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Discount Brokerage Weekly Roundup – March 30, 2018

What better way to cap off March and segue into Easter than with the talk of goodies and mythical bunnies bearing gifts? For Canadian DIY investors hunting for new and exciting features it seems like the best place to look at the moment is further south where all kinds of interesting trader treats are already being released.

In this Good Friday edition of the roundup, we kick things off with a closer look at the latest US online brokerage rankings, specifically with an eye towards interesting findings and cool feature trends. From there we’ll buzz over to a rebrand at one online brokerage that is preparing itself for the next chapter in its storied history. As usual, we’ll cap off the roundup with chatter from Twitter as well as in the investor forums.

Interactive Brokers crowned best online brokerage in the US

Although the recent news cycle south of the border makes Canadians less envious of living in America, trading in America continues to evoke a sense of envy with Canadian DIY investors – and for good reason.

Just over a week ago, Barron’s published their latest rankings of 19 online brokers in the US and found that Interactive Brokers provided online investors with the best overall online experience.

As with all rankings, it’s important to understand what the criteria mean and how the assessment is conducted, and thankfully Barron’s does a great job of providing the details of the online brokerage ranking in a way that none of the Canadian broker rankings do. Specifically, Barron’s actually enables readers to download an excel spreadsheet that contains the details of how the scores were derived.

Before getting too far into the weeds, it’s useful to point out that Barrons’ latest online brokerage rankings assessed brokerages based on the following categories:

  1. Trading Experience & Tech
  2. Usability
  3. Mobile
  4. Range of Offerings
  5. Research Amenities
  6. Portfolio Analysis and Reports
  7. Customer Service, Education, Security
  8. Costs

That Interactive Brokers topped the field of US online brokerages when it comes to costs is perhaps not that surprising. In fact, in looking at the spreadsheet drill down for the margin rates and commission cost per trade, Interactive Brokers stands out as a considerably cheaper option than many of its peers.

What was potentially more surprising was the degree to which Interactive Brokers was able to score highly on the other categories that comprised the online brokerage rankings. Over the past two years or so, it has become increasingly more noticeable that Interactive Brokers has been making additional efforts to go beyond their active trader roots and expand the support, services, products and educational content for online investors. The latest rankings from Barron’s, however, demonstrate just how well Interactive Brokers has managed to do so in the US.

Following Interactive Brokers in first place, the brokerages in second (Fidelity), third (TD Ameritrade) and fourth (Charles Schwab) were all separated by 0.8 points, a sign that it is a very close race between the top four online brokerages in the US.  That said, the graph shows that it isn’t really until after 10th place (Lightspeed Trading) that rankings scores drop off substantially. Firms at the bottom end of the rankings certainly have their work cut out for them, however, as it is clear that this is a very dynamic space.

From a Canadian perspective, it is also interesting to note how small the DIY investor market is here in Canada relative to the US and whether there are too many brokerages in Canada fighting for too small a market share. Barrons’ latest ranking covers 19 online brokerages in the US (with some notable omissions like Robinhood) however that is only slightly more than the 14 online brokerages currently here in Canada, soon to be 13 (or 12) once the Qtrade Financial and Credential Direct merger takes place. Ironically, despite the conditions favouring far more competition here in Canada between discount brokerages, it appears we’re innovating far slower than in the US.

In digging into the actual spreadsheets of the brokerage rankings, there were a few interesting trends noted that might be on the horizon (or just wishful thinking) for Canadian investors. For example, one of the categories that showed up in this year’s detailed ranking breakdown was whether an online brokerage offered cryptocurrency trading.

Already there were 8 online brokerages in the US that had come connectivity to cryptocurrency trading data or trading enabled. Interestingly, Charles Schwab was the only brokerage in the top five ranked online brokers that didn’t offer some kind of connectivity to trade cryptocurrency (e.g. Bitcoin futures).

Other features that we noted that were far ahead of what’s available to Canadian DIY investors included integration with smart home devices, such as Amazon’s Echo. Five online brokerage firms already have this integration deployed or are actively working to do so. Similarly, chatbots on social media are another feature that appears to be growing in popularity with online brokerage providers.

Another interesting observation of the results was the position that Tastyworks ranked in (8th), an amazing feat considering that it was just shy of edging long-time brokerage E*Trade and that Tastyworks has not been around nearly as long. Whether Tastyworks can sustain its growth and challenge better-funded incumbents remains to be seen, but the fact that they’re already scoring as highly as they are means whatever is resonating with investors.

Finally, another feature that casts a very unfavourable light on Canadian online brokerages is the speed with which online brokerages in the US are able to onboard and enable clients to begin trading. Wait times range from almost zero to four days in the US, with the many firms enabling same day trading and account opening.

The US is certainly a faster moving market when it comes to feature development and deployment than Canada is. Nonetheless, it is interesting to note that the Canadian online brokerages looking to make a splash here would be wise to pay attention to some of the abovementioned features.

For the moment, Canadian DIY investors have to content themselves with peering over the fence to see how the other side trades.

To Bee or not to Bee: Desjardins Online Brokerage gets a logo refresh

On the marketing front, Desjardins Online Brokerage updated its corporate logo to bring it in alignment with the parent Desjardins who also updated their storied logo.

This modern incarnation of the logo retains elements of the previous iteration, such as the green colour and the honeycomb hexagon however this logo does not have the stylized bee drawing in the centre of the logo. Also updated was the typeface, with sans serif font replacing the previous version which had serifs.

While it certainly isn’t market moving news, the story behind the logo change reflects that Desjardins is moving in response to the market and readying itself for the next, digital chapter in its story.

Discount Brokerage Tweets of the Week

Overall a bit of a quiet week on Twitter aside from the usual mixture of sneers and jeers. Mentioned this week were Questrade, RBC Direct Investing, Scotia iTRADE, TD Direct Investing and Virtual Brokers.

From the Forums

Tax Talk

At this time of year DIY investors are diligently working to compile trading statements and calculate the tax implications for their trades. Ironically, managing the required paperwork is itself taxing.

In this post (on TD Direct Investing) and this post (about BMO InvestorLine) it is interesting to see how some DIY investors are managing the business of keeping their transactions in order.

Short and not sweet

Playing in the investor forum sandbox can sometimes be a place for some tough love. This post, from reddit’s Personal Finance Canada thread highlights one investor’s curiousity about selling puts and a response received to proceed with caution.

Into the Close

Whether you were short the week or long the weekend, on behalf of everyone here at, we wanted to wish you a safe and ‘hoppy’ Easter! Remember be on the lookout for pranksters this weekend!

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