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Discount Brokerage Weekly Roundup – June 3, 2016

source: Giphy

In case you didn’t get the memo, it’s National Donut Day – oh and apparently there’s a bull market in commodities to mark the occasion. As we head into a new month, the headline of a ‘bull market’ in commodities is great news for Canadian traders, regardless of whether or not the rally sustains itself. For Canadian online brokerages, this could be the break they’ve been waiting for, so long as they’re able to get their story out over and above the Canadian real estate price craze that is dominating the news cycle.

In this week’s roundup, we take a look at the freshly baked offers from Canadian discount brokerages who are offering up deals to woo back DIY investors into the summer markets. Next, we take a look at one online brokerage who has grown its number of clients by over 250% since the great recession. From there we’ll take a look at the latest online brokerage related tweets and what DIY investors were talking about this week.

Sweet Deals are Made of These

With summer just around the corner, most people will be looking to take it easy. Not so at a few Canadian online brokerages drumming up interest with deals & promotions.

Heading into a new month the deals activity appears to have stabilized somewhat with promotions from Scotia iTRADE coming back online in May and a new deal from BMO InvestorLine launching at the beginning of the month to replace their outgoing spring promotion.

One of the interesting trends that seems to be picking up steam is the use of contests. Virtual Brokers was at it again with regards to running a contest, this time for their existing clients, offering up a contest entry for completing a feedback survey. The prizes: 3 draws for an Apple gift card (or a $500 deposit into their account).

As we had referenced last week, National Bank Direct Brokerage, RBC Direct Investing, Virtual Brokers and Scotia iTRADE all have contests going at the moment whereas the ‘cash back’ or ‘free trade’ offers continue to remain on hold.

For those looking for a deal or promotion from Questrade, the good news is that there are still affiliate-based offers to be had that provide cash back or free trades. Specifically, users can use this link for a $50 commission credit or check our deals section on referral offers for a cash back offering. (note: Sparx will receive an affiliate payment for either of these)

Now that the commodity markets (in Canada) seem to be signaling a bullish tone, it will be interesting to watch how or if discount brokerages will move quickly to capitalize on the attention.

Interactive Brokers Grinds Higher

In sports, whenever a team or an athlete goes on a winning streak people start paying attention. In the online brokerage world, however, things are a bit more, um, humble.

As we’ve highlighted in the past, the beginning of the month typically signals a point at which we can check in on the latest trading metrics at Interactive Brokers (since they are one of a few online brokerages in the US that actually report these figures).

For anyone keeping score, trading metrics for the month of May at Interactive Brokers were largely in line with activity in the year thus far: DARTs, client equity and credit balances were healthy. The only sign of an issue was with margin loan balances decreasing on both a month/month and year/year basis.

What was particularly fascinating in looking through these figures is the growth streak that Interactive Brokers has been on.

For some context, each month when these stats are published, there seems to be one number that keeps on growing: the number of total accounts. “How long has this been going?” we wondered since it has been that way for as long as SparxTrading.com has been around and then some. So we checked.

As it turns out, as of the data available (going back to January 2008), Interactive Brokers has been growing the number of users for the past 100 (yep) consecutive months which explains how they’ve grown their user base 263% from 97.2 thousand clients to 352.6 thousand. That despite the great recession/housing crisis, the hubbub in Europe over sovereign debt and all other market pullbacks along the way.

Interactive Brokers Account Growth 2008 – Present

For some context, the number of brokerage accounts at E*trade in April 2016 was about 3.2M so Interactive Brokers is certainly a much smaller player in comparison to its peers in the US and also in Canada. That said, in January of 2014, E*trade had 3M brokerage accounts so the percentage growth in brokerage accounts since then (~7%)  has been relatively flat whereas at Interactive Brokers client base grew 45% over the same period.

