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Discount Brokerage Weekly Roundup – February 28, 2014

inconvenient power outageLess than a week after skiers and snowboarders were making their way down the slopes, a different set of peaks and valleys are now confronting investors. At the peak, the S&P 500 chased a new all-time high this week. Down in the valley is bitcoin because of the loss of a major exchange to a possible theft.

Canadian discount brokerages were also busy navigating their own ups and downs this past week. In this roundup we look at a major Canadian online brokerage that went temporarily offline, roll outs of a new set of US Dollar registered accounts, the continued ripple effect of standard commission price drops, a couple of interesting educational resources and finally, some insightful threads from the Canadian investor forums.

TD WebBroker Goes Offline

As one of Canada’s largest bank-owned discount brokerages, clients of TD Direct Investing had a rough couple of days this week when WebBroker (and EasyWeb) went offline due to technical difficulties.  The cause of the outage was not disclosed however the outage caught the attention of investors on social media, forums and mainstream media.

The outage is an important example of what can sometimes go wrong when trading online and also where traders can turn when something unknown happens. Active traders that had open positions or trades going against them were likely in for a white-knuckle ride as they were forced to wait and watch the market unfold.  For others who were looking to contribute into their RRSP accounts ahead of the deadline, the downtime was understandably frustrating.

While it is cold comfort to investors or traders who are unable to access their account, the fact is that technical glitches can happen to any online brokerage, exchange or data providing member in the convoluted pathway between buyer and seller. Part of trading online means preparing for and accepting these hazards.

Even though TD did apparently broadcast the service interruption, it was interesting to note that on Twitter there were a number of messages from users indicating the issue first arising, escalating and finally being resolved.  The use of Twitter as a way to stay informed about what’s happening in near real-time comes in handy when other channels aren’t providing much information.

USD Registered Accounts Quietly Rolling Out

US dollar registered accounts are great feature for those who do a great deal of trading in US listed equities and options. While several bank-owned online brokerages do offer this, some of the major brokerages such as TD Direct Investing, have yet to bring this feature to clients.

A comment left by visitor ‘Jin’ earlier this week brought to light that National Bank Direct Brokerage is quietly offering existing and prospective clients USD TFSAs and RRSPs. Upon following up with a client rep from NBDB, they explained that these accounts are being rolled out as part of a multi-phase plan and that currently they are about 2/3 of the way through this process.  What this means for investors is that, for the moment, these registered accounts can accept deposits in USD and clients can trade (and hold) USD equities, however withdrawals from the account will result in a currency conversion back into CAD.   We’ll continue to monitor this as more information becomes available.

Price Drops Continuing to Make a Splash

While Canadian discount brokerages commission pricing still has plenty of room to fall when compared to brokerages in the US (such as Robinhood which doesn’t charge any commissions on a trade) the recent moves by bank-owned online brokerages are continuing to make waves with investors. This article from the Toronto Star is a perfect example of the spotlight now shining on pricing.  For those considering the new lower commission costs, it is also important to consider any other costs that still may be associated with the account, such as inactivity fees or minimum balance fees. The second of our two-part series (released this week) looks at the commission-price drops at bank-owned online brokerages and in particular at some of these fees.

Know Your Options

One of the new ‘battlegrounds’ for the deep discount brokerages is in options trading.  Recently Virtual Brokers released a new promotion that offers free data for their PowerTrader Pro platform for clients who make one or more complex options trades.  Earlier today, Questrade released a free guide to options trading which explains some of the complex trade types that can be placed using the Questrade IQ platform.  To download a free copy of the guide, click here.

Another interesting story readers may be interested in tracking is a special by CBC Marketplace this Friday (tonight). This story is the result of a mystery shop exercise at Canadian financial firms (including Canada’s big 5 banks) to see what kind of financial advice was being dished out by the firms’ “financial advisers”.

From the Forums

This week’s forum threads  capture the outage at TD described above (and the lessons other investors can draw from this situation) as well as an instructive post on how to convert from USD to CAD using Interactive Brokers.

Murphy’s Law

The forums were alight with users of TD Direct Investing not being able to access their accounts.  Check out the following posts on Canadian Money Forum and Red Flag Deals as a sobering reminder that as DIY investors there’s a lot more that can go wrong when trading online.

Crossing the Border

For those curious about using their brokerage to convert between USD and CAD, there have been a number of different approaches.  This post on RedFlagDeals’ forum provides a concise ‘how to’ for users of Interactive Brokers.

That does it for this February-ending edition of the weekly roundup. Have a safe and warm weekend!


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