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Discount Brokerage Weekly Roundup – July 29, 2016

The summer Olympics are just around the corner and with them will come all kinds of excitement, fanfare and of course, the widely anticipated opening ceremonies. While there aren’t typically flag bearers, parades, fireworks or exotic choreography, there are a handful of Canadian discount brokerages who try to make opening an online trading account feel exciting.

In this week’s roundup we take a look at some interesting maneuvers in the US online trading space that signals where online brokerages might be looking for opportunity to grow their top (and bottom) line. From there we’ll take a quick look at the promotions set to expire heading into August to see which deals stay and which ones don’t make the cut. We’ll also take a look at what investors were thinking and talking about this past week on social media and investor forums.

E*Trade Exercises Options to Buy OptionsHouse

All across the board in the US, there are signs that some of the final shackles of the great recession are finally coming loose.

In the online brokerage space, one of the brokerages that was heavily impacted by subprime lending practices (E*Trade Financial) finally took the milestone step of acquiring a competing brokerage, OptionsHouse, for $725M USD. The good news for E*Trade is that they were in a financially strong enough point to raise the funds and move forward instead of backward.

E*Trade wants to further entrench itself with the active trader community and their latest move does just this. In particular, E*Trade will be gaining a reasonably profitable and active trading client base that tends to trade considerably more than their existing clients. Options trading capabilities are also more profitable a product.

The Numbers

Now that OptionsHouse is part of a publicly traded company, we can get a glimpse of its numbers. According to E*Trade’s press release, OptionsHouse clients have $3.6B USD in assets. 63% of the firm’s volume is options and they did about $675 in revenue per account last year (154k accounts and $104M).

Using Cash

The acquisition puts to work about 44% of E-Trade’s idle cash and cash equivalents. The firm will still have over $900M USD in cash after the purchase.

But E*Trade is not only getting OptionsHouse – there’s also a perk of the talent coming with it.

History

General Atlantica, private equity firm, saw an opportunity to consolidate the brokerage business in late 2014. The firm bought OptionsHouse and merged it with another acquisition, tradeMONSTER.

Both firms specialized in options. tradeMONSTER was cofounded by the Najarian brothers who frequently appear on CNBC as trading personalities. OptionsHouse on the other hand was founded by PEAK6 – a large proprietary trading firm in Chicago, located in the historic CBOT building.  General Atlantic, merged tradeMONSTER and OptionsHouse to form Aperture Group in January of 2015.

Now just about a year and a half later, General Atlantic is calling on their inner trader to flip this to E-Trade.

While we don’t know General Atlantic’s cost basis, there’s a good chance they are in the green.

Heading into Expiry

With only a few more days left in July, the new deals cycle is almost here. While deals and promotions from Canadian discount brokerages have been lighter this spring/summer compared to last, there are still signs that there may be more deals on their way in August.

For instance, Virtual Brokers, who had not been active in the deal space for quite some time, has now launched several offers in 2016. It seems likely that Virtual Brokers will be pursuing new accounts and promotions a bit more actively in the past.

At the other end of the size spectrum, TD Direct Investing this week held a snap one-day promotion for clients. The offer included one commission-free trade as part of a ‘client appreciation’ maneuver.  With the promotional landscape having thinned out, it was remarkable that TD was the one rolling out the deal.

In the meantime, there are a couple of deals from larger bank-owned brokerages BMO InvestorLine and Scotia iTRADE that were slated to expire at the end of the month. For its promotion, BMO InvestorLine actually pushed out an extension to the promotion so that it now expires at the end of August. For Scotia iTRADE, there haven’t been any extensions (yet) on deals related to new accounts.

With a long weekend for many Canadians falling on August 1st it will be interesting to see which brokerages are actually going to update the deals sections on their sites on (or before) the turn of the new month.

Discount Brokerage Tweets of the Week

Another week and another set of platform outages. This past week there was a significant outage with Scotia iTrade which got a lot of active traders (understandably) fired up.

Mentioned this week were Questrade, Scotia iTRADE, TD Direct Investing, and Virtual Brokers.

From the Forums

Pros and Cons: Comparing Questrade and Virtual Brokers

Even though pricing changes have forced an evolution for Virtual Brokers’ price point, there are still common questions on how Questrade compares to Virtual Brokers. In this post from reddit, it was interesting to see one how one user broke down their experiences with both these popular discount brokerages.

