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Discount Brokerage Weekly Roundup – February 26, 2016

Time flies when you’re up against a deadline. That seems to be the theme for many Canadians looking to take advantage of the RRSP contribution deadline for 2015 coming up this Monday. For Canadian discount brokerages, however, it seems that at the end of RRSP season may be signaling the start of an even stormier season ahead.

In this week’s roundup, we take a look at what’s around the corner for deals and promotions as we head into a new month and how we might be seeing the first signs of troubled waters for Canadian brokerages as they try to keep pace with one another. Next we take a look at a recent BNN interview with one ranking agency that highlights how tricky it can be to pick an online brokerage without doing some homework first. From there we take a look at the latest discount brokerage tweets and close out the roundup with a look at what investors were talking about on the forums this week.

Peak Deal?

As the RRSP deadline is fast approaching, Canadian investors will be busy trying to calculate their contributions and limits to ensure they can qualify for the 2015 tax year – at least those who intend to make a contribution. This recent survey from H&R Block stated that only 18% of Canadians surveyed intend to contribute to an RRSP this year. Whether it’s the volatile markets or because of other factors, it is against this backdrop that Canadian discount brokerages have had to figure out how best to encourage DIY investors to sign up for an online brokerage account. Clearly they’ve had their work cut out for them.

For Canadian discount brokerages, the RRSP season is typically among the busiest all year and so it is interesting to reflect on who did (or didn’t) post a promotion this year and what that could mean for deals landscape looks as the next big season i.e. tax return season takes effect.

Looking back at last year, there were 24 deals and promotions being advertised in February with that number shrinking slightly to 20 or so by the time March rolled around. This year, however, there are only 18 offers that have been advertised for February and four of those are set to expire within the first week of March.

So, could this be a signal of firms playing defense because of the DIY investing climate or could this be the first real hint that the Canadian online brokerage landscape may soon be thinning out?

Consider the following. Two big bank-owned brokerages, CIBC Investor’s Edge and RBC Direct Investing, opted to sit out the promotional race RRSP season this year despite having run promotions around the same time last year. While it is not clear if other means they’ve used to fuel the interest in their DIY investing products and services have worked the fact remains that this year, they’ve yielded what little market share there is to be had to big bank-owned competitors as well as independent brokerages who have been running promotions.

Another interesting observations between last year and this year is that some brokerages are running promotions that offer lower value incentives year (or higher barriers to qualify) despite the increased competition.

Virtual Brokers, for example, had an offer last year of 50 commission-free trades which required deposits of $5,000 whereas in 2016 that same number of commission-free trades requires a deposit of $25,000.

All is not doom and gloom, however.

Desjardins Online Brokerage upped their commission-credit offer for new clients to $500 from $300 and Credential Direct entered the deals race earlier this year than they did in 2015. Also, encouragingly for investors, Questrade has continued to put forward more incentives and promotions than other Canadian brokerages which implies that they’re committed to providing incentives to get DIY investors’ attention and ultimately business.

Looking at the big picture, with online brokerage margins being squeezed, a turbulent economic situation and now an added factor of robo-advisors competing for client assets, getting more clients or more assets per client will likely be as important as improving operating efficiency. In either case, offering a promotion or incentive enables them to do both.

There are already whispers from several brokerage sources that making deals and promotions a bigger part of their planning in 2016 is in the cards. Of course, just like in any market, when the value becomes compelling enough, the buyers step back in so for Canadian discount brokerages, the next two months will be their chance to make their case.

Know Thyself

As seasoned or new DIY investors continue to kick the tires on their online brokerage options, what it takes to make a good choice still remains somewhat tricky. After all, almost all brokerages are willing to accept a client’s money however finding out what makes a great ‘fit’ is not something brokerages look at the same way as clients do. What is clear about DIY investing and perhaps about wealth management in general is that nobody will care for your money more than you do.

For DIY investors, the reality of choosing the right online brokerage comes back down to knowing what kinds of services and costs are appropriate for their particular needs. This past week, the president of financial services research firm Surviscor Glenn LaCoste was on BNN offering viewers tips on what to look out for when choosing a brokerage.

Three questions that were highlighted as important for DIY investors looking for an online brokerage to ask were:

  • Do I know what I am getting myself into?
  • What kind of account am I looking for?
  • Do I need the firm to offer both online & mobile options?

Of course, the online brokerage industry is constantly evolving and the differences between firms are narrowing which highlights why DIY investors need to know more about what they want and need since relying on rankings and ratings may cause some confusion.

A good case in point of just how fluid the results of a top online brokerage ranking may be was also illustrated in that same interview.

Of the five brokerages listed as “top picks” (BMO InvestorLine, Scotia iTrade, Questrade, RBC Direct Investing and Qtrade Investor) there were other brokerages that seemed to score higher on Surviscor’s recent rankings that were left off the list. So, for example, RBC Direct Investing was ranked 6th (along with TD Direct Investing) in Surviscor’s 2015 Online Discount Brokerage Review and behind Credential Direct who ranked 5th. Further, in Surviscor’s most recent Service Level Assessment analysis RBC Direct Investing and Questrade ranked 13th and 14th (out of 14) respectively. As such, it was interesting to note that despite scoring higher than RBC Direct Investing on various Surviscor rankings, these top picks did not include Credential Direct (who placed 4th on the service level assessment) and underscores the point that measuring and recommending discount brokerages is always a moving target.

A brokerage that does well or poorly on a ranking or rating in one period may do worse or better on a relative basis when measured at another time frame. Further, even rankings that might measure similar components (such as customer service)will do so in different ways and thus yield different results. In fact, this was the focus of an article published in 2013 that still holds true today: when looking at a rating, ranking or recommendation for a brokerage it is important to understand how and what’s being measured to get a clear picture of what the ranking means. For those shopping around for a brokerage account, the lesson appears to increasingly point to knowing what you want and need before making any decisions on a provider.

