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Discount Brokerage Weekly Roundup – September 26, 2014

When it rains it pours. That’s not only true if you’re in Vancouver, but also if you’ve been following what’s been going on with Canadian discount brokerages this week.

In this edition of the roundup we highlight what’s probably been one of the biggest and busiest weeks of 2014 for Canadian brokerages. On the menu: an article that dives into the strategy behind one of the largest offers currently available from a brokerage, a major discount brokerage ranking announcement, a big price drop announcement from an independent online brokerage as well as a mention for SparxTrading in the news, and the tour of the Canadian investor forums.

Trade Here Often?

It’s no secret that competition between Canada’s discount brokerages is at an all-time high. Since the RBC Direct Investing commission price drop earlier this year, brokerages big and small have been scrambling to not only match the offer but to also innovate and differentiate themselves in a new pricing world. While many brokerages have followed suit by lowering commission prices (including one this past week that we look at below) Scotia iTrade, a major bank-owned brokerage, has opted for a particularly challenging road by not lowering their standard commission fees. In this article on Scotia iTrade’s latest promotion we take a deep dive into one of their recent strategies of offering 500 free trades, and what it signals to consumers as well as to iTrade’s fellow brokerages.

They’ve got the Power

As we step into discount brokerage rankings season, JD Power’s Investor Satisfaction Survey results are in and Desjardins Online Brokerage has once again taken top prize. There were many interesting angles to this past year’s results: from the fact that only 7 online brokerages were actually covered instead of the previous years’ 11 to rise in the ranks of RBC Direct Investing. The big story, of course, is that Desjardins Online Brokerage has managed to not only earn a podium finish in all of the awards and for most of those they’ve been first. Stay tuned for our upcoming story on the results for 2014. In the meantime, check out our primer on the survey and how the results are typically calculated.

What Rhymes with Price Drop?

There are those who believe that if you’re planning on showing up fashionably late then you better look fashionably good. One online brokerage may have done just that with their standard commission price drop today when Qtrade Online Brokerage announced that they have lowered and simplified their standard commission price for online trading. The new numbers they’re sporting: $8.75 for their standard commission price and $6.95 for their “investor plus” pricing – eligible to those who make 150 or more trades per quarter or have $500,000 or more in assets with Qtrade.

Not content to just match the offers of the big banks, Qtrade has taken their standard pricing to lower than the “$9.99” and “$9.95” crowd, and also lower than their regional counterpart Credential Direct’s $8.88 per trade pricing. Their previous standard pricing started at $19.99 per trade and so this move offers substantial commission savings for the “standard” crowd.

Like their bank-owned counterparts, the way to offset lowering commission prices is with administrative and ‘inactivity fees’. The conditions on the new offer include paying an administrative charge of $25 per quarter for those who have less than $25,000 with Qtrade. The fee may be waived by placing at least 2 commission-generating trades per quarter.

While the new commission fee structure is effective immediately, it seems that the inactivity fees take effect in January, so there’s just about a quarter without having to worry about that new charge for those to whom it applies. Be sure to check out the upcoming piece on Qtrade’s latest move coming shortly.

That’s Us in the Spotlight

SparxTrading got a little media love courtesy of an interesting piece in the Globe and Mail by Gail Bebe on discount brokerage deals – something we track pretty closely here.

While the crux of the article was to make a careful decision when weighing the benefits of an incentive such as free trades (or a “free iPad”), one of the reader comments to the article also made a compelling point:

“Given that most of the brokerages basically all offer the same core level of service for the same price (give or take a couple of bucks per trade), if you are looking for a new broker you might as well take advantage of the best promo you can get.”

 From the Forums

 Aaand it’s gone

Although it’s an infamous South Park reference, the feeling of putting money into an online investing account only to have it disappear is not just the stuff of fiction apparently. In this post from the investing forum, one user had the unfortunate scenario play out. Check out what readers had to offer for perspective and how the brokerage involved (Questrade) tried to correct it.

Tricks of the Trade

In another post about getting funds into Questrade, this post by a reddit personal finance Canada reader offers up a tip when transferring money to this discount brokerage. Check out the commentary offered by the group and the interesting fact that Questrade’s social media team (aka John from Team Questrade) is also covering reddit.

That wraps up another edition of the roundup and takes us into the end of September. Hopefully the only red we’ll see stepping into fall will be on the trees and not the markets!

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