Out of Orders

As mentioned above, this past week Scotia iTRADE’s trading system went down – much to the chagrin of many clients. In this post from RedFlagDeals.com’s personal finance section, multiple users chimed in on the experience with Scotia as well as the help.

Into the Close

That’s a wrap for another edition of the roundup. Have a safe and happy holiday weekend and remember that Canadian markets are closed on Monday.

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Discount Brokerage Weekly Roundup – July 22, 2016

With the activities going on in the US republican convention this week, it was difficult to escape the news cycle that was dominated by the upcoming US elections in November. Alas there are no plagiarized speeches, comb-overs or bad spray tans (at least that we know of) in the online brokerage space. Given the hubbub in the US, it seems fitting that this week we also shine a spotlight on US-based online brokerages as they reported their quarterly earnings and provided a fascinating glimpse behind the curtain of the world of an online brokerage.

In this week’s roundup we take an in-depth look at the recent earnings from the major publicly traded US online brokerages as well as distill out some of the more fascinating talking points from the heads of the brokerages themselves. From there we’ll move to the borderless medium of Twitter to find out what had Canadian DIY investors talking about this week. Finally, we’ll close off the roundup with a few interesting conversation threads from Canadian DIY investors in the Canadian investor forums.

Feel the Earn

This past week, the latest quarterly numbers hit the tape for several of America’s largest publicly-traded discount brokerages. As a group, the four main publicly traded discount brokerages (Charles Schwab, TD Ameritrade, E*Trade Financial and Interactive Brokers) pulled in a combined $3B USD in revenues for the quarter ending June 30th – not a bad haul considering the ultra-low interest rate environment. Looking at these revenue figures, it is clear that they have not stood still waiting for them to rise. Instead, they have changed their model to incorporate everything from extra fees, fee-based advice and even integrated ‘robo-advisor’ products into the mix.

Here are some highlights from the most recent earnings reports.

Profitability

Quarterly income per account brings headline numbers into perspective and also indicates how active each firm’s users are. These stats are displayed below, but the key takeaways are as follows.

Interactive Brokers, despite having doubled their client base over the past five years to 357k clients, still has the lowest number of accounts compared to their peers.  That said, Interactive Brokers is clearly holding its own when it comes to profitability compared to its peers. IB clients on average generated $596 of net income per account. On the other hand, the least profitable per account firm was TD Ameritrade which came in at $34.78 of income per account, however keep in mind Ameritrade has over 6.9M accounts.

Net Income per Client Account at US Online Brokerages Quarter Ending June 2016

DARTs

While all the other US brokerages houses showed mixed results DARTs (daily average revenue trades) wise, TD stood apart from the competition. TD posted the highest DART growth year-over-year, while Schwab had the hardest time quarter over quarter. The chart below displays DARTs for each firm.

Far from being the ‘apocalyptic’ event that many news headlines would have suggested, the Brexit volatility tended to benefit the online brokerages with, according to E*Trade’s CEO, many traders and investors jumping in to purchase securities that had sold off.

% Growth of Daily Average Revenue Trades (DARTs) at US Online Brokerages Quarter Ending June 2016.

Technology & Platform Improvements

All these firms have acknowledged the importance of staying on the cutting edge of technology. As online brokerages, this should come as no surprise. Nonetheless, one of the biggest themes of discussion in company conference calls was the “digital advice” aka robo-advisors.

For example, Schwab released updates to their “Intelligent Portfolios” retirement planning feature. This application uses user generated initial investment, time and income stats to estimate monthly income levels. As the firm puts it, “clients now have more flexibility in setting their desired monthly income and receive suggestions on adjustments to meet their goal.”

E*Trade Financial also reported in on their robo-advisor product line, known as the “Adaptive Portfolio” which launched in June and has attracted $100M in assets under management since debuting the service. This application is E-Trade’s take on targeted asset allocation and automatic rebalancing, a hybrid strategy between completely self-directed and a managed account.

TD Ameritrade also rolled out a “digital upgrade” to their Amerivest service in June which will now enable Ameritrade to compete with its peers in the robo-advisor space. While not a full robo-advisor service just yet, the fully digital platform is forecasted to roll out in the fiscal year 2017.

Interactive Brokers continued to update their hallmark Trader Workstation desktop application. From Interactive Brokers, there was the admission that market making isn’t the business it used to be. After making only $5M this quarter, the lowest amount in the last 96 quarters, the writing is on the wall for this business unit to go out to pasture. It begs the question, if it’s hard for the so-called pros to make money by making markets, how well can individual investors fare?