While all streaks must eventually come to an end, this is one is an interesting signal that a) investors are continuing to turn to DIY platforms for investing/trading and that b) Interactive Brokers must be doing something right when it comes to catering to active traders – who, incidentally, are the most highly prized (and profitable) client segment of the market for online brokerages.

Naturally their competitors and clients would want to know what their ‘secret’ is however as CEO of Interactive Brokers revealed, the ‘secret’ is a relentless focus on technological dominance and lowering the cost of trading execution.

As part of a recent communique to clients and again on their Twitter feed, they highlighted new order types available to clients – an adaptive algorithmic market order.

While it is a mouthful to say, the clip shown below demonstrates just how far ahead of the other brokerage players (at least in Canada) Interactive Brokers is when it comes to trading experience. A “smart” market order that can adapt to market conditions to get a little better of a fill price is indicative of the technical savvy of Interactive Brokers and also a sign that human traders are increasingly turning to machines/algos to help compete against the robots they’re inevitably trading against (their Accumulate Distribute Algo is also very interesting for any trading geeks out there).

With that in mind, it will be interesting what technology the other Canadian online brokerages embrace to provide active trading clients with in order to compete against other traders. Even more interesting, however, will be what technology the brokerages will embrace to compete against the robo-advisors that are also chipping away at their market share.

Discount Brokerage Tweets of the Week

An interesting selection of queries, comments and some shade this week. Mentioned are Questrade, RBC Direct Investing, Scotia iTRADE, TD Direct Investing and Virtual Brokers.

From the Forums

Making a Move from Questrade

As many DIY investors will confess, keeping multiple trading accounts offers the best of all worlds for features but not so much for convenience. In this post from RedFlagDeals.com’s Investing forum, one user is looking to consolidate from Questrade to BMO InvestorLine and receives an interesting answer worth considering.

Going Steady

Going the couch potato route is a popular approach for many investors. How well it works, however, can also be influenced by the commissions paid for ETFs. In this post from reddit’s PersonalFinanceCanada section, one user asks for comments comparing TD’s popular E-Series with ETFs and how regular (large-ish) contributions might factor in.

Into the Close

It’s finally Friday. There’s definitely no shortage of ways to enjoy this weekend from inside or out. While there’s no telling what next week in the markets soon – an interest rate hike isn’t likely to be one. As for exactly when, for that we need psychics. Now if we could only ask this duo (see video) when that hike will hit or have them around during earnings season, that would be something!

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Discount Brokerage Deals & Promotions – June 1, 2016

Summer is close at hand and now that May is behind us, those who have sold in May and gone away might still find a reason to come back to the markets – at least that’s what some brokerages are banking on.

As we launch into a new month the discount brokerage deals and promotions landscape this year looks quite different than a year ago at this time.

For starters, one of the major sources of promotional offers for DIY investors, Questrade, is still in a holding pattern with no new noteworthy promotions being put forward. This is in stark contrast to last year where they were leading all brokerages with the most offers. For those still seeking a deal with Questrade, several are available, including (see below) links to affiliate plans and refer-a-friend bonuses.

In terms of the bank-owned brokerages, there were two interesting developments. First, BMO InvestorLine started the month with a new offer for the summer to replace their outgoing promotion that concluded at the end of May. Second, Scotia iTrade recently celebrated their 1-year anniversary of their downtown Toronto investor centre opening and marked it with incentives like free gelato and movie passes to meet with investment representatives.

There’s been a recent uptick in the number of contests being put forward by online brokerages so it will be interesting to monitor this approach to see if this will be a strategic way to drum up excitement for online brokerages during the summer months.

That said, there are a number of offers that are scheduled to expire during and at the end of June. Desjardins Online Brokerage’s commission credit offer, Virtual Brokers Apple gift card promotion, BMO InvestorLine’s refer-a-friend and National Bank Direct Brokerage’s commission-free Canadian ETF promotion are all on the chopping block this month so it will be interesting to see which discount brokerage promotion, if any, gets renewed.

