. “Key opportunities for the retail brokers include continued growth of customer wallet share driven by additional products and technology solutions for customers,” it says. “To the extent that the retail brokers are successful in this effort, as industry leader Schwab has largely been, it has the potential to create a durable business model and stickier customer relationships.”

Charles Schwab Corp. has stepped up competition by cutting its trading commissions and lowering the price of its core index funds offering, the report notes. This ability to engage in price competition has been supported by stronger earnings driven by higher net interest revenue, it says, adding that it expects “these favorable earnings and profit margin tailwinds to persist should short-term rates continue to rise.”

“Risks for monoline retail brokers are primarily related to further price competition in the form of lower or no trading commissions,” the Fitch report says. “At present, Fitch believes that reduced trading commissions for those retail brokers with diverse product offerings will be used more as a marketing tool to attract more asset or wealth management business.”