Discount Brokerage Tweets of the Week

This week technology strikes again as brokerages big and small work their way through some digital hiccups. Mentioned this week were BMO InvestorLine, Questrade, RBC Direct Investing, Scotia iTrade, TD Direct Investing & Virtual Brokers.

From the Forums

A DRIP of this, a dash of that

The power of compounding is an essential ingredient for the long term dividend investor. In this post from RedFlagDeals’ Investing thread, one user was curious how to get up and going with setting up a DRIP at RBC Direct Investing.

Adjust Cause

Tax time is here and with it come the flood of questions from investors trying to make heads and tails of the proper method of tracking their buys and sells. In this post on reddit’s personal finance Canada section, one user has a question about the adjusted cost base calculation for shares purchased in US dollars.

Into the Close

That’s a wrap for this week’s roundup. For the movie buffs, this is the big screen equivalent of the super bowl as some of hollywood’s best and brightest will be walking down the red carpet for the Oscars. Of course, in 2016 in addition to the glitz and glamour, there’ll also be many entertaining (and sometimes NSFW) tweets to go along with it all. Here’s a highlight (or lowlight) reel heading into the big show. Have a great weekend!

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Discount Brokerage Weekly Roundup – February 19, 2016

Having had such a terrible start to the trading year, this past week offered a reprieve from the bad news. Of course the recent stock market performance has many skeptics shouting from the rooftops but, as it always is, it will be the market that has the last word.

For Canadian discount brokerages, the market they need to be paying attention to is DIY investors. Specifically listening to what they’re asking for and finding a way to deliver it. While many brokerages are looking for ways to innovate, it’s clear that what investors want will ultimately drive popularity and this past week we saw some interesting developments take shape.

In this week’s roundup we take a look at the latest promotional offer from an online brokerage getting creative with ETFs. Next we take a look at a recent review and ranking of online brokerage service and why Canadian online brokerages received a failing grade. As usual, we’ll take a look at what DIY investors were chatting about online and showcase upcoming investor education events.

Canadian ETFs go commission-free at National Bank Direct Brokerage

ETFs continue to make headlines and waves with retail investors and several Canadian online brokerages are looking to leverage this attention.

National Bank Direct Brokerage has once again opened up commission-free ETF trading, making them, at least until the end of June, the fifth Canadian online brokerage to offer up some form of commission-free ETF offering. The offer is open to both new and existing clients and no promotional code is required to take advantage of the commission-free ETF trading program however there are some important conditions.

One of the important distinctions between National Bank Direct Brokerage’s offer and that of the other brokerages is that NBDB’s promotion is limited to Canadian ETFs only. Given the rise in popularity of ETFs, the list of Canadian ETFs numbers somewhere close to 510 (as of December 2015), which technically speaking, would be the highest number of completely commission-free ETFs (i.e. buying and selling are commission-free) being offered by any Canadian brokerage (see table below). So, even though investors may be missing out on trading some of the approximately 1600 US ETFs commission-free, there’s definitely lots for investors to choose from. With the Canadian dollar also being where it is relative to the US dollar, not having to worry about the currency factor is also another bonus of having access to such a wide range of commission-free ETFS, a few of which are US currency hedged.

Online Brokerage commission-free ETF buying only commission-free ETF buying AND selling # of fully commission-free ETFs Notes
National Bank Direct Brokerage No Yes* 511** *Canadian ETFs only; minimum purchase 100 units;
**estimated as of Feb. 2016
Qtrade Investor No Yes 60
Questrade Yes No n/a
Scotia iTRADE No Yes 50
Virtual Brokers Yes Yes 150

Another important detail for investors considering this offer to take note of is that there is a minimum quantity of 100 units to be purchased in order for this offer to qualify as commission-free. Thus, the offer may be less appealing for investors who fine tune and rebalance their portfolio with small (or odd lot) quantities of purchases and sales.

Finally, the list of ETFs eligible for this promotion is the one published by the Canadian ETF Association found here. The most recent list (at the time of publishing this piece) was from December 2015 however it appears that the list is generally updated monthly (for the previous month’s total) around the middle of each month.

For Canadian DIY investors, having another online brokerage offer up commission-free ETFs is certainly a big plus. If there is a limitation to this offer, however, it is that it is only offered up for a short amount of time.

This is not the first time NBDB has run a promotion offering commission-free ETFs nor are they the only Canadian online brokerage to offer the same kind of promotion (CIBC Investor’s Edge also ran a similar promo last year). Given how fiercely competitive the online brokerage space is, and factoring in the rise in popularity of robo-advisors, if this offer proves to have traction with DIY investors, it seems fair to assume that this won’t be the last time we see National Bank Direct Brokerage (or one of their competitors) roll out an ETF-based program such as this.

Service Shuffle

At a time when client service is starting to become a bigger focus at Canada’s financial services firms, it seems that providing speedy resolution via email is out of focus at Canadian discount brokerages according to the latest assessment by financial services firm Surviscor. Ironically, while email has been the de facto method to communicate online since the internet turned mainstream, today’s investors have so much access to so many digital touch points that it has become a challenge for brokerages, big and small, to keep pace with where there clients are. As a result, the notion of what constitutes ‘service’ has become a much more fluid concept for investors, rankings agencies and brokerages to agree on.