If not, it will definitely be a much smaller field of brokerages and offers for DIY investors to choose from, at least until the fall season shows up when brokerages will be more interested in ramping up their promotional activities.

Expired Deals

The turnover in deals in May was not that substantial, with an offer from BMO InvestorLine and Virtual Brokers’ referral deal expiring. At the time of publication, it was not confirmed if Virtual Brokers would be extending the Cash Referral Program however we will post an update when we have one.

Extended Deals

No deals were officially extended at the time of publication.

New Deals

BMO InvestorLine was the only online brokerage to kick off the new month with a new offer. Specifically, BMO InvestorLine is offering investors cash back for opening and funding a new qualifying account. The cash back amounts range from $200 to $1,000 cash back depending on deposit sizes. In keeping with many of their previous promotions, the minimum deposit to qualify (for the entry level cash back amount) is $100,000. Interestingly, and unlike many other brokerages, BMO InvestorLine enables this cash back offer to be combined with their referral bonus ($50 for a minimum deposit of $50,000).

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 Virtual Brokers and they may cover up to $150 in transfer fees. $150 $25,000 Apple gift card promo June 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 June 30, 2016

Expired Offers
Last Updated: June 1, 2016 16:50 PT

Referral 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 sponsoring the latest edition of the Horizons ETFs Biggest Winner simulated trading competition. Top prize for the contest winner is $7,500 with a runner up prize of $2,500. There will also be weekly prizes of $500. Be sure to read terms and conditions for full details on timing and eligibility. n/a Horizons ETFs Biggest Winner 6 June 17, 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 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
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: June 1, 2016 16:50 PT

Transfer Fee Promotions

Company Brief Description Minimum Deposit Amount Commission/Cash Offer/Promotion Type Time Limit to Use Commission/Cash Offer Details Link Deadline
Jitney Trade A Sparx Trading exclusive offer! Use the promo code “Sparx Trading” when signing up for a new account with Jitneytrade and receive access to their preferred pricing package. n/a Discounted Commission Rates none For more details click here none
Open and fund a new account (TFSA, Margin or RRSP) with at least $1,000 and you may be eligible to receive 5 commission-free trades. Use promo code 5FREETRADES when signing up. Be sure to read terms and conditions carefully. $1,000 5 commission-free trades 60 days 5 commission-free trade offer December 31, 2016
Open and fund a new account at Virtual Brokers with at least $5,000 and you may be eligible to receive 3 months of commission-free equity trading and a $150 USD/mo credit towards Edge Trader Pro for 3 months. Use promo code sent at sign up to qualify. Be sure to read full terms and conditions for details. $5,000 3 months commission-free equity trading + $150 USD/mo platform fee rebate. 3 months 3 months free trading / Sign up form for promo code available here none
Scotia iTrade Open and fund a new account at Scotia iTrade with at least A) $25,000; B) $50,000; C) $100,000 D) $250,000 E) $500,000 or F) $1,000,000+ and you may be eligible to receive up to A) 75 commission-free trades and 5 contest ballots; B) 150 commission-free trades and 10 contest ballots; C) 200 commission-free trades and 25 contest ballots; D) 250 commission-free trades and 50 contest ballots; E) 250 commission-free trades and 100 contest ballots; or F) 250 commission-free trades and 200 contest ballots. Use promo code SP16FT when opening account to be eligible. Be sure to read terms and conditions for full details. A) $25,000 – $49,999 B) $50,000 – $99,999 C) $100,000 – $249,999 D) $250,000 – $499,999 E) $500,000 – $999,999 F) $1,000,000+ A) 75 commission-free trades + 5 contest ballots B) 150 commission-free trades + 10 ballots C) 200 commission-free trades + 25 ballots D) 250 commission-free trades + 50 ballots E) 250 commission-free trades + 100 ballots F) 250 commission-free trades + 200 ballots 90 days for free trades TSX Shopping Spree Contest . For full contest rules, click here July 31, 2016
Disnat Disnat is offering new & existing clients up to $500 in commission credits which can be used for up to 6 months. To be eligible, new/existing clients need to deposit $50,000 into a Disnat account. You’ll have to call 1-866-873-7103 and mention promo code Disnat500. See details link for more info. $50,000 $500 commission credit 6 months Disnat $500 Commission Credit Promo August 30, 2016
BMO InvestorLine Open a new qualifying account with BMO InvestorLine, and fund it with at least A) $100,000 or B) $250,000 or C)$500,000 in net new assets and you may be eligible to receive A) $200 cash back, B)$500 cash back or C) $1,000 cash back. Use promo code Summer1000 when signing up to be eligible. Be sure to read the terms and conditions for more details on the offer. A) $100,000 – $249,999 B) $250,000 – $499,999 C) $500,000+ A) $200 cash back B) $500 cash back C) $1,000 cash back Cash back will be deposited the week of Mar. 6, 2017. Summer 2016 Promotion July 31, 2016

