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Discount Brokerage Weekly Roundup – July 27, 2020

For anyone keeping score at home – July is almost over. The strange pace of time that COVID-19 has imparted on the world is equaled only by the strange behaviour in stock markets that, because of COVID-19, have seen major indices fall off a cliff then sharply rise close to the edge they fell from. For online brokerages, waves have taken on a different meaning this summer, and in looking down the track to the end of 2020 (thank goodness), preparation should be on the list of important summer activities.

In this edition of the Roundup, we look at one story with several important facets. The latest earnings from US online brokerages are in, but the real story appears to be not where we’ve been but rather where things go from here for online investors. Also on the docket, interesting chatter from DIY investors on Twitter and from the forums.

Breaking Fad: Is the Retail Investor Frenzy About to Expire?

The story on the meteoric rise in trading by “retail investors” over the course of the COVID-19 pandemic continues to gather steam. Ironically, while we’ve been covering this news since March of this year, the fact that it is now hitting the “major” news outlets could be a signal that the retail frenzy is about to lose considerable steam.

This past week, there were several major US online brokerages that reported their quarterly earnings. TD Ameritrade, E*Trade, and Interactive Brokers all showcased record-breaking performances in terms of trading activity as well as in terms of account openings and earnings. In contrast, although the largest online brokerage in the US, Charles Schwab, experienced similarly large volumes of activity, revenues and earnings missed estimates. All told, however, it was another eye-popping quarter filled with people coming in droves to trade stocks.

Not to dismiss the earnings and performance metrics, but much of this data is looking in the rear-view mirror at what’s already happened. At a time when so much news is happening so quickly, it’s important to stay on top of what’s actually taking place.

Beyond the numbers, however, the bigger stories emerging from the narrative around online investing appear to be in how different, and influential, stakeholders are covering the online brokerage space, and what that means for the near-term future for the industry in the US as well as in Canada.

The first interesting angle on the coverage of the retail-trading frenzy came from one of the most influential voices for investing and trading in North America, CNBC. And what stood out was as much what was said as what wasn’t.

Last week, online brokerage Robinhood was casually referenced as one of “the major online brokers” in an article by CNBC, and Interactive Brokers was not. Though this might have been just an omission (Interactive Brokers and Robinhood were mentioned as major online brokers in another article by the same author), the fact that Robinhood is now being counted among the “major” publicly traded online brokerages (even though it is not yet publicly traded) arguably reflects a step change in who they are as a firm and in the influence their clients have on market direction.

Whatever the calculus was, Robinhood’s vaulting to the status of “peer” of the much larger incumbents means that growth is happening much faster than anyone had planned for. Perhaps this is behind the decision to delay Robinhood expanding to the UK (for now).

Two important facts stand out as important context: First, despite the best account-opening numbers from any of the publicly traded online brokerages in the first six months of 2020, Robinhood handily beat them by adding over 3 million accounts. Second, Robinhood did this despite peer firms taking commissions to zero, meaning that consumer preference likely played a decisive factor in online investors picking Robinhood over Schwab or Ameritrade or E*Trade.

For US online brokerages, it should be abundantly clear that the rise of Robinhood signals that they cannot afford to discount “millennial” (or future) investors anymore and that platform adoption is going to be heavily influenced by user experience – in particular on mobile. While this shouldn’t be news to anyone in the online brokerage industry by now, the fact that so many online brokerages have seen their market share erode or be captured by Robinhood, especially in the millennial segment, means that other online brokerages are going to be playing catch-up.

Overlaying what’s unfolding in the US online brokerage market with the situation in the Canadian online brokerage space, it’s interesting to see which Canadian discount brokerages are putting a priority on design and user experience ahead of other long-standing “standard” features. Arguably, it’s a short list.

Both Wealthsimple Trade and Questrade have managed, from a feature and accessibility standpoint, to successfully reach and appeal to younger investors, and the former is clearly taking many of its cues from Robinhood. Like Robinhood in the US (but without the same degree of scale of impact), Wealthsimple (and especially Wealthsimple Trade) is being talked about in the media as it relates to investing online. Other Canadian online brokerages: crickets.

Perhaps the question that incumbent online brokerages on either side of the 49th Parallel need to wrestle with is given Robinhood’s gains with the millennial segment, how hard will it be for them to appeal to the older or more mature investor segment? Can existing online brokerages move down market faster than Robinhood can move up? Does the same hold true for Wealthsimple Trade, even though they still have lots to develop to compare fully with online brokers in Canada? Sounds a bit like an innovator’s dilemma if ever there was one.

The second interesting angle relating to the coverage and response to the retail-investor market comes from assembling the fragments of highly seasoned and influential voices in the online investing market. In particular, it was the notes of concern expressed by the head of the NYSE, the founder of Interactive Brokers, as well as a slide from the deck of Schwab’s business update showing sentiment among investors that paint a curiously grim picture just as the S&P 500 is within spitting distance of its all-time high.