Earlier this month Surviscor announced the results of their latest Service Level Index (SLI) ranking, formerly known as the Customer Email Responsiveness program. This analysis program measures the speed with which different online brokerages respond to online requests for support (via ‘mystery shop’ requests) and uses that as a measure of how strong (or weak) a firm’s service response levels are.

To help provide additional context, Surviscor also applies a tiered rating system according to how quickly a response is received from a brokerage. The rating system ranges from Platinum, which is awarded to firms with a response time of under 2 hours to Bronze which is awarded to those with response times of 8 to 12 hours.

In Surviscor’s latest assessment, which took place over the full year (2015), Qtrade Investor earned the best “Service Level Index” score whereas Desjardins Online Brokerage had the best response time of the brokerages listed. Both firms were close in score, separated only by 2 percentage points however Qtrade Investor scored highest with 88%.

Unfortunately, there were no online brokerages that achieved either a ‘platinum’ or ‘gold’ standard ranking this year meaning that none of the firms assessed had a consistent response time of faster than five hours via email.

What was particularly interesting, however, was just how poorly most brokerages ranked on this assessment. The average ranking for the group worked out to be a meagre 45% with 9 out of the 14 brokerages studied falling beneath that average, with RBC Direct Investing earning a grade of 10%.

In short, according to the Surviscor assessment, “2015 was not a banner year for self-direct brokerage firms….” It seems that according to the numbers shown above, that might be an understatement.

Of course with most of the rankings, ratings and reviews of Canadian online brokerages, these numbers don’t tell the whole story. Specifically, the method used to gauge these service levels may not be the only nor the best way to reach an online brokerage representative for support.

For example, Questrade, who ranked 13th (out of 14) on Surviscor’s SLI assessment, has both live chat support during business hours and also has a Twitter handle which is well monitored (as shown on numerous occasions in our weekly roundups). They also have their own forum on which individuals can submit questions and support requests and they are the only online brokerage to be actively responding and covering popular investor forums, including Reddit.

No other Canadian brokerage, including firms that ranked above Questrade assessment have so far shown the same kind of breadth of coverage.

Another example of alternative support channels can be seen with TD Direct Investing. Unlike most of their bank-owned brokerage peers, TD Direct Investing has dedicated coverage on its support forum TD Helps, it also has its own Twitter feed (although this is a recent development) and both of these appear to be relatively quick methods to get resolution or a proper response to an inquiry, as shown just this past week in the following Twitter interaction:

Recent Twitter interaction between TD Direct Invest and online user.

Interestingly the parent bank of TD Direct Investing placed second in Surviscor’s assessment of the banking services levels showing that the customer service experience in one channel (i.e. banking) might create high expectations for other areas that the bank may be involved with, making it all the more important for bank-owned brokerages to create a consistent brand experience.

The take home message for DIY investors is simply this: that with any ranking or rating it is important to know what is being measured.

In the case of “service” it is even more important to be clear on exactly what that term means since different interpretations of what comprises “service” are (quite evidently) possible, especially in a world where online investors turn to multiple online sources for support.

It would be fair to say that based on Surviscor’s latest ranking of service levels, overall email response times could stand to improve at most Canadian brokerages.

Unfortunately for consumers, with so many brokerages ranking so poorly, it seems that email-related service experience would not be something DIY investors could really expect a strong positive experience with. That said, for those brokerages that have done well, their commitment to providing quick turnaround times via email stands out even more this year and may continue to be an investment that pays off with existing and prospective clients.

Discount Brokerage Tweets of the Week

This week there was a good cross section of responses from DIY investors on Twitter. Mentioned this week were Questrade, RBC Direct Investing, Scotia iTRADE and TD Direct Investing, Virtual Brokers. Interestingly, the Twitter push from CIBC Investor’s Edge seen last week was surprisingly silent.

Event Horizon

The days are getting longer, and it’s an illuminating week ahead for discount brokerage-sponsored investor education events. Here are some upcoming sessions that may be of interest to options enthusiasts and yield hounds. Short selling, trading strategies, and a market outlook round out this week’s selection.

February 20

TD Direct Investing – Market Outlook

February 23

TD Direct Investing – Introduction to Fixed Income

Scotia iTRADE – Strategies for Bear Markets – What Goes Up When the Market Goes Down with Pro Market Advisors

February 25

TD Direct Investing – Options Fundamentals

NBDB – Short Selling – [Fr]

From the Forums

Too late to say sorry?

Saying good-bye to a brokerage is a common occurrence for many DIY investors. Regardless of the reason, sometimes the exit is not nearly as seamless as investors like. In this post on Reddit, one Questrade user submitted their frustration with the process. Interestingly (especially given the story above) Questrade replied. Worth a read for those considering a switch.

Next stop…the world

Which brokerages will let DIY investors trade internationally? It’s a question that more and more investors are asking yet surprisingly fewer brokerages are answering the call for. In this post, also from Reddit, one user was curious about online brokerages that offered international trading. Of course there were also some alternatives provided which were interesting approaches to international exposure.

Into the Close

Even though the trading week was short, it seems that markets favoured the long trade. But, all may not be as it seems as the bears still have quite a bit of support heading into next week. And, don’t forget, bears are resilient bunch. This story of the ‘water bear’ (tardigrade) coming back to life after surviving being frozen for 30 years might offer some food for thought – especially to all of those in parts of Canada that feel more like Antarctica and of course, those holding onto losing positions in their portfolio. Have a great weekend, keep warm but stay frosty into the week ahead!

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Discount Brokerage Weekly Roundup – February 12, 2016

This week there was some serious talk about gravity. From the astrophysicists cheering the official confirmation of Einstein’s predicted gravitational waves to the basketball fans in ‘the six’ hoping to observe the NBA’s best and brightest defy gravity at the upcoming All-Star game, this has been an exciting week. Unfortunately for most investors, watching the markets succumb to the pull of gravity has been a tough lesson in the physics of how markets react to uncertainty. For Canadian discount brokerages, there also appear to be distant forces at work which could cause commission prices to feel the gravitational pull on pricing.

