Fidelity, Schwab Block Orders of BlackRock, Texas Capital ETFs

Fidelity Investments and Charles Schwab Corp. are prohibiting clients from investing in money-market ETFs on their trading platforms, an unusual move for the financial powerhouses who typically permit easy access to funds that already trade on an exchange.

The two firms are blocking purchases of three exchange-traded funds offered by BlackRock Inc. and Texas Capital, the first to track money—market securities such as Treasury bills and other government-backed debt in an ETF structure.

The new funds serve as a direct challenge to mutual-fund providers, who have long been big, established players in money-market products. Fidelity and Schwab alone manage ...