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Discount Brokerage Weekly Roundup – March 21, 2014

If there is one thing that March madness can guarantee, its unpredictability. In the discount brokerage space this was certainly the case as we were watching to see who, if anyone, would launch a promotion that could make a splash in the already ultra-competitive online brokerage market. This past week it happened.

In this week’s roundup we’ll take a look at that deal launched by one of Canada’s largest bank-owned brokerages, then see which major online brokerage was crowned ‘#1 online brokerage’. Next we’ll take a peek at some interesting technology that brokerages south of the border are tinkering with. Finally, we round out this week by looking at a couple of interesting investor forum posts.

Kind of a Big Deal

On the heels of their now lowered standard commission offer, TD Direct Investing has upped the ante in the discount brokerage price battle by announcing a new promotion. Until April 30th TD is offering up to 300 commission-free trades for those who open a new account with a deposit of at least $100,000. For those who are depositing less than $100,000, TD is offering 30 free trades. Recently, RBC Direct Investing had a 20 commission-free trade offer however this new promotion by TD Direct Investing is going to make a splash because the sub-$100K depositor can land 30 free trades good for 90 days (or slightly longer depending on when the account is opened). At the $100K+ deposit level, there is still BMO InvestorLine’s offer of $250 + 250 commission-free trades that comes close however the TD Direct Investing deal edges it out when factoring in the cost per trade. At the very least, TD’s latest offer will spur other bank-owned brokerages to put together an offer that can rival the combination of promotion plus lowered standard commission pricing. To learn more about all of the current discount brokerage promotions here.

Interactive Brokers Wins Top Online Brokerage

For the second consecutive year, US financial publication Barron’s has rated Interactive Brokers as the #1 online brokerage. The US online brokerage market is a highly competitive marketplace so edging out the field is no easy feat. Barrons’ ranking compared 20 discount brokerages across 8 categories they felt were relevant to evaluating the user experience and scored all of the online brokerages out of 5 for each category. Interestingly, Interactive Brokers led the field on costs and did well on portfolio analysis as well as trading experience and technology.

Timing the Market

With the competition being so fierce in the US, not only do prices go down, but innovation tends to go up. This interesting article about what US discount brokerage Fidelity is trying to do with smart watches definitely highlights that. While it appears that the jury is still out on whether a watching your stocks on your watch will improve your market timing, it is nonetheless interesting to peek over the fence at our neighbours to the south to see what, if anything, could come our way in Canada. In this case, self-directed investors might be staring at their regular old watches (or smartphones) for quite some time before the smartwatch trading applications land at a Canadian discount brokerage.

From the Forums:

In this week’s forum posts, a pair of interesting threads from Canadian Money Forum crossed our radar.

Settling the Gambit

One of the interesting techniques for potentially saving on US currency conversion fees is called Norbert’s Gambit.

In this thread, there is a great example of the importance of understanding the trade settlement process in detail as well as which discount brokerages tend to fare better for clients wishing to perform this technique.

Here’s My Number, So Call Me Maybe

For many DIY investors, one of the important sources of information about the potential of a stock comes from analysts who follow the company’s ins and outs carefully. The recommendations analysts make about price targets are interesting because they seem to suggest a level of certainty that, in reality, just doesn’t exist. This thread wonders out loud what the value of analyst price targets are and the answers from the forum are worth a read.

That does it for this week’s roundup. Enjoy the first official spring weekend and hopefully it won’t be filled with too many basketball or weather induced facepalms!

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