Expired Offers
Last Updated: July 8 14:45 PT

Other 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 – $9,999 B) $10,000 – $24,999 C) $25,000 – $49,999 D) $50,000 -$99,999 E) $100,000+ $25 cash back (for referrer per referral; $50 bonus cash back for every 3rd referral) For referred individuals: A) $25 cash back B) $50 cash back C) $75 cash back D) $100 cash back E) $250 cash back Cash deposited into Questrade billing account within 7 days after funding period ends (90 days) Refer a friend terms and conditions Code Number: 476104302388759 none
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 Virtual Brokers client) refer a friend or family member to open a new account with at least $5,000 you may be eligible to receive $25 cash per referral. For 3 or more referrals Virtual Brokers will add a $50 bonus. Referred individuals depositing either A) $5,000 – $50,000 or B) $50,000+ may be eligible to receive A) $25 or B) $50 cash back. Be sure to read the full terms and conditions carefully for full details. Be sure to read the terms and conditions to this offer carefully for full details. A) $5,000 – $50,000 B) $50,000+ Referrer: $25 per referral; $50 bonus for each 3 or more referrals. Referee: A) $25 B) $50 Cash to be deposited to VB account by August 15, 2016. Cash Referral Program May 31, 2016
BMO InvestorLine If you (an existing BMO InvestorLine client) refer a new client to BMO InvestorLine and they open an account with at least $50,000 the referrer and the referee may both be eligible to receive $50 cash. To qualify the referee must use the email of the referrer that is linked to their BMO InvestorLine account. See terms and conditions for full details. $50,000 You(referrer): $50; Your Friend(referee): $50 Payout occurs 45 days after minimum 90 day holding period(subject to conditions). BMO InvestorLine Refer-a-Friend October 31, 2016

Expired Offers
Open a new account (TFSA, Margin or RRSP) and receive $50 commission credit . Use promo code: kdkfnbbc $1,000 $50 commission credit 30 days none none
Last Updated: July 8, 2016 14:51PT
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Discount Brokerage Weekly Roundup – May 27, 2016

Source: Twitter

Even though the week was technically a shortened one for Canadian DIY investors, there were many who felt it was simply a bit too long (TGIF amirite?). Despite the shortened timing, oil managed to make a brief appearance above $50, Trump managed to make an appearance of wanting to debate a democrat but then changed his mind, and unfortunately for Toronto, they won’t be making an appearance in the NBA finals.  For Canadian discount brokerages, however, appearances on social media this past week illustrate just how important the “online” in online brokerage is becoming.

In this week’s roundup we take a look at two online brokerages who continue to push contest promotions as markets appear to head into the traditionally slower months. From there, we’ll take a look at another online brokerage that suffered a number of technical outages that left clients having more than a few colourful comments to share online. Finally, to cap off the shortened week, we take a look at reactions of DIY investors on social media and investor forums.

