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Discount Brokerage Weekly Roundup – March 14, 2014

This week’s discount brokerage roundup is a little ‘rounder’ than most as it falls on Pi Day. This irrational edition of the weekly roundup features a quick announcement about an ETF webinar reschedule followed by a release by one discount brokerage of a refreshed trading platform.  In addition, we provide some interesting results from US online brokerages that may be telling of what may unfold here in Canada and finally we’ll come full circle with an irrational forum post fit for an algorithmic king.

Credential Direct Webinar Moved

Although we were looking forward to the session with the Canadian Couch Potato this past week, it seems that this webinar got postponed.  The date for the new webinar with Dan Bortolotti is March 19th at 12 pm ET.

myQuestrade Gets a Refresh

Questrade users got a nice surprise recently as the discount brokerage rolled out its latest upgrade to the myQuestrade interface.  There are upgrades to monitoring one’s account including performance stats and charts that make staying on top of one’s account much easier than it used to be.   The reaction from Questrade users online was generally very positive – although it appears that there may be some third party compatibility issues with Mint.    To learn more about the updates, check out the video below the tweets.

Back to the Future

When it comes to online brokerage products, pricing and services, the US market tend to be an interesting place to look for clues as to what may be coming down the wire here in Canada.  And, unlike the title song from Back to the Future, it looks like the discount brokerage train will be looking for money and for credit.

As the Canadian marketplace tries to adjust to the newer reality of lower commission pricing, the US has already been working through this environment for quite some time.  An interesting set of articles released this week helps to paint a picture of what is going stateside that could shape how things unfold for Canadian discount brokerages.

First, data from this article adds to the evidence that more and more retail investors are participating in the markets.  An important takeaway (and perhaps disturbingly) is that many ‘institutional’ investors monitor the participation of retail investors in the market as a contrarian indicator – meaning when the public is piling in, the pros are on their way out.  With more and more retail investors coming in, it is safe to wager more seasoned investors are becoming more cautious.

A second piece, a news release from ratings agency Fitch, suggests that large brokerages are interested in attracting deposits and supplying fee based services to offset low trading commission revenues.  In their analysis Fitch also reaffirms the view that pricing for commissions will continue to be driven lower. The bottom line, bank-owned or larger online brokerages could start to make their managed products and ancillary services more of a focal point.  For smaller or independent brokerages, however, these other services aren’t an option (unless they partner with a bank) so increasing fees (as Questrade is doing with their cheque processing fee for example), getting more active traders, higher margin lending rates and/or aggressively pursuing more assets could all be part of the plan.

From the Forums

IPO Frequencies Going High Frequency

It seems that IPOs continue to generate interest, and while calling a bubble is hard to do, the word comes to mind when looking stories such as this one from the Financial Wisdom Forum that showcase a high frequency trading firm going public.  You can read up on the financial firm Virtu mentioned in the post here. Skepticism is warranted but also – what are they paying on trading commissions?

That does it for this week’s roundup.  Hope you all have an irrationally great weekend!

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