Overall, despite the low interest rate environment, US online brokerages have managed to weather the storm by getting creative and offering a spectrum of services for investors. The biggest issues to watch over the next several months in the US will be the roll out of Department of Labor (DOL) rules on investor protection as well as the continued ramping up of robo-advisors.

These are two particularly important points for Canadian discount brokerages to monitor as well. The robo-advisor space in Canada is already becoming a crowded field, considering the Canadian market’s size, and so any Canadian discount brokerage contemplating entering into the space (following the lead of the US brokerages) will have to do so quickly and effectively.

The other item for Canadian brokerages to learn from is the role/impact of regulatory reforms (such as CRM2) that will force brokerages to be more efficient and effective in their use of technology. Already technology is clearly where Canadian brokerages, big and small, are trying to get right albeit with varying degrees of success. Throwing in the added pressure to ensure fees are disclosed properly and in a timely fashion means that brokerages might not focus as much on innovating as they do on ensuring they stay within the boundaries of the regulators.

Discount Brokerage Tweets of the Week

Even though there was a lot of heat outside and on Twitter, there was some high praise sent to RBC Direct Investing on their new digital look and feel. Mentioned this week on Twitter were Questrade, RBC Direct Investing, Scotia iTRADE, TD Direct Investing and Virtual Brokers.

From the Forums

Interface Dialogue

RBC Direct Investing rolled out the latest upgrade to their online trading interface. Reactions to the new look and feel were definitely mixed, as seen in this post on RedFlagDeals.com’s forum. Click to learn more about the various reactions and perspectives on whether the new site hit or missed the mark with DIY investors.

Fee-ling Down

One of the perceived advantages of going with the deeper discount brokerages, such as Questrade, is that DIY investors can save quite a bit on commissions. While commission pricing isn’t the only factor to consider, it is an important one. In this post from Canadian Money Forum, one reader got a bit more than they bargained for with ECN fees at Questrade. Click to read more.

Into the Close

That’s a wrap on another wacky week. Despite the dour headlines, markets continue to push higher. Enjoy the ride while it lasts and have a great weekend!

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Discount Brokerage Weekly Roundup – July 15, 2016

Even when the world appears irrational, markets still move to beat of their own drum. Against a backdrop of turbulent headlines, markets in the US have managed to hit new all-time highs. For DIY investors in Canada, however, it is an interesting moment. As stock prices move higher, this will invariably attract investors back into the mix however most Canadian discount brokerages have yet to ramp up their marketing efforts to capture investor interest. Ironically, it seems that the Canadian discount brokerages are also having trouble timing the market.

In this week’s roundup we take a look at the clues about current DIY investor sentiment that were revealed by one US online brokerage and what that might mean for brokerages heading into earnings season. Next we take a look at one major bank-owned discount brokerage that took a bold move forward in the social media space. From there we’ll recap what investors were talking about on Twitter and in the investor forums.

Sentimental Value

It takes two to tango and also to make a market. In the case of the latter, it’s an ongoing debate between those who think buying is smarter and those who think selling is. One US-based online brokerage, E*TRADE Financial, released the results of its regular survey of ‘experienced investors’ which showed that there many shades of grey between the lines separating buyer from seller.

While not the most scientific of approaches, there was an interesting portrait of the DIY investor that could be painted based on looking at the ‘big picture’ of the data.

For example, it appears that when it comes to trading and markets, most investors associate their sentiment about the markets with the movie title “Dazed and Confused”.  Although this number surged to 40% for Q3 of 2016 (up from 31% in Q2 of 2016), the fact that it has consistently been the top answer since Q3 2015 implies that a fair portion of experienced investors feel this way most of the time.

Another interesting observation is that most of these experienced investors would recommend individual stocks as the best option for friends/family thinking of getting into the markets at this moment. Remarkably, after stocks, equity mutual funds were the most popular recommendation rather than their lower priced counterparts, ETFs. That said, there has been a growing number of investors who seem to think that bonds would make a good investment to get into. When lined up against what’s been happening in the world and with a US election coming in November, this seems to imply that traders have been positioning for the “fear trade” for quite some time.

On the business side for discount brokerages, whether this forecast translates into more or less trading has real consequences. Next week, another US-based online brokerage, Interactive Brokers, will report its quarterly earnings. With markets hitting new all-time highs, volatility from the Brexit vote as well as other election related uncertainty, it will be interesting to see whether the fear of missing out trumps the fear of loss at least for another quarter.

Wanna Chat?

For those who still think that social media is all hype, selfies and food pics, any recent footage from major news events or articles writing about them probably contain or are based on content from social media. Donald Trump also took to Twitter to announce his running mate for Vice President for what it’s worth.

This past week, TD Direct Investing took the bold step of launching a DIY investing Q&A on Twitter that went reasonably well. It was a definite gamble from the big green given the amount of flack it has been catching from the intermittent (but unfortunately too frequent) outages from its flagship trading platform WebBroker. Nonetheless the social experiment was a success in that there were a number of influential Canadian personal finance bloggers/personalities fielding interesting questions about investing (and also because TD emerged relatively unscathed).

We’ve captured the 350+ tweets that were exchanged over the course of the session and presented them below for anyone interested in reviewing the conversation.

Here are the 10 topics that were covered:

  1. Why should someone tackle DIY investing? Is the juice worth the squeeze?
  2. What mistakes did everyone make when they first started DIY investing? What should 1st timers be aware of?
  3. Honestly, how hard is it really to DIY invest? How much reading and math do you have to do?
  4. Where should you get started when it comes to making your first trade?
  5. When is the best time to buy stocks and then sell them?
  6. If you have debt, should you be investing?
  7. How are you investing? In an RRSP, TFSA or other?
  8. Any tips on what to invest in if you want to grow a housing down payment ASAP?
  9. If the market is down in Canada, should you wait to invest until times are better?
  10. What tools do you use to make it easier to build your confidence as an investor?

Overall the chat was an informative session that offered bite-sized pieces of insight into the world of DIY investing. Thematically it appeared that “slow and steady” was the central message of the talk.

It was clear that there were lots of opinions from the various financial bloggers in attendance and it was encouraging to see that at least some individual investors were participating in the conversation too. With most things personal finance, however, keeping the responses brief but informative was a challenge, especially when some of the questions take some length to explain fully. Nonetheless, there were lots of thanks being passed around for the useful information and for the opportunity to bounce questions off the Canadian personal finance community.

At one point, the #DIYInvesting hashtag was noted as “trending” in Canada indicating that this topic floated to upper layers of what was being discussed in Canada at the time the Twitter chat was happening.

Strategically, this was also a very interesting move for TD Direct Investing for several reasons. First, they were able to score some air time by having multiple participants providing answers and participating in the conversation. In fact, this was a great move by TD Direct Investing to change the conversation away from the issues plaguing WebBroker into something more positive and controlled that scores points with prospective and existing customers.

Another reason this was such a strategic win for TD Direct Investing is because they managed to dominate the conversation on the hashtag #DIYInvesting. One of TD Direct Investing’s direct competitors, Scotia iTRADE has also been using this hashtag as part of their marketing efforts however as was clearly seen over the course of the Twitter chat, there were no references to Scotia iTRADE (or any other brokerages). This is not to say that other brokerages can’t or won’t piggy back on the greater awareness of the #DIYInvesting handle, but there is definitely some ground that TD Direct Investing managed to gain at the expense of other brokerages’ attempts to create a conversation around DIY investing.

TD Direct Investing has come a long way on Twitter despite them having their own handle for a relatively short amount of time. For other Canadian discount brokerages who are contemplating how to compete in the digital landscape, this latest move by TD Direct Investing should raise some eyebrows and force everyone else to step up their game. #ShouldBeFun

Discount Brokerage Tweets of the Week

Technology on the fritz seemed to be yet another theme of why DIY investors reach out to online brokerages via Twitter. Could be the massive heat wave in Toronto that got tempers a little shorter than usual. Mentioned this week were Qtrade Investor, Questrade, RBC Direct Investing, Scotia iTRADE, TD Direct Investing and Virtual Brokers.

 

From the Forums

Getting to Know You

For anyone signing up for an online trading account, one of the questions that inevitably comes up is how much trading experience you might have. In this post from reddit’s Personal Finance Canada section, one user was curious as to why that happens.

Wrong Turn

Transferring from one brokerage to another involves quite a bit of paperwork, a bunch of patience and a whole lot of trust that things will go smoothly. Unfortunately for one reddit user, their experience in transferring an RRSP account into Questrade did not go as planned. In this post, find out what happened and how Questrade attempted to help get things back on track.

Into the Close

That’s a wrap on another crazy week. With all of the heavy news here’s something a little more uplifting to close out on. Whatever you happen to get up to this weekend, have some summer fun, stay cool and see you for a fun earnings-filled week next week!