Consider the following:

In a recent interview with CNBC, the president of the NYSE, Stacey Cunningham, stated: “I am excited to see the retail investor engaging in the market, but I’m also concerned if they’re not doing it with information and also not understanding the risks associated with it, because you certainly don’t want to see retail investors get hurt because they didn’t understand that markets can go in both directions and they can go pretty quickly.”

In an interview with CNBC regarding earnings, Thomas Peterffy, founder of Interactive Brokers, labelled the action in the current market environment as “crazy” and characterized trading levels as unsustainable over the near term.

According to the latest business update from Schwab, investor sentiment continues to track lower despite markets’ substantially rebounding from their lows.

Finally, there’s the growing chorus of experienced market observers, analysts, and influencers who are also increasingly skeptical of markets’ powering higher and the sustainability of that move.

Aside from the latter (typically pundit) view, there is a cause for concern when individuals representing businesses that would directly benefit from more trading state they’re concerned about the levels of trading taking place.

While the pace of retail-investor activity is almost certainly going to decline, when and how rapidly is simply a waiting game. It will be interesting to see whether or not the decline will once again entice investors back into the market the way the first drop did in March or, as the concerned voices seem to suggest, whether retail investors will get badly burned by a contraction. Regardless, any kind of volatile downward move is likely to generate significant trading activity and put pressure on technical as well as service systems across the online trading ecosystem.

There is already discussion of preparing for a second wave of COVID-19 outbreaks here in Canada, and with the current situation in many states of the US unpredictable (or just dire), the risks for continued pandemic-related economic (and health) impacts seem likely. What this directly means for online brokerages in Canada is that their trading systems and customer service delays should be prioritized to be fixed, because there are a lot of nervous investors holding into these rallies.

Indeed, DIY investors must also be prepared for market volatility. The track record for most online brokerages in Canada during March was that there were untimely delays or outages during massive volatility days. Time has passed but investors (as shown in Twitter comments) tend to remember moments when their online brokerage platform or customer service experience let them down.

As much as commission cost and user experience are clearly going to be driving the bus when it comes to DIY investor interest, uptime (aka reliability) and wait time are going to keep clients on the bus, even (and perhaps especially) when the road gets bumpy. If things go awry for online investors in the US, at least they can cite not having to pay commissions, but here in Canada, the expectations for performance and reliability are directly tied to the price. And, in a world where commission price exists (in spite of zero-commission alternatives), there is little room (or patience) for things going wrong.

Discount Brokerage Tweets of the Week

From the Forums

The Grass Is Always Greener

A Redditor asks if there’s a benefit to investing in Canadian versus American ETFs in this post. Commenters break down factors such as commissions, exchange rates, and long-term market patterns to tackle this big question.

A Rare Stake

In this post, a potential investor asks for advice on whether or not they should buy shares in the company they’ve been at for the past two years. Fellow forum users give their perspectives and offer insights into the company’s possible motives.

Into the Close

That’s a wrap on what has been an insightful few weeks in the online brokerage space. While the US market has dominated the headlines, there’s still activity taking place among Canadian brokerages, which will start filtering back into the mix. In the meantime, with gold and bitcoin creeping past key psychological hurdles, and more stimulus money in the works (in the US), it looks like the music is still going for just a bit longer.

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Discount Brokerage Weekly Roundup – July 20, 2020

Elon Musk isn’t just a fan of shorts this summer. He’s also taken a pretty long view on bringing big ideas to fruition. As markets continue to press higher despite what appear to be doom-and-gloom messages about the real economy, it seems like the distant future is being priced in rather than the immediate one. Curiously, the thesis of looking past the current crisis is one that online brokerages appear to be doing, understanding (and hoping) that things will get resolved in due course.

In this edition of the Roundup, we take a look at a curious (but perhaps predictable) development at the largest online brokerage in the US and examine what their latest earnings report portends for the industry in the US and here in Canada. From there we’ll take a look over a different fence, at a popular Canadian robo-advisor that is clearly taking its cues from what’s working in wealth management (and online investing) in the US. As always, we’ve collected stories and reactions from DIY investors in the past week from the forums and on Twitter.

Online Brokerages See Weakening Earnings

There are some things that seem like a good idea, until they don’t.

This past week, the first in an upcoming wave of financial reports from US online brokerages was released, and the financial results were, um, not good.

The largest online broker in the US, Charles Schwab, reported their financial performance for the last quarter, and despite seeing record levels of new account sign-ups and record trading volumes, earnings came in lower than estimated.

This past quarter, Schwab added another 552,000 new accounts (excluding the 1.1 million accounts that came their way via the USAA acquisition), which was just over 9% less than the 609,000 new accounts opened the previous quarter. Nonetheless, a million new accounts in half a year is a staggering number when looked at across the past six months (although Robinhood managed to open 3 million new accounts in half that time). Also incredible was the daily trading volume, which clocked in at 1.62 million daily active trades, an increase over the 1.54 million daily active trades from the previous quarter.

With more clients and more trading, things should be rosy for an online brokerage, except for one small detail: Commissions for trading are now at zero.

What the new reality of operating in a zero-commission world translated into for the largest online broker in the US was that on the top line, Schwab missed on revenue estimates by a little ($40M USD), at $2.45 billion. However, when all was said and done, the bottom-line earnings of 48 cents per share was well short of the forecasted 53 cents per share. While this quarter may be disappointing on its own, when viewed against where Schwab was at last year, revenue is down 9% for the same three-month period, and net income is down a whopping 28%.

Even so, commissions don’t drive most of the earnings at Schwab anymore – instead, fees and interest revenue do. Nonetheless, it appears that structurally Schwab saw an opportunity to deepen its business in the online brokerage market by acquiring TD Ameritrade (and their assets as well as clients). Incidentally, as reported in their financial performance release, the deal to acquire Ameritrade has received regulatory clearance to proceed.

Despite the miss in terms of revenue and earnings, it appears there is a longer game at play, namely to massively scale up.

Schwab’s assets under management are now $4.11 trillion dollars (that’s trillion with a T) and continue to generate substantial revenue at healthy margins. For the time being, Schwab appears to be able to weather the storm of lower interest rates. However, it’s clear that zero-commission trading has challenged Schwab to find new revenue sources. The silver lining: their competition has to, too.

With the latest numbers coming out of the US, the fact that an online brokerage the scale and profile of Schwab is struggling to meet revenue and earnings forecasts suggests that Canadian discount brokerages will likely not be in any more of a rush to lower their commissions, least of all to zero.

A conversation this past week on BNN focused on the US online brokerage market and whether commission-free trading would or could gain traction here in Canada. The key takeaway in this segment is that Canadian online brokerages do not feel the pressure to match, in terms of pricing or offerings, what Schwab or Robinhood are currently doing in the US.

So, despite there being investor appetite and desire to see more commission-free trading here in Canada, there is no catalyst for online brokerages to do so at this time. That said, when investor appetite to wade into the market subsides – which the latest data on account openings suggests is taking place – online brokerages here in Canada are going to have to work especially hard to capture and hold the attention of folks who may have become accustomed to outsize returns in short amounts of time.

The next few weeks will be instructive to the direction for the rest of the year. We’ll be watching what happens with the largest players in the US discount brokerage space for clues on how Canadian discount brokerages will have to respond when/if another drop in commission pricing occurs.

Wealthsimple Makes Token Gesture to Launch into Crypto Trading

There’s no doubt that in the US online brokerage space, Robinhood has made a name for themselves not just for the low cost of trading but also for being agile around releasing new features and reimagining the user experience of an online brokerage account. From the time they launched in 2013 through to this year, Robinhood has grown its customer base from zero to over 12 million users and its valuation to $8.6 billion.

It is perhaps no accident, then, that Robinhood serves as an example of how to successfully connect with a younger audience of investors and why financial services providers in Canada (and the US), especially those in the wealth management/online brokerage space, would want to pay attention to the kinds of features being released by Robinhood.

In Canada, Wealthsimple appears to have followed in the footsteps of the US online brokerage when it comes to focusing on a younger audience and the user experience and attempting to democratize finance by making it “easier” and more accessible for most investors.

One clear parallel between Wealthsimple and Robinhood was the launch by Wealthsimple of their direct investing solution, Wealthsimple Trade, which charges no commission to buy or sell stocks. This past week, yet another parallel between these two firms emerged when Wealthsimple announced they would be exploring the launch of cryptocurrency trading.

Trading in cryptocurrencies was something that Robinhood launched in 2018 – right around the height of the crypto craze – and they have been rolling it out across the US since then. Two years into cryptocurrencies, much of the initial hype has died down, but it’s clearly a value driver for Robinhood clients curious or interested in trading it. Given the recent volatility in both Bitcoin and Ethereum, cryptocurrencies are finding their way back into the spotlight, so it is a good time for Wealthsimple to be launching their new trading platform.

In true Wealthsimple fashion, however, trading in cryptocurrency on their platform isn’t ready just yet, but that has not stopped them from garnering interest ahead of the release. As with their Wealthsimple Trade product, Wealthsimple has created a waitlist for interested parties to sign up for cryptocurrency trading when the trading feature becomes available.

In the highly commoditized environment of discount brokerages (and wealth management more broadly), what makes one brokerage stand out over another is going to become increasingly important. Pricing is still a place where this can happen – specifically commission pricing per trade – however, the other key value driver is in features, which is where Wealthsimple launching a cryptocurrency trading platform significantly differentiates them from their peers.

Perhaps another good piece of news for Wealthsimple is that they have close to two years to study what has happened with Robinhood’s cryptocurrency experience, to hopefully make this as smooth a deployment as possible.  

Whether or not cryptocurrency picks up any time soon, it appears that because they will offer direct trading of cryptocurrenies, Wealthsimple will have ample room to run unchallenged by Canadian online brokerages, a rare situation in a highly competitive landscape.

The combination of a mobile-first mindset, a sound content strategy, low pricing, and a deliberate investment in aesthetic appeal means that Wealthsimple has raised the bar on most, if not all, online brokerages in Canada to step up or risk getting left behind.

Despite joining the crypto-trading party very late, Wealthsimple doesn’t have to be original to be considered innovative in the Canadian online brokerage space. They simply have to move faster than their peers at getting in-demand features up and running, which by this latest announcement it appears they’re managing to do.  

Discount Brokerage Tweets of the Week

From the Forums

The Graduate

A recent graduate turns to the forums for some clarification on the pros and cons of index funds and ETFs in this post. Fellow Redditors explain the advantages and disadvantages of each and offer insights into how timelines can impact one’s investment plans.

The Tortoise and the Hare

In this post, a curious Redditor ponders the age-old question of whether staying on a steady course is better than “splurging” on a potentially high-growth stock.

Discount Brokerage Tweets of the Week

Into the Close

It’s been an interesting ride thus far, with markets continuing to press higher despite a worsening health crisis in the US. In the online brokerage space, this week will put a spotlight on earnings from other big online brokers and some business updates. Despite the summer weather outside, it seems like we’ll be glued to our screens as more news continues to break.

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Discount Brokerage Weekly Roundup – July 13, 2020

With COVID-19 very much in focus, it appears that time is being measured more in phases and case counts than in actual calendar days or traditional time. Despite the uncertainty (or perhaps as a result of it), discount brokerages in Canada find themselves in a unique position to learn from what is happening in the US to plot out the next important steps to take in the second half of 2020.

In this edition of the Roundup, we pull out the telescope to peer into the second half of 2020 and see what interesting data points from investors and online brokerages could provide insights into what to expect from Canadian discount brokerages in the remainder of the year. From there, we recognize the bold decision that one bank-owned online brokerage has taken to include an often-overlooked group and hope that this is the start of a new design choice among brokerages going forward. As always, we’ll wrap up with chatter from DIY investors on Twitter and in the investor forums.

The Next Chapter: Where Might Canadian Online Brokerages Go Next

With the first half of 2020 now well behind us, it’s time to start looking ahead at what trends could impact online brokerages here in Canada and in the US.

It almost goes without saying that the biggest force still at work is COVID-19, followed by the US presidential election.  And, while there is justifiable cause for alarm at the human toll of this crisis, the giant voting machine that is the stock market is placing its bets that though things might be bad, the future (at least for some sectors) stands to be brighter than it is today.

For US online brokerages, the heightened uncertainty in the stock market should translate into continued earnings strength from commissions (for those that charge them), payment for order flow, and margin interest. The historically low interest rates suggest that the cost of borrowing for margin trading (to amplify results) will be, on a relative basis, more affordable. In sum, the macro picture for online brokerages in the US appears to be bullish, as investors continue to wade into the volatility rather than shy away from it.

Among Canadian discount brokerages, the thesis supporting robust performance appears to be similar. Strong trading volumes combined with trading commissions holding steady mean that online brokerages are going to be generating healthy revenues, and for Canadian banks (those that have online brokerage arms), this could be an important bright spot against a backdrop of challenging economic conditions. Across Twitter, the comments over the past few months by Canadian DIY investors reflect heightened enthusiasm for making fast money, as well as the tools/platforms and user experience to facilitate doing so. As such, active trading platforms – along with associated data feed packages – have likely seen record levels of interest, and brokerages that don’t currently have these features in place are likely losing the patience or the business of clients who wish to keep a very tight pulse on the market.

For the better part of this year so far, Canadian online brokerages have been surprisingly quiet when it comes to advertising campaigns or major feature release announcements. As we referenced in last week’s Roundup, it is unlikely that the final half of 2020 will see Canadian brokerages maintain their “wait and see” approach – there are simply too many important opportunities at stake.

Some interesting data out of the US online brokerage market also seems to support the macro case for Canadian brokerages either ramping up advertising to close out 2020 or seriously considering doing so.

