Commission-Free Online Brokerages Launching Soon(ish)
If the field of 15 Canadian online brokerages felt a little crowded before, things are going to get even cozier over the next two years since that number could grow to 19, or more.
One of the biggest stories in the online brokerage industry in 2021 was the launch of commission-free trading by two large financial institutions in Canada: National Bank Direct Brokerage and Desjardins Online Brokerage. However, there hasn’t been much press about a record-breaking number of new no-commission online brokerages looking to launch in Canada.
Neither the presence of existing competitors, Canada’s relatively small population, fragmented regulatory landscape, nor the price point for commissions have dissuaded an unprecedented number of online brokerages from proposing to launch in Canada over the next two years. We’ve spotted at least four online brokerages (and are eyeing a fifth) who’ve indicated publicly that they are working to launch DIY investor solutions in 2021 and 2022.
Chalk this one up to global ambition. Freetrade, a commission-free online brokerage based out of the UK, has a bold vision of becoming a leading commission-free trading platform around the world. To that end, their expansion plans reveal Canada is on their roadmap.
We first broke the news in early August, and since then we’ve seen the number of job postings increase for interesting positions related to setting up this online broker in Canada. The timeline to seeing Freetrade go live is a bit fuzzy, but it wouldn’t be surprising if they opened up a waiting list and took a run at launching later into 2022 or early 2023.
In March of 2021, Canadian financial services firm Mogo Financial acquired a fintech company called Moka. While Moka’s core product is about helping individuals contribute what is essentially spare change into an investment account, Mogo rounded up to a whole other level by announcing they would be stepping into the world of zero-commission trading as well.
Originally road mapped to launch by the end of 2021, the window for official rollout appears to be in motion. An important acquisition of an order-execution-only firm (Fortification Capital Inc.) as well as a partnership with CI Investment Services and approval from regulators puts MogoTrade on the right path to go live in 2022. To close out 2021, individuals can sign up for the official waitlist.
If tastyworks and tastytrade received a nickel for every time they stated they were coming to Canada, there would be a lot of Canadian beaver coins to go around. Tastyworks has been “coming to Canada” for several years now, however, the regulatory logjams have created hurdles.
In the absence of more data on when exactly this busy beaver brokerage might go live in Canada, the latest update from the summer is that clearing and settlement firm, Apex, was working through regulatory approval to operate in Canada. Of course, one very big development is that tastytrade was acquired for one billion dollars in June by IG Group, something that deepens the pockets behind this online brokerage and sets the stage for the Tasty brand to go international.
October 2021 brought more than just fall colours to online investors, as another online brokerage outside of North America announced that they were looking to establish a foothold in Canada.
Unlike some of the other online brokerages catering to investors, in particular passive investors, TradeZero is all about active trading. As part of their roadmap to global ambition, TradeZero is looking to launch in Canada and support both crypto as well as options, which would land them in pretty exclusive company for a zero-commission brokerage.