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Discount Brokerage Weekly Roundup – July 8, 2016

Bulls will be bulls. On a day when grim news captured the headlines, the S&P 500 managed to put it all in the rear-view mirror and touch a new record high intraday. Despite what naysayers are nay-saying, the numbers on the tape tell a different story. For Canadian discount brokerages, the news cycle is relatively quiet. The numbers coming out of brokerages, however, are doing most of the talking at least when it comes to deals and promotions and where brokerages are seeking out opportunities.

In this week’s roundup we take a look at the latest deals that were revived after the Canada Day long weekend. From there we look at one online brokerage that is banking on innovation as the path to winning against bigger bank-owned competitors. From there we’ll take a look at what investors were chatting about on social media and in the investor forums. Saddle up.

Guess Who’s Back?

This past week saw a number of deals get a reboot from several Canadian discount brokerages.

First, the refer-a-friend offers from both BMO InvestorLine and Scotia iTrade, which originally expired at the end of June were picked up again and renewed well into 2016. While BMO InvestorLine had updated their terms and conditions at the time of writing, Scotia iTrade had not (although they confirmed the referral offer is still active). Until the revival of these two offers, Questrade held the sole refer-a-friend promotion among Canadian discount brokerages heading into July. As we referenced previously however, it was unlikely that other brokerages would allow Questrade to remain unchallenged for too long.

The third offer that was revived was Desjardins Online Brokerage’s $500 commission credit offer. Having been live for well over a year and a half, this deal is now active again through to the end of August.

Currently, there are 24 advertised offers from Canadian brokerages across the four categories we track.

Offers from Canadian Discount Brokerages (July 2016)

What is interesting about the kinds of offers currently being advertised, however, is that contests and other promotions are nearly at the same levels as more popular cash back/commission credit or transfer fee promotions. Another interesting observation is that, Questrade now shares the title of brokerage with the most number of advertised offers with Scotia iTrade.  Surprisingly, Desjardins Online Brokerage is close behind, edging out other brokerages, including its cross-town rival National Bank Direct Brokerage.

With such a close race between providers, there is certainly more of an opportunity for any of the Canadian brokerages to make a move to become a dominant player in the promotional space. Virtual Brokers has certainly been attempting to compete with other brokerages in the deals section by offering up new deals every month or so. Even with these efforts, however, they’re still lagging. That said, should Virtual Brokers decide to bring back their referral offer as a standing promotion as well as a standing transfer fee coverage offer, they would definitely win some of the spotlight that Questrade has given up in this space over the past few months.

As competition heats up along with the summer weather, it will be interesting to see which offers currently scheduled to expire at the end of July will either get renewed or replaced and whether or not one brokerage reaches to claim top spot in the deals arena.

Widening Circle

One of the interesting side effects of the low interest rates on online brokerages in both the US and Canada is the squeeze on their revenues. Without lending generating substantial revenues, online brokerages are left to other streams like fees and commissions to keep the lights on and servers running. Of course, in order to make up for the shortfall in commission revenues from falling prices, brokerages, especially at the “discount” end of the commission spectrum (such as Questrade and Virtual Brokers) have turned to more creative endeavours to boost revenues.

This past week, BBS Securities, parent of Virtual Brokers, announced that they have partnered with one of Canada’s newest stock exchanges, Aequitas Neo Exchange, in order to provide Platform Traded Funds (PTFs) to Virtual Brokers’ institutional clients. More importantly, however, Virtual Brokers is already signaling that they wish to become the first Canadian discount brokerage to offer PTFs.

In a nutshell PTFs help to simplify the trading (and thus lower the cost) of mutual funds by integrating with securities trading platforms (for more background on PTFs check out this article from the Financial News). This makes it easier for advisors and dealers to process mutual fund orders which, in turn, can result in savings for investors. While it will likely take investors some time to untangle the difference between an ETF and a PTF, the bottom line is that innovation in how the financial services world delivers a very popular product (mutual fund) has resulted in lowered costs for investors.

For Virtual Brokers, the headline and optics of embracing a “fintech” solution positions them as a firm that is continuously innovating – something that the Globe and Mail has pointed out about Virtual Brokers in several of its discount brokerage rankings. Interestingly, the fact that this solution is aimed at their advisor client base means that Virtual Brokers is continuing to diversify its opportunities, something it has already done in the robo-advisor space.