One of the first important indicators of this is a recent sentiment survey by E*Trade Financial, released last week. In that survey, it found that in Q3 of 2020, bullishness among DIY investors has increased 34% (13 percentage points) compared to Q2 of 2020. Importantly, over half of investors (51%) believe that markets will rise through the end of the year – a remarkable feat considering how much markets have rallied from their March lows.

Another interesting factor for online brokerages in Canada to consider (though this data point also originated in the US) is a comment regarding online investing made by Interactive Brokers founder Thomas Peterffy in an interview with Bloomberg. Specifically, Peterffy pointed out that even once the pandemic stabilizes, the interest in online investing has likely been sparked in many investors who will want to continue. In other words, the die has been cast for the return and prominence of active online investors. For Interactive Brokers in particular, Peterffy highlighted that unlike with Robinhood, the clients of Interactive Brokers tend to be more sophisticated in nature, with a better understanding of what they want and how to manoeuvre around various market opportunities.

From a macro perspective, the US market heading into the second half of the year will also provide some important information regarding the consolidation of players on the field. On July 21st, online brokerage Charles Schwab will provide their summer update and likely include information about the progress of their acquisition of TD Ameritrade. Incidentally, Interactive Brokers is also announcing their earnings on the same date. The Schwab/Ameritrade merger will create a behemoth in the online brokerage space in the US, something that appears to be necessary to fend off a growing number of competitors. Other deals on the radar in the latter half of 2020 include the acquisition between Morgan Stanley and E*Trade.

On the technology front, it will also be interesting to see what US online brokerages roll out in the near term that may influence how Canadian online brokerages ultimately decide to deploy the historic revenues they are generating from trading activity.

One clear winner for online brokerages in the US has been fractional share trading – something that has ignited interest by younger investors to participate in the stock market in record numbers. Another interesting feature gaining traction is investor-oriented content. Online brokerage Robinhood has clearly put significant effort into their podcast, and it is gaining momentum with their target demographic. Almost all major US online brokerages have robust online/digital content strategies, and the brokerages making outsized gains have clearly demonstrated the value of these during the COVID-19 pandemic. By comparison, online investor content among most Canadian online brokerages is extremely limited, static, and often inaccessible.

Already, Canadian DIY investors on Twitter are calling out Canadian online brokerages for features that exist in the US but do not exist here – whether that be zero-commission trading, fractional shares, innovative technology, or incredible DIY investor content. Seeing as how three of those four options would require massive technology investment or significant revenue erosion, one likely battleground for DIY investors in the next half of 2020 will be in content.

RBC Direct Investing: A More Inclusive Approach

One of the unique consequences of covering the Canadian online brokerage market in detail for almost a decade is that you get to see how the market has evolved over that time. This past week, we spotted a small but important detail on the RBC Direct Investing website that we hope signals a shift in the way in which online investors are depicted.

Specifically, on the RBC Direct Investing website, an image of an individual in a wheelchair was positioned alongside the caption “I Want to Be a Confident Investor.” In the almost-decade-long coverage of the Canadian online brokerage space and the scores upon scores of generic business imagery placed on the front pages of DIY investing websites, it would be difficult to identify at any point the inclusion of a person with a disability on the homepage. It is certainly worth commending RBC Direct Investing for doing so in this case, even though the inclusion is not in the main image (yet). The reality is that persons with disabilities get little to no recognition or acknowledgement in the often “aspirational” imagery associated with online brokerage websites.

For that reason, RBC Direct Investing deserves a significant “hats off” for being (probably) the first major online brokerage in Canada to be more inclusive in their imagery choices, by including a person with a visible disability. Here’s hoping it inspires other online brokerages to do the same.  

Discount Brokerage Tweets of the Week

From the Forums

A Whole New World

A Redditor looking to improve their financial literacy turns to the forum to ask for advice in this post. Forum users offer resources for tackling debt, defining financial goals, and starting to invest.

It’s All Greek to Me

In this post, a first-time investor confused by the variety of ETF options turns to the forum to ask for direction. Fellow Redditors offer advice on how to approach seemingly confusing options and reiterate the merits of keeping it simple.

Into the Close

With another round of earnings season just about to kick off, there are going to be even more numbers in the headlines that traders and investors will have to keep their eyes on. And with little in the way of encouraging news at the moment, here’s hoping for some nice surprises in the earnings and outlooks.

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Discount Brokerage Weekly Roundup – July 6, 2020

Whether it’s the first or fourth of July, where and how you might have celebrated depends in large part on where you happen to find yourself.

In this edition of the Roundup, we keep things short and sweet, like a great helping of soft-serve ice cream. First, we take a peek at the deals and promotions for July and see how they differ from June. Next, we scroll on over to the launch of an updated mobile app for a leading Canadian online broker. As always, there’s lots to ponder from the investor forums as well as from Twitter.

New Month, Same Deals

With the second half of 2020 now officially underway, there are lots of questions investors and online brokerages are asking as far as what the rest of the year holds for investing online. One of the biggest questions is around volatility and whether the trading volumes that were the norm in the first part of the year will continue to feature prominently into the end of 2020.

As has been covered extensively through the Weekly Roundup since March, volatility in stock markets has also pushed up trading volumes to record-breaking levels. The prevailing theory is that the combination of individuals being forced to shelter in place, the absence of sports betting, and the distribution of government support payments have all converged into a perfect storm of retail investors flooding into the market to try to take advantage of some kind of rally in heavily battered stock prices.

The knock-on effect of all of this, however, has been that interest in opening an online trading account at an online brokerage has been so strong that most Canadian online brokerages have opted to shelve their promotions for the summer. In the most important deal categories to DIY investors (cash-back or commission-free trades), Questrade has become the sole online brokerage with active promotions.

Crossing the threshold into the latter half of the year, it is hard to imagine Canadian online brokerages standing on the sidelines for much longer before jumping back into the promotions race.

First, Questrade represents an increasingly tough competitor for other Canadian discount brokerages to defend against. Whether it is in investor forums, TV commercials, or social media, there’s a good chance that new investors looking for an online brokerage are going to run into mentions or even recommendations for Questrade. By leaving Questrade unchallenged, other online brokerages are enabling this already popular brokerage to build market share and attract investors to a conversation about investing.

Second, should any of the factors that caused the rush of investors looking to set up accounts abate, discount brokerages would almost certainly have to aggressively ramp up their marketing efforts – including adding promotions. To further challenge the financial services space as a whole in Canada, several large Canadian banks have also elected to pause their advertising on Facebook. Unless Facebook remedies their enforcement of curbing hate speech, it will be a challenge for online brokers to find a way to scale up their messaging and advertising during COVID-19.

Finally, the end of the year is typically when the ramp-up to RRSP-contribution season starts. Layer in a year in which there is almost certainly going to be a good portion of tax-loss selling and realizing of capital gains, TFSA maneuvering, and more, and DIY investors will be doing a lot more with their accounts through the end of this year. Of course, in order for online investors to want to stick with their current brokerage, it means the service experience at online brokerages has to be very good, and right now, based on comments from Twitter, there aren’t a lot of good customer service stories for Canadian discount brokerages.

It’s clear that nobody can fully predict the scale and scope of how COVID-19 will unfold in Canada or the US. Tied to that uncertainty is the business need to attract new clients via marketing and incentives. As the rest of the economy in Canada starts to fire up again, and people begin to come out of isolation, so too, hopefully, will the Canadian discount brokerage deals.

Teaching an Old App New Tricks – TD Direct Investing Launches Updated App

When mobile investing apps first arrived, they were heralded as the future for individual investors to gain even more freedom when wanting to trade, whether in line at Starbucks or hanging out poolside with a drink in one hand and a phone in the other. Mobile trading was truly going to be the next “big thing” with DIY investing. Arguably, now that apps and being able to do just about everything on a mobile device have become the norm, that sentiment of trading almost entirely by mobile app is closer to the original vision.

In June, TD Direct Investing unveiled the latest updates to their mobile app, which focused on investor education. TD Direct Investing’s mobile app now provides access to their online learning centre, which is filled with content to help investors get up to speed on a number of topics related to investing.

Among the more interesting capabilities is the ability to cast video lessons directly to TV – something that could offer up that perfect balance of autoplay TV series and educational content.

Of course, TD isn’t the only one that has conducted a refresh or added features to their mobile trading app this year. Virtual Brokers and RBC Direct Investing are the others. Thus, it seems like multiple Canadian discount brokerage who haven’t yet worked on improving their current app design/build will be busy figuring out how to build a mobile app for the current world.

With summer now upon us, it is the perfect opportunity both to learn about investing and investments as well as to be out and about. The latest wave of mobile upgrades at TD Direct Investing enables users to do both.

Discount Brokerage Tweets of the Week

From the Forums

Getting Schooled

A soon-to-be student wonders how to make the best of their savings while minimizing post-university debt in this post.

Oh Brother

In this post, a Redditor who has just purchased a house with his brother wonders how equity stake will accumulate in this split-ownership situation.

Into the Close

That’s a wrap on a shortened-week edition of the Roundup. Markets continue to power higher (for now), which means that there are many DIY investors on the sidelines hoping to still get in on the action. Of course, with professional sports starting to come back online, we’re betting we will start to see fewer “traders” and a restart of the world of financial promotions. Oh, and there’s now Kanye to add into the mix.


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Discount Brokerage Deals & Promotions – July 2020

*Update: July 28* Summer has finally arrived, and what a strange summer it’s shaping up to be! This word has been used a lot in the last few months, but it continues to be the word of the moment: unprecedented.

With the whole world – and the stock market – venturing into uncharted territory, it’s impossible to know what, exactly, the second half of 2020 holds in store.

Despite ongoing fluctuations in the stock market, online brokerages are continuing to see a high level of interest from DIY investors. Like their US counterparts, Canadian discount brokerages have been opening huge numbers of new accounts. This may explain why several brokerages haven’t felt the need to add any new deals or promotions for the month of July.

Regardless, there are still many ongoing deals and promotions to entice savvy DIY investors. Scroll on to review the current offerings from Canadian discount brokerages.

As always, Sparx Trading will add any updates as they appear, so be sure to check back throughout the month.

Expired Deals

*Update: July 28 – Qtrade Investor’s referral promotion has officially been confirmed as expired. *

BMO InvestorLine ended its cash-back promotion on June 1st.

Extended Deals

No extended deals to report at this time.

New Deals

No new deals to report at this time.

Discount Brokerage Deals

  1. Cash Back/Free Trade/Product Offer Promotions
  2. Referral Promotions
  3. Transfer Fee Promotions
  4. Contests & Other Offers
  5. Digital Advice + Roboadvisor Promotions
  6. Offers for Young Investors

Cash Back/Free Trade/Product Offer Promotions

Company Brief Description Minimum Deposit Amount Commission/Cash Offer/Promotion Type Time Limit to Use Commission/Cash Offer Details Link Deadline
Open and fund a new account (TFSA, Margin or RRSP) with at least $1,000 and you may be eligible to receive $88 in commission credits (up to 17 commission-free trades). Use promo code SPARX88 when signing up. Be sure to read terms and conditions carefully. $1,000 $88 commission credit 60 days Access this offer by clicking here: $88 commission-credit offer . For full terms and conditions, click here. 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, 2020
Open and fund a new qualifying account with at least $25,000 and you may qualify for one month of unlimited commission-free trades and up to one month free of an advanced data package. Use promo code ADVANTAGE14 when opening a new account. Be sure to read terms and conditions for full details. $25,000 commission-free trades for 1 month + 1 month of advanced data. 1 month Active Trader Program December 31, 2020
BMO InvestorLine Open a new qualifying account at BMO InvestorLine with new assets worth at least A) $50,000; B) $100,000; C) $250,000; D) $500,000 or E) $1M+, and you may be eligible to receive a cash back reward of up to A) $250; B) $450; C) $800; D) $1,000 or E) $2,000. Use promo code SPARXCASH when registering to qualify. Be sure to read full terms and conditions. A) $50,000 B) $100,000 C) $250,000 D) $500,000 E) $1M+ A) $250 B) $450 C) $800 D) $1,000 E) $2,000 Cash back will be deposited week of December 14, 2020 BMO InvestorLine Cash Back Offer Details June 1, 2020

Expired Offers

Last Updated: Jun. 30, 2020 16:20PT

Referral Promotions

Company Brief Description Minimum Deposit Amount Incentive Structure Time Limit to Use Commission/Cash Offer Deposit Details Link Deadline
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 B) $10,000 C) $25,000 D) $50,000 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
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 tbd
If you (an existing Qtrade Investor client) refer a new client to Qtrade Investor and they open an account with at least $1,000 the referrer and the referee may both be eligible to receive $25 cash. See terms and conditions for full details. $1,000 $25 cash back (for both referrer and referee) Cash deposited at the end of the month in which referee’s account funded Refer A Friend to Qtrade Investor none
BMO InvestorLine If you (an existing BMO InvestorLine client) refer a new client to BMO InvestorLine and they open an account with at least $5,000 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. $5,000 You(referrer): $50; Your Friend(referee): $50 Payout occurs 45 days after minimum 90 day holding period (subject to conditions). BMO InvestorLine Refer-a-Friend January 5, 2021

Expired Offers

Last Updated: Jul 28, 2020 14:24PT

Transfer Fee Promotions

Company Brief Description Maximum Transfer Fee Coverage Amount Minimum Deposit Amount for Transfer Fee Eligibility Details Link Deadline
Move your brokerage account to Questrade and they’ll cover the transfer-out fee up to $150. $150 n/a Transfer Fee Promo none
Transfer $15,000 or more to RBC Direct Investing and they will pay up to $200 in transfer fees. $200 $15,000 Transfer Fee Rebate Details none
Transfer $15,000 or more into a new HSBC InvestDirect account and you may be eligible to have up to $152.55 in transfer fees covered. $152.55 $15,000 Confirmed via email contact with HSBC InvestDirect Rep. Contact client service for more information. none
Transfer $15,000 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 $15,000 Transfer Fee Rebate none
Transfer $20,000 or more to a National Bank Direct Brokerage account and they will pay up to $135 plus taxes in transfer fees. $135 $20,000 Transfer Fee Rebate 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 Transfer Fee Promo Contact client service for more information (1-800-465-5463). none
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
BMO InvestorLine Open a new qualifying account with BMO InvestorLine or fund a qualifying existing account and you may be eligible to have transfer fees covered up to $200. Contact client service for more details. $200 Contact client service for more information Contact client service for more information (1-888-776-6886) none

Expired Offers

Disnat Desjardins Online Brokerage is offering up to $150 to cover the cost of transfer fees from another institution. To be eligible, new/existing clients need to deposit $10,000 into a Desjardins Online Brokerage account. You’ll have to call 1-866-873-7103 and mention promo code DisnatTransfer. See details link for more info. $150 $10,000 Disnat 1% Commission Credit Promo January 8, 2020
Last Updated: Jun 30, 2020 16:35PT

Other Promotions

Company Brief Description Minimum Deposit Amount Required Details Link Deadline
Submit your information via the Hardbacon website to be referred to National Bank Direct Brokerage. Open and fund a qualifying account and you may receive up to 20 commission-free trades and discounted trading commissions. Be sure to read full terms and conditions. n/a Hardbacon Free Trade Promo none
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 Broker@ge 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

Expired Offers

Last Updated: Jun 30, 2020 16:39PT

Digital Advice + Roboadvisor Promotions

Robo-advisor / Digital advisor Offer Type Offer Description Min. Deposit Reward / Promotion Promo Code Expiry Date Link
Discounted Management Open and fund a new Questrade Portfolio IQ account with a deposit of at least $1,000 and the first month of management will be free. For more information on Portfolio IQ, click the product link. $1,000 1st month no management fees KDKFNBBC None Questrade Portfolio IQ Promo Offer
Cash Back Open and fund a new or existing SmartFolio account with at least $1,000 and you could receive 0.5% cash back up to $1000. Use promo code PROMO1000 when opening a new account. See terms and conditions for full details. This offer can be combined with the refer-a-friend promotion. $1,000 0.5% cash back to a maximum of $1000. PROMO1000 January 2, 2020 SmartFolio Cash Back Promo
Discounted Management Open a new account with BMO SmartFolio and receive one year of management of up to $15,000 free. See offer terms and conditions for more details. $1,000 1 year no management fees STSF April 30, 2019 SmartFolio New Account Promotion
Cash Back – Referral BMO SmartFolio clients will receive $50 cash back for every friend or family member who opens and funds a new SmartFolio account. Friends and family referred to SmartFolio will receive $50 cash back for opening and funding an account, plus automatic enrollment into SmartFolio’s mass offer in market at the time. See offer terms and conditions for more details. $1,000 $50 cash back (referrer) $50 cash back (referee) Unique link generated from SmartFolio required. None SmartFolio Website
Transfer Fee Coverage Transfer at least $25,000 into Virtual Wealth when opening a new account and you may be eligible to have up to $150 in transfer fees covered by Virtual Wealth. $25,000 up to $150 in transfer fees covered None None Contact customer service directly for more information.
Last Updated: Jun. 30, 2020 16:40PT

Offers for Young Investors

Brokerage Offer Type Eligible Age Range / Client Segment Offer Description Min. Deposit Expiry Date Link
Student Pricing Clients with CIBC Smart™ Account for students $5.95 per trade and zero annual account fees not required None CIBC Student Pricing
Broker@ge 18-30 18-30 years old investors Benefits: * 5 free transactions (Minimum deposit of $1,000 required) * No inactivity fees * No asset minimum to maintain for free registered accounts * Exclusive events * Disnat Mobile App $1,000 None Broker@ge 18-30
Offers for professionals & Students Students in selected fields of study Professionals and students in the below fields can benefit from a reduced pricing structure: * Engineering students * Legal, accounting and business students * Healthcare students * Health sciences students * Nursing students Benefits: * $5.95 commission on equities * $0 commission on ETFs * $0 annual administration fee not required None NBDB Student Pricing
Young investor pricing 18-30 years old investors Benefits: * $7.75 commissions for stock and ETF trades * No account minimums * No quarterly admin fees min. $50 a month through pre-authorized contributions. None Young Investor Pricing
Waiver of account maintenance fee Clients who have RBC Student account, currently or in the past 5 years. The Maintenance Fee ($25 per quarter) is waived, regardless of the account balance. not required None Zero Account Management Fee
Young Investors Offer Clients below 26 years old Low activity account administration fee and the RSP account administration fee are waived. not required None Young Investors Offer
Zero Account Administration Fee Clients below 26 years old The account administration fee ($24.95 per quarter) is waived. not required None $0 Account Administration Fee
Last Updated: Jun. 30, 2020 16:45PT