While the news around the Canadian discount brokerage industry this past week did not prove or disprove any of Einstein’s theories, there appear to be interesting forces at work for the discount brokerage industry on the horizon. In this edition of the roundup, we take a look at the growing trend of commission-free trading and how it might be poised to take the world by storm. Next, we take a look what DIY investors were talking about both on Twitter and in the investor forums. Finally, we close out the roundup with a look at the upcoming investor education events.

From Zero to Hero

Somewhat akin to the running of the 4-minute mile or the existence of ‘gravitational waves’ the idea that online discount brokerages could offer “zero commission” stock trading seemed impossible until somebody went ahead and showed it could be done.

With firms like Robinhood, in the US, not only has commission-free trading gone from unthinkable to reality, much like the 4-minute mile, there are now multiple firms offering up zero commission trading and potentially many more looking at the model with some notion that they too can do the same.

Earlier this month, a piece in the Investors Chronicle, profiled the rise of the ‘uber discount broker’ in Europe, with the firm iDealing becoming the first online brokerage in Europe to offer commission-free trading as of December 2015. While limited in scope to a handful of smaller markets, it looks like zero commission trading has officially spread to and landed in Europe.

Interestingly, even though ‘commission-free trading’ is being met with mixed reactions in the US, it seems that Europe could be shaping up to be a bit of a battleground for commission-free trading.

We recently noted a hiring post on Robinhood’s career website signaling they too are eagerly looking to bring their commission-free trading model into Europe and perhaps the UK, which would put them in direct competition with iDealing. While there appears to be a number of regulatory challenges for both iDealing and Robinhood to overcome before being cleared to launch in the UK, it seems like a matter of time before either one or both are cleared to enter and massively disrupt the DIY investor market in Europe.

screenshot of Robinhood job posting

So what does all of this mean for Canadian discount brokerages?

One of the common threads amongst these new “uber discount brokerages” is the use of technology to drive down the operational costs of being a brokerage. They are often small in size and agile in the use of technology to do the heavy lifting. Interestingly, these firms are increasingly being viewed as tech or ‘fintech’ companies first and financial services companies second. In fact, looking at the continued success of Interactive Brokers and the extent to which technology has helped keep operational costs low, there is clearly a case to be made for focusing on IT development.

For the larger bank-owned online brokerages, this poses a significant challenge as they not only have to deploy a competitive trading experience, but they also have to ensure they live up to client expectations of a seamless experience between the banking and the investing touchpoints. A failure in one element of the business is enough to send many Canadians looking to a provider who can get these pieces to work.

With many of Canada’s largest discount brokerages still struggling to create user friendly, intuitive and convenient online experiences, it would be a significant disruption to the Canadian online brokerage landscape should a firm, such as Robinhood, decide to launch within Canada.

Yes, there would be barriers to overcome and trust to be built. What firms like Wealthsimple and other robo-advisors, as well as the relatively young Virtual Brokers have shown is that sometimes it doesn’t take that much time for a lower cost alternative to get noticed.

Another reason for the disruptive nature of zero-commission trading is that not only would ‘commission-free trading’ brokerages have a head start on operating within a no-commission framework, but they are also able to leverage their technological agility and talent pool to have a significant “technology edge” over their counterparts.

While it seems inconceivable that yet another discount brokerage could enter and succeed in the already crowded Canadian DIY investor market, the fact that the wave of zero-commission trading is already starting to spread globally means that it is likely a matter of time before the idea takes root here in Canada. And, just like the four-minute mile barrier being broken, it is now possible for investors and providers alike to envision a world in which zero-commission trading is possible.

Event Horizon

Love is in the air, and it’s an enticing week ahead for discount brokerage-sponsored investor education events. Here are some upcoming sessions that may be of interest to options enthusiasts, those who are interested in trading strategies and new to investing. ETFs, technical analysis and risk management round out this week’s selection.

February 16

NBDB – Introduction to Call Options – [Fr]

TD Direct Investing – Understanding Margin & Short Selling

RBC Direct Investing – The ETF Selection Process: Navigating the ETF Landscape – RBC Global Asset Management

Scotia iTRADE – Building a Better Portfolio Using ETFs: How to Build a Low-Cost and Efficient Portfolio using ETFs with Horizons ETFs

TD Direct Investing – Introduction to Canadian ETFs and ETF Options

NBDB – Tools and Technical Analysis with Michel Carignan – [Fr]

February 17

TD Direct Investing – Options as an Income Strategy

NBDB – Stop Orders: A Winning Solution Worth Knowing – [Fr]

February 18

TD Direct Investing – Technical Analysis – Candlestick Charting

NBDB – Introduction to Put Options – [Fr]

RBC Direct Investing – The ETF Selection Process: Navigating the ETF Landscape – RBC Global Asset Management

Discount Brokerage Tweets of the Week

There were cheers and jeers this week on Twitter. On a positive note, it looks like changes to user interfaces are paying off at a couple of brokerages while outages during trading hours took their toll on others. Mentioned this week were BMO InvestorLine, CIBC Investor's Edge, Credential Direct, Questrade, Scotia iTrade and TD Direct Investing.

From the Forums

Tailored Switch

In this post from the Personal Finance Canada thread on reddit, one user requested the community’s input on transferring from Tangerine to Questrade and whether or not this was the ‘smart move’ to make. Worth a read for those interested in the passive investing/CCP strategies.

Seeking Clari-fee-cation

In this post from the investing forum, one user has a question about stepping into the world of investing within a TFSA at Questrade. There’s some good information for those considering Questrade and the explanation of how ECN fees are incurred

Into the Close

That’s a wrap on this lighter-than-usual roundup. As a reminder to all the traders out there, the Canadian stock markets will be closed on Monday in observance of Family Day in Ontario. Markets will reopen for trading again on Tuesday. In addition to Family Day, it’s also Valentine’s Day and the NBA All-Star game this weekend so whatever your reason to celebrate, you’ve got a great setup to make this weekend a slam dunk!


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Discount Brokerage Weekly Roundup – February 5, 2016

It seems like Fox Mulder and Goldman Sachs share at least one more thing in common: they both want to believe. When the poster child for capitalism questions out loud whether or not capitalism actually is working as it should, there is definitely something paranormal happening. Canadian and US discount brokerages alike also want to believe that the recent downturn in stocks won’t spook investors.

In this week’s roundup we take a look at two sides of the race for dominance in online trading. Starting first with the most recent discount brokerage deals and promotions to emerge in the race to the RSP contribution deadline. From there, we take a look at the recent performance of the US online brokerages to gauge whether investors are trading more or less as a result of the recent market volatility. Next we’ll review the upcoming investor education events and then take a look at what DIY investors were talking about on Twitter and in the investor forums.

New Month, New Deals

A big story at Canadian discount brokerages this year continues to be the fierce competition to provide incentives and promotions to DIY investors.

In the initial week of February, Virtual Brokers stepped into an already crowded deals and promotions arena bringing the number of advertised promotions to 18 with an offer that pitted it clearly against Questrade’s recent success with the Apple watch (i.e. Apple store gift card) promo.

Although Virtual Brokers’ promotion is not exactly the same, it has many popular elements as their cross-town rival.

First, it has a tiered deposit structure so that the more a client deposits, the greater the reward. In this case, the reward is commission-free trades ranging from 25 (minimum deposit required: $15,000) through to 200 (minimum deposit required: $250,000).

Under their new “classic” commission pricing structure of $9.99 per trade (flat) this equates roughly to just under $250 to and $1998 in value (depending on the deposit).

In addition to the tiered offer, Virtual Brokers has also paired the tiered offer with an entry to a contest to win a $500 Apple gift card (which can be used towards an Apple watch for example). Previously, Questrade was the only Canadian discount brokerage leveraging the Apple watch as part of its promotional mix.

What is interesting about Virtual Brokers’ latest promotion is that it sets the deposit bar far higher than Questrade does in order to qualify for a modest incentive (VB’s deal requires $15,000 minimum whereas Questrade has 6 offers requiring $5,000 or less). That means the barrier to qualify for a promotion is much higher than with Virtual Brokers than with Questrade.

Another interesting observation is that with Virtual Brokers now in the deals arena there are only 4 online brokerages without some kind of publicized deal for DIY investors: CIBC Investor’s Edge, Interactive Brokers, Qtrade Investor and RBC Direct Investing.

Distribution of current discount brokerage deals & promotions (as of February 5, 2016)

That said, Interactive Brokers does offer a referral bonus (that benefits the referrer not so much the referee) and Qtrade Investor is running an RSP contest, however unlike in previous years, CIBC Investor’s Edge and RBC Direct Investing have yet to step forward with any major offers.

As the month progresses, competition should continue to heat up. As most of these offers show, however, many of the deadlines for these promotions fall after the RSP contribution deadline of February 29th which means that while there are some limited-time offers, there’s still plenty of selection for those that are looking to see what else pops up.

A Volatile Combination

Volatility may bring opportunity, but many DIY investors in the US pulled back on their trading in the most recent quarter. With the exception of one brokerage, most of the publicly traded US online brokerages saw less activity in the face of global equity volatility and crude oil in freefall.

One of the key indicators of that trading activity, known as “daily average revenue trades” (DARTs), saw quarter over quarter (QoQ) and year over year (YoY) declines across the board. DARTs specifically measure the total number of trades over trading days in a given period.

According to recent earnings releases from key players in the DIY brokerage space, including TD Ameritrade, Charles Schwab, and E*trade, retail traders were marginally less involved in recent swings. Out of all the discount brokerages researched, E*Trade showed the worst performance DART wise (displayed below) and on the new accounts front. New accounts for E*Trade tumbled 34% YoY, the firm is leading in alternative measures of client engagement however.

A key trend in two of the biggest discount brokerages was the client utilization of mobile apps for trading.

E*Trade indicated 14% of their 2015 DART volume was done on a mobile device. Similarly, TD Ameritrade set an internal record of 18% DART volume from mobile. Mobile trading will be a key variable for all online brokers going forward, as it represents a new age of engagement and functionality.

Ideally, the optimal combination for an online brokerage would be increasing DART volume while seeing increasing client account equity. This would indicate clients are engaged with the firm’s services and keen on putting capital to work. Fortunately, this was the case for Interactive Brokers, where customer equity was up 19% YoY with 4% DART growth vs 2014.

Interactive Brokers was also the clear winner new assets wise, while E*trade, TD Ameritrade and Charles Schwab found it harder to grow assets. Interactive Brokers Group stood out as their clients embraced their cutting edge technology and ramped up their activity (and equity) in the face of volatility. Of course, Interactive Brokers is certainly smaller than their peers so percentage growth can mask the difference that scale and size have on the ability to show positive growth.

Nonetheless, the trading habits at these particular firms show that the active traders are drawn to the volatility whereas many of the less or moderately active investors tend to step back and let the dust settle. For many DIY investors currently watching the Canadian markets, as well as several Canadian online brokerages there seems to be a growing hope that the dust settles sooner rather than later.

Event Horizon

What better way to beat the cold this month than to huddle up for an investor education seminar or webinar. Coming up this week are sessions on Technical Analysis, Registered Accounts, ETFs, Options and avoiding common trader pitfalls – and that’s all before Wednesday!

February 9th

NBDB – Introduction to Technical Analysis – Oscillators – [Fr]

TD Direct Investing – Building Wealth Through Registered Accounts

Scotia iTRADE – Top Mistakes Made by Investors with Pro Market Advisors

Desjardins Online Brokerage (Disnat) – Meet the 18-30 Broker@ge Team at 360d

February 10th

TD Direct Investing – Building Wealth Through Registered Accounts

Desjardins Online Brokerage (Disnat) – Discover the Benefits of the TFSA

NBDB – Equities and ETFs – [Fr]

RBC Direct Investing – The ETF Selection Process: Navigating the ETF Landscape – RBC Global Asset Management

February 11th

Scotia iTRADE – Options Trading: Myths versus Reality with Montreal Exchange

TD Direct Investing – Advanced Options

Discount Brokerage Tweets of the Week

DIY investors on Twitter paused to take a breath after a wild start to this year’s trading activity. Mentioned this week are CIBC Investor’s Edge, Credential Direct, Questrade, Scotia iTRADE and TD Direct Investing.

From the Forums

Asset A Location?

One of Canada’s largest online brokerages, TD Direct Investing, was the focus of this post on the Reddit personal finance Canada section. In particular, one user was curious to know why there was so much ‘in person’ activity required for an online investment.

Year Right

In this post from Canadian Money Forum, Interactive Brokers’ RSP contribution feature was a cause for confusion because it required individuals to select the tax year for the contribution to apply to. Read on to find out more about how this issue was finally resolved.

Into the Close

That does if for this edition of the roundup. Whether you’re gearing up for the “big game” this weekend or simply looking to take advantage of the ‘bad break’ in the markets – have a super weekend! For all the readers in BC, happy Family Day long weekend!

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Discount Brokerage Deals & Promotions – February 1, 2016

*Updated: Feb 2* While it still looks like winter across most of Canada, the deals and promotions section is a balmy +17 +18 at the outset of February.

Even though no new deals have launched at the beginning of February, this month is typically a very exciting month across the discount brokerage space. Throughout January, for example, there were 7 offers that went live as well as several contests being promoted by Canadian brokerages. As the RSP deadline (February 29th) draws closer, things are likely to get even more competitive.

A case in point is the entrance into the deals pool by TD Direct Investing. Ahead of the new month, TD Direct Investing revived a tiered commission-free trade offer with as many as 200 commission-free trades being granted to individuals depositing at least $100,000. As one Canada’s largest online brokerages, TD Direct Investing’s entry at this point signals that even the big players are doubling down their efforts into the RSP contribution deadline (February 29th).

Looking more closely at the discount brokerage deals currently being offered, Questrade once again dominates in the number and diversity of offers with 7 offers. Interestingly, 6 out of the 8 promotions from Canadian discount brokerages requiring deposits of less than $10,000 to qualify are from Questrade, indicating their aggressive pursuit of more modest depositors (and likely to be younger investors). In fact, looking at the following graph, it’s clear that Questrade (shown in bright green) is competing with offers above and below the most crowded deposit ranges. Questrade does have offers that apply at the $25,000 deposit level, however these are part of tiered offers, which is why they don’t appear directly on the graph below. That said, Questrade is clearly competing across the promotional board which is not something any other Canadian discount brokerage is currently doing.

Minimum deposit for current Canadian discount brokerage promotion offers vs. days to offer expiry (measured as of Feb. 1st 2016)
Minimum deposit for current Canadian discount brokerage promotion offers vs. days to offer expiry (measured as of Feb. 1st 2016)

Another interesting observation is that the most competitive deposit range appears to be between $20,000 and $50,000 with five discount brokerages (including several bank-owned brokerages) putting forward offers for deposits at these levels.

Finally, while RSP season appears to be quite busy, as shown in the chart above, the deadlines for many of the current discount brokerage deals expire well after the February 29th contribution deadline. We’ll keep an eye out for any new developments and of course, if there are any that we’ve missed, let us know here.

Expired Deals

No news to report here.

Extended Deals

No news to report here.

New Deals

*Updated Feb. 2: Well it didn’t take long for another Canadian discount brokerage to be drawn into the deals and promotions competition. Virtual Brokers has rolled out a new tiered commission-free trading offer that runs from the beginning of February through to the end of March.  Unlike previous promo offers from Virtual Brokers, their latest offer includes an entry into a draw for a $500 Apple gift card. This latest move is a direct response, it seems, to their cross town rival Questrade.  The tiered offer from Virtual Brokers requires a minimum deposit of $15,000 to qualify for at least 50 commission-free trades. See table below for more information.*

While technically not new for February, the latest offer from TD Direct Investing launched quite close to the beginning of the new month. Their latest offer is a revival of their tiered commission-free trade offer where new account openings may be eligible for 50, 100 or 200 commission-free trades for deposits of $25,000, $50,000 or $100,000+. See the table below for more information.

Discount Brokerage Deals

Company Brief Description Minimum Deposit Amount Commission/Cash Offer/Promotion Type Time Limit to Use Commission/Cash Offer Details Link Deadline
Jitney Trade A Sparx Trading exclusive offer! Use the promo code “Sparx Trading” when signing up for a new account with Jitneytrade and receive access to their preferred pricing package. n/a Discounted Commission Rates none For more details click here none
Open a new qualifying account with HSBC InvestDirect and you could be eligible to receive up to 30 commission-free North American equity trades. Be sure to read terms and conditions for full details. n/a 30 commission-free trades. 60 days Winter free trade promotion March 15, 2016
Open a new account (TFSA, Margin or RRSP) and receive $50 commission credit . Use promo code: kdkfnbbc $1,000 $50 commission credit none none none
Refer a friend to Questrade and when they open an account you receive $25 cash back and they receive either A) $25; B) $50; C) $75; D) $100; or E) $250 depending on the amount deposited amount. Enter code: 476104302388759 during account sign up to qualify. Be sure to read the terms and conditions for eligibility and additional bonus payment structure and minimum balance requirements. A) $1,000 – $9,999 B) $10,000 – $24,999 C) $25,000 – $49,999 D) $50,000 -$99,999 E) $100,000+ $25 cash back (for referrer per referral; $50 bonus cash back for every 3rd referral) For referred individuals: A) $25 cash back B) $50 cash back C) $75 cash back D) $100 cash back E) $250 cash back Cash deposited into Questrade billing account within 7 days after funding period ends (90 days) Refer a friend terms and conditions Code Number: 476104302388759 none
Open and fund a new account (TFSA, Margin or RRSP) with at least $1,000 and you may be eligible to receive 5 commission-free trades. Use promo code 5FREETRADES when signing up. Be sure to read terms and conditions carefully. $1,000 5 commission-free trades 60 days 5 commission-free trade offer December 31, 2016
Open and fund a new qualifying account (registered or margin) with at least A) $1,000; B) $25,000 or C) $50,000 and receive either A) 1 month; B) 2 months or C) 3 months of commission-free trading. Use promo code UNLIMITEDW16 when registering. Be sure to read terms and conditions for full details. A) $1,000 B) $25,000 C) $50,000 Commission-free trades A) 1 month B) 2 months C) 3 months 3 months unlimited trading March 4, 2016
Open and fund a new qualifying account (registered or margin) with at least A) $2,000; B) $25,000 or C) $50,000 and receive either A) 1 month; B) 2 months or C) 3 months of commission-free trading. Use promo code RSP2016 when registering. Be sure to read terms and conditions for full details. A) $2,000 B) $25,000 C) $50,000 Commission-free trades A) 1 month B) 2 months C) 3 months RSP 2016 Promotion March 1, 2016
Open and fund a new online trading account with Questrade with at least $5,000 and you could be eligible to receive 25 commission-free trades good for use for up to 1 year. Use promo code NEWYEAR2016 when applying to be eligible for this offer. Be sure to read the full terms and conditions for this promotion. $5,000 25 commission-free trades Jan. 1, 2017 25 Commission-free Trade for 1 Year Promotion February 29, 2016
Scotia iTrade If you refer a friend/family member who is not already a Scotia iTrade account holder to them, both you and your friend get a bonus of either cash or free trades. You have to use the referral form to pass along your info as well as your friend/family members’ contact info in order to qualify. There are lots of details/conditions to this deal so be sure to read the details link. A) $10,000 B) $50,000+ A) You(referrer): $50 or 10 free trades; Your “Friend”: $50 or 10 free trades (max total value:$99.90) B) You(referrer): $100 cash or 50 free trades; Your “Friend”: $100 cash or 50 free trades (max total value: $499.50) 60 days Refer A Friend to Scotia iTrade March 31, 2016
Open and fund a new account with Virtual Brokers with at least A) $15,000; B) $25,000 C) $50,000; D) $100,000 or E) $250,000+ and you may be eligible to receive A) 25; B) 50; C) 100; D) 150 or E) 200 commission-free equity (stock & ETF) trades. In addition, qualifying applicants will also be entered into a draw for a $500 Apple gift card. Use promo code 200APPLEWATCH when signing up to be eligible. Be sure to read the terms and conditions for full details. A) $15,000 – $24,999 B) $25,000 – $49,999 C) $50,000 – $99,999 D) $100,000 – $249,999 E) $250,000+ A) 25 commission-free trades B) 50 commission-free trades C) 100 commission-free trades D) 150 commission-free trades E) 200 commission-free trades 90 days (cash for commissions to be credited back Aug. 2, 2016) Virtual Brokers RRSP 2016 Free Trade Promo March 31, 2016
Open and fund a new account (or existing clients can transfer in new assets) at Credential Direct with at least A) $15,000; B) $50,000; C) $150,000; D) $500,000 or E) $1,000,000 and you may be eligible to receive at least A) $75; B) $125; C) $200; D) $500 or E) $1,000. Applicants need to use code CASH2016RSP and fund account in order to qualify for cash back offer. Be sure to read terms and conditions for full details. A) $15,000 – $49,999 B) $50,000 – $149,999 C) $150,000 – $499,999 D) $500,000 – $999,999 E) $1,000,000+ A) $75 B) $125 C) $200 D) $500 E) $1,000 Cash credited to account on Oct. 15, 2016. Cash Back Offer March 15, 2016
Open and fund a new National Bank Direct Brokerage account with at least A) $20,000 or B) $100,00 and you may be eligible to receive up to either A) $500 or B) $1,000 in commission credits. Use promo code CashBack2016 when registering for an account to qualify. Be sure to read full terms and conditions for additional details. A) $20,000 – $99,999 B) $100,000+ A) $500 in commission credit B) $1,000 in commission credit 90 days Cash back promo March 31, 2016
Scotia iTrade Open and fund a new account at Scotia iTrade with at least A) $25,000; B) $50,000; C) $100,000 or $250,000+ and you may be eligible to receive up to A) 75; B) 150; C) 300 or D) 500 commission-free trades. Use promo code TRADES-RSP16 when opening account to be eligible. Be sure to read terms and conditions for full details. A) $25,000 – $49,999 B) $50,000 – $99,999 C) $100,000 – $249,999 D) $250,000+ A) 75 commission-free trades B) 150 commission-free trades C) 300 commission-free trades D) 500 commission-free trades 90 days Free Trade Offer March 31, 2016
Open and fund a new account at TD Direct Investing with at least A) $25,000; B) $50,000 or C) $100,000+ and you may be eligible to receive up to A) 50; B) 100 or C) 200 commission-free trades. Be sure to read terms and conditions for full details. A) $25,000 – $49,999 B) $50,000 – $99,999 C) $100,000 A) 50 commission-free trades B) 100 commission-free trades C) 200 commission-free trades 60 days Commission-free Trading Offer April 15, 2015
Disnat Disnat is offering new & existing clients $500 in commission credits which can be used for up to 6 months. To be eligible, new/existing clients need to deposit $50,000 into a Disnat account. You’ll have to call 1-866-873-7103 and mention promo code Disnat500. See details link for more info. $50,000 $500 commission credit 6 months Disnat $500 Commission Credit Promo March 31, 2016
BMO InvestorLine If you (an existing BMO InvestorLine client) refer a new client to BMO InvestorLine and they open an account with at least $50,000 the referrer and the referee may both be eligible to receive $50 cash. To qualify the referee must use the email of the referrer that is linked to their BMO InvestorLine account. See terms and conditions for full details. $50,000 You(referrer): $50; Your Friend(referee): $50 Payout occurs after 45 days (subject to conditions). BMO InvestorLine Refer-a-Friend June 30, 2016
Open or fund an eligible account with at least $100,000 and make at least one commission generating trade and you may be eligible to receive a $500 gift card for the Apple Store. Use promo code APPLEWATCH when signing up. Be sure to read terms and conditions carefully. $100,000 $500 Apple Store gift card Gift card will be sent within 30 days of client meeting eligibility requirements. Apple Watch Promo March 31, 2016
BMO InvestorLine Open a new qualifying account with BMO InvestorLine, and fund it with at least A) $100,000 or B) $250,000 in net new assets and you may be eligible to receive either A) $200 cash back and 100 commission-free equity trades or B) $600 cash back and 100 commission-free equity trades. Use promo code WinterSD600 when signing up to be eligible. Be sure to read the terms and conditions for more details on the offer. A) $100,000 – $249,999 B) $250,000+ A) $200 cash back + 100 commission-free equity trades. B) $600 cash back + 100 commission-free equity trades. 60 days for equity trades. Cash back will be deposited the week of Oct. 10, 2016. Commission rebates will be paid week of Oct. 10, 2016. Winter 2016 Promotion March 1, 2016

Expired Offers

Last Updated: Feb. 2, 2016 17:30 PT

Transfer Fee Deals

Company Brief Description Maximum Transfer Fee Coverage Amount Minimum Deposit Amount for Transfer Fee Eligibility Details Link Deadline
Transfer $15,000 or more to a new Virtual Brokers account from another brokerage and Virtual Brokers may reimburse up to $150 in transfer fees. See terms and conditions for more information. $150 $15,000 Virtual Brokers 2016 RRSP Promo March 31, 2016
Transfer $15,000 or more to RBC Direct Investing and they will pay up to $135 in transfer fees $135 $15,000 Transfer Fee Rebate Details none
Transfer $25,000 or more from another brokerage and Credential Direct will cover up to $150 in transfer fees. Use promo code SWITCHME when signing up to qualify for the transfer promotion. $150 $25,000 Credential Direct Transfer Fee Rebate none
Qtrade Investor will reimburse your transfer fee up to $150 when transferring a balance of $10,000 or more. For reimbursement, please mail or fax a copy of your statement from the transferring institution that shows the transfer charge to Qtrade Investor at 604.484.2627 and indicate your Qtrade Investor account number. $150 $25,000 Transfer Fee Rebate none
Move your brokerage account to Questrade and they’ll cover the transfer-out fee up to $150. $150 $25,000 Transfer Fee Promo none
Transfer at least $25,000 or more in new assets to TD Direct Investing when opening a new account and you may qualify to have transfer fees reimbursed up to $150. Be sure to read terms and conditions for full details. $150 $25,000 Commission-free trade promo April 15, 2016
Scotia iTrade Transfer at least $25,000 or more in new assets to Scotia iTrade when opening a new account and Scotia iTrade may reimburse transfer fees up to $150. Be sure to read terms and conditions for full details. $150 $25,000 Free trade offer March 31, 2016
Transfer $25,000 or more into a CIBC Investor’s Edge account and they will reimburse up to $135 in brokerage transfer fees. Clients must call customer service to request rebate after transfer made. $135 $25,000 confirmed with reps. Contact client service for more info (1-800-567-3343) none
Transfer $25,000 or more to a National Bank Direct Brokerage account and they will pay up to $135 plus taxes in transfer fees $135 $25,000 Transfer Fee Rebate none
Disnat Disnat is offering up to $150 to cover the cost of transfer fees from another institution. To be eligible, new/existing clients need to deposit $50,000 into a Disnat account. You’ll have to call 1-866-873-7103 and mention promo code Disnat500. See details link for more info. $150 $50,000 Disnat $500 Commission Credit Promo March 31, 2016
Scotia iTrade Transfer $15,000 or more to Scotia iTrade from another Canadian brokerage, and iTrade may pay up to $150 in transfer fees. $150 $15,000 500 Free Trade or $500 Cash Back Offer December 31, 2015