The bigger picture indicates that the online brokerage space and “DIY investing” are clearly not enough to sustain most Canadian discount brokerages, so it is interesting to see how different firms are broadening their service offerings. It does beg the question, though, that if the ‘traditional’ discount brokerages are struggling to keep up with all of the changes in services and products, how can DIY investors do the same?

Discount Brokerage Tweets of the Week

Battling technology issues in the summer heat has made for some interesting feedback to brokerages. Mentioned this week are Questrade, Scotia iTRADE, TD Direct Investing and Virtual Brokers.

From the Forums

Bank to Bank

Making the decision to switch to a bank-owned discount brokerage is a challenge for some DIY investors because banks are usually hard to distinguish from one another. In this post from RedFlagDeals.com’s investing forum, one user wants to find out which bank-owned brokerage is better: BMO InvestorLine or Scotia iTrade?

Tipping Point

Getting started with DIY investing is a challenge for many, mainly because there is a lot of trial and error. Hopefully for most investors, the errors aren’t too costly out of the gate. In this post from reddit’s Personal Finance Canada section, one user asks for any advice or tips for starting out using TD’s WebBroker.

Into the Close

That’s it for another edition of the roundup. This weekend is filled with all kinds of excitement (and investing metaphors) for the folks attending the Calgary Stampede. Regardless of which rodeo you follow, there are plenty of reasons to hold on to your hats and keeping your heads up going into next week. Have a great weekend!

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Discount Brokerage Weekly Roundup – July 1, 2016

Happy Canada Day! The recent visit of US President Barack Obama to Canada underscored the importance of the two countries’ working relationship. Interestingly, at least one US online brokerage has managed to maintain its presence in Canada as part of its international expansion plan and the writing on the wall suggests that it won’t be the last US online brokerage to make a push north. For Canadian online brokerages, the clock is ticking and between the coming wave of robo-advisors and pressures to step up their game.

In this week’s roundup we take a look at the latest promotional offers to hit the deal wire at the outset of a new month. Following that we’ll review the latest metrics from one US online brokerage that should raise more than a few eyebrows at Canadian online brokerages. From there we’ll take a look at the latest chatter from Canadian investors around social media and in investor forums.

Deal Breaker

It looks like Great Britain wasn’t the only one making an exit this past week. The Canadian discount brokerage landscape saw yet another series of brokerages deciding to pull offers off the table at the roll-over into a new month. At the outset of July only one brokerage, Virtual Brokers, launched a new offer while brokerages such as BMO InvestorLine and Scotia iTRADE let their referral offers lapse. The biggest stories from this month’s deals and promotions section however concern Desjardins Online Brokerage and the state of referral programs.

Starting first with Desjardins Online Brokerage, it appears that their very long-standing promotion of offering up to $500 in commission credits for a $50,000 deposit has finally been retired. This offer initially launched back in 2014 and has been running strong ever since. There were various moments where the offer was scheduled to expire only to be renewed again for months at a time. With its removal, however, this leaves Desjardins Online Brokrerage with just a handful of offers.

One offer, for example, provides $50 in commission credits to DIY investors 18 to 30 years old. The other offers are directed toward individuals with assets over $500,000 as part of their ‘prestige’ program.  This puts Desjardins Online Brokerage in a tricky position given that their fiercest competitor, National Bank Direct Brokerage, has launched a margin account discount offer that includes lower trading commissions and lower borrowing rates for margin.

The second big story from the deals and promotions space at the outset of July is the expiration of referral programs by brokerages other than Questrade.

At the beginning of July, Questrade has the enviable position of being the only Canadian brokerage to be advertising a current referral program. Competitors, BMO InvestorLine and Scotia iTRADE both have refer-a-friend agreements listed on their websites but details on those offers clearly state the offers expired June 30th.

While it is unlikely that either Scotia iTRADE or BMO InvestorLine wish to concede market share by abandoning this low cost onboarding strategy, the evolving landscape of online brokerage promotions suggests that brokerages are prepared to take all kinds of creative approaches to lower their own costs to stay competitive.

Follow the Brexit Signs

While most investors dislike market volatility there are certainly others in the market place who look forward to it. One is definitely the media who took full advantage of the heightened anxiety with the Brexit referendum. The other group that enjoys market volatility are active traders. And, as seen with the outcome of the Brexit vote, there was ample market volatility to keep traders locked onto their screens.

For Interactive Brokers, June appeared to be a great month for their key metrics. Specifically, they saw an 8% spike in new accounts over the previous month which will probably earn the envy of their fellow online brokerages. Another interesting observation from the metrics report is the inclusion of the basket of currencies (and their respective weights) that Interactive Brokers manages. In particular, what is interesting is that Interactive Brokers operates in many international markets and that they are factoring in the relative importance of China to their business. This is not the first time this month a US brokerage has relayed the importance of China to their growth plans. Startup online brokerage Robinhood, who offers commission-free trading, announced they have expanded into China by partnering with Baidu (the leading search engine in China) to enable Chinese citizens to trade US stocks and ETFs.

Canadian online brokerages who are looking to attract active investors/day traders certainly have their work cut out for them in trying to compete with Interactive Brokers. As one of a small number of firms in Canada that offer international trading, Interactive Brokers continues to be a formidable online brokerage to compete with in the US, Canada and other international markets.

Discount Brokerage Tweets of the Week

 

 

From the Forums

Solid Platform

Trading technology being what it is in Canada is somewhat limited. For one online investor in this reddit post, figuring out what else is out there prompted some interesting suggestions and reviews from fellow community members.

R is for Reliability

For serious investors, price is one thing but reliability is paramount. Being able to get into and out of a trade how and when you need to can be worth the few extra dollars per trade – think of how expensive the alternative can be. In this post on the Canadian Money Forum, one DIY investor pitches the question of ‘which brokerage is most reliable’ to the crowd and gets some interesting perspective in return.

Into the Close

That’s a wrap for this shortened trading week. Have a safe and enjoyable Canada Day weekend, and of course, for those who decide to trade the US markets a quick reminder that Monday will also be a day off trading the US markets. As a shoutout to the recent visit from US President Obama, here’s a video of recent address to parliament.

 

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Discount Brokerage Deals & Promotions – July 1, 2016

*Update July 13* It looks like the ‘brexit’ wasn’t the only big exit to happen this week. Closer to home, the Canadian online brokerage deals and promotions space also saw a number of promotional offers take off, perhaps for the summer, perhaps longer.

The trend towards promotional offers continues to be a volatile one, which isn’t great news for DIY investors. Compared to this point last year, the total number of cash-back and/or commission-free trade offers has contracted significantly – a development we continue to track. Even though the number of offers has contracted, there are still signs that things are evolving. Interestingly, there has been a rise in the number of contest-related promotional offers.

Despite the turnover in offers, the news isn’t all bad.

Virtual Brokers continued its streak of new offers by launching a Canada Day themed promotion that is highly targeted to Ontario, particularly GTA based, DIY investors that have a penchant for roller coasters and funnel cake.

As part of their latest promotion, Virtual Brokers is offering up a raffle for 4 day passes to Canada’s Wonderland for individuals signing up for a new account during July. Alternatively, for those not in the Toronto area, or who’ve outgrown Canada’s Wonderland, there’s an alternate prize for 20 commission-free trades that potential winners can elect to receive.

Another Canadian discount broker, National Bank Direct Brokerage, also appears to be active in promotions space during the summer. Last month they launched an offer for a margin trading account which offers discounted borrowing rates (0.75%) for margin lending as well as discounted commission trading rates ($6.95) for 3 months. The offer is open to new and existing clients signing up for a margin trading account. As we pointed to in a previous weekly roundup, however, here is a lag time for opening an account at National Bank Direct Brokerage because documents need to be submitted by mail. With a possible strike by Canada Post, there could be an additional delay attached to this process.

We’re already hearing whispers of more offers coming this Fall so it will be interesting to see whether brokerages will be getting ahead of the promotional storm or will be taking it easy for July and August. With competition coming from robo-advisors, recent volatility in the markets and also competition from summer weather, brokerages will no doubt have to get very creative to win the attention of DIY investors.

Expired Deals

There were a number of expired offers from June but among them were a couple of big ones.

*Update July 13: Virtual Brokers has updated their website to include the reinstatement of their transfer fee rebate.*

*Update July 8: Desjardins has extended their $500 commission-credit offer*  First, Desjardins Online Brokerage has elected to not extend their long running $500 commission-credit offer. This means that for the time being their best promotional offer is their ‘[email protected] 18-30’ $50 commission credit.

*Update July 8: Both BMO InvestorLine and Scotia iTrade have extended their refer-a-friend offers* Next, a pair of referral offers also expired at the end of June and as of Canada Day, these offers have yet to be renewed on their respective websites. BMO InvestorLine and Scotia iTrade both had their refer-a-friend offers expire however in the past both of these firms haven’t let these kinds of low-cost promotions lay fallow for too long.

Another offer from Virtual Brokers, the draw for an Apple gift card, also expired at the end of the month and took with it the associated transfer fee rebate.

Extended Deals

*Update July 13: Virtual Brokers has re-posted the transfer fee deal on their website in the terms and conditions section. See table below for more information*

*Update July 8: Three brokerages, Desjardins Online Brokerage, BMO InvestorLine and Scotia iTrade have each extended previously expired offers* At the moment, no deals have been extended.

New Deals

Virtual Brokers was the only Canadian discount brokerage to launch a promotion this month with their Canada Day themed raffle for either a series of 4 day passes to Canada’s Wonderland or 20 commission-free trades. See the table below for more details.

Discount Brokerage Deals

  1. Cash Back/Free Trade/Product Offer Promotions
  2. Referral Promotions
  3. Transfer Fee Promotions
  4. Contests & Other Offers

Cash Back/Free Trade/Product Offer Promotions

Company Brief Description Maximum Transfer Fee Coverage Amount Minimum Deposit Amount for Transfer Fee Eligibility Details Link Deadline
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
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 contact TD Direct Investing for further details. $150 $25,000 Contact client service for more information (1-800-465-5463). none
Transfer $25,000 or more to Qtrade Investor from another brokerage and Qtrade Investor may cover up to $150 in transfer fees. See terms and conditions for more details. $150 $25,000 Transfer Fee Rebate none
Transfer $25,000 or more to Virtual Brokers and they may cover up to $150 in transfer fees. $150 $25,000 Transfer Fee promo September 30, 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 information (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 August 30, 2016

Expired Offers

Last Updated: July 13, 2016 11:30 PT

Referral Promotions

[table id=173/]

Transfer Fee Promotions

Company Brief Description Maximum Transfer Fee Coverage Amount Minimum Deposit Amount for Transfer Fee Eligibility Details Link Deadline
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
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 contact TD Direct Investing for further details. $150 $25,000 Contact client service for more information (1-800-465-5463). none
Transfer $25,000 or more to Qtrade Investor from another brokerage and Qtrade Investor may cover up to $150 in transfer fees. See terms and conditions for more details. $150 $25,000 Transfer Fee Rebate none
Transfer $25,000 or more to Virtual Brokers and they may cover up to $150 in transfer fees. $150 $25,000 Transfer Fee promo September 30, 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 information (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 August 30, 2016

Expired Offers

Last Updated: July 13, 2016 11:30 PT

Other Promotions

Company Brief Description Minimum Deposit Amount Required Details Link Deadline
Credential Direct has partnered with Trend Micro to offer 50% off Trend Micro Titanium Internet Security. Use code “TrendCF” at checkout. n/a Trend Micro Special Offer Code none
National Bank Direct Brokerage is offering a discount of 0.75% on it’s current margin lending rate for new margin accounts for a period of 3 months. In addition, new margin account registrants will receive a commission rate of $6.95 per equity trade. This offer is open to new and existing clients. Use promo code MARGIN2016 when signing up. Be sure to read the terms and conditions for full details. n/a Margin Account Promotion August 31, 2016
Scotia iTrade Scotia iTRADE is offering a no-purchase entry option to their Stock Shopping Spree contest. There is a limit of one (1) ballot per person using the no purchase required method. Top prize is $10,000 and there are 5 runner-up prizes of $1,000. Be sure to read full contest rules and regulations for eligibility. n/a No Purchase Entry Link . Click here for full contest rules. July 31, 2016
Disnat Desjardins Online Brokerage is offering $50 in commission credits for new Disnat Classic clients depositing at least $1,000. See terms and conditions for full details. $1,000 [email protected] 18-30 Promotion none
Scotia iTrade Scotiabank StartRight customers can receive 10 commission-free trades when investing $1,000 or more in a new Scotia iTrade account. Trades are good for use for up to 1 year from the date the account is funded. Use promo code SRPE15 when applying (in English) or SRPF15 when applying in French. Be sure to read full terms and conditions for full details. $1,000 StartRight Free Trade offer none
Virtual Brokers is offering the chance for individuals who sign up for a new online trading account on the classic commission structure with a deposit of at least $1,000 to win an Apple $500 gift card. Be sure to read terms and conditions for more information. $1,000 Apple Gift Card Promotion June 30, 2016

Expired Offers

Last Updated: July 1, 2016 15:50 PT