Look at me now…

If you happened to be in Downtown Toronto this past week you probably couldn’t help but notice that the excitement in the air. All the attention, however, wasn’t on the Raptors. There were a pair of online brokerages that also found a way to drum up some interest by launching a pair of contests involving frozen treats and bank vaults.

Scotia iTrade kicked things off by celebrating the one-year anniversary of their ‘new’ downtown Toronto investor centre with offers of free gelato. Fortunately, it was plenty warm enough in Toronto for gelato to be a hit.

The investment centre, as young as it is, has a history of tying in promotions to get people to visit. When the centre first launched there was a massive promotion that offered free trades AND cash back as opposed to having to choose between free trades OR cash back. The catch was that investors had to come down to the investor centre to get the deal.

Last year, Scotia iTrade also had a ‘selfie’ themed competition in which movie passes were up for grabs to folks who took a ‘selfie’ in the new investor centre. This year, however, in addition to the gelato giveaway, Scotia iTrade also offered up two free movie passes to individuals who made an appointment with one of their investment representatives. Interestingly, the total face value of the two passes ($24.98) is just shy of their standard commission price per trade.

In addition to these promotions, Scotia iTrade is also running a “shopping spree” themed contest that’s offering up a prize of $10,000 in TSX listed securities. And in case you didn’t see it, Scotia iTrade is also on the BNN ticker for BNN’s beta version of the new website and they’ve been broadcasting their promotions in online ads as well as on Twitter (to which there have been some interesting replies from Twitter followers).

Like the temperatures in Toronto this past week, Scotia iTrade is turning up the heat on its competitors.  By marketing more aggressively and running promotions across their social media channels, it’s clear that iTrade is looking to get out in front of their competitors during a traditionally slower time in the markets.

But they weren’t the only ones working hard heading into summer. Not too far down King St W another online brokerage, in this case National Bank Direct Brokerage, also held an interesting competition to attract the attention of local passersby.

No stranger to contest-driven promotions, National Bank Direct Brokerage was offering up a heftier prize of $5,000 towards an investment account. The catch – individuals had to sign up for a webinar/seminar with National Bank Direct Brokerage.

In comparing these two discount brokerages’ approach to running promotions, how they each advertised their respective contests on social media was actually quite interesting.

On the one hand, Scotia iTrade has its own Twitter account – which is independent of the Scotiabank twitter handle.  As a result, there was more specific promotion as well as greater coverage of the current promotion by Scotia iTrade on Twitter than there was for National Bank Direct Brokerage.

Source: Twitter

In fact, by comparison, NBDB did not appear to broadcast this event widely on social media, although the National Bank Direct Brokerage LinkedIn page did get more attention, it seems, than the message put forward on Twitter.

Source: LinkedIn

Why this is important, not only for brokerages but also for DIY investors is because individuals are increasingly spending more time on different social media channels. In particular, millennial investors – the ones who represent the largest and most important demographic that would take on DIY investing, will increasingly be judging how well (or poorly) brands are using technology platforms as a component to deciding who they wish to park their business with. For “online brokerages” claiming technological supremacy means they not only have to walk the walk, but they also have to talk the talk.

Technical Foul

This past week, there was a lot of attention being shone on one of Canada’s largest discount brokerages: TD Direct Investing for a series of outages that clients experienced on the trading platform WebBroker. Often, investors and traders are trying to take advantage of particular moments in the market, so when a platform goes offline, tensions mount.

Unfortunately for TD Direct Investing this week, those tensions boiled over when numerous clients experienced trading platform outages and then took to social media and forums to voice their discontent (see our tweets of the week for full details).

What was especially interesting to see was personal finance expert Rob Carrick weigh in on Twitter. As a response to several messages from users, Carrick tweeted to TD Direct Investing asking “Yo, @TD_Canada – Am receiving reader complaints about persistent problems getting access to the TD Direct Investing website. What’s up?”

Source: Twitter

While veteran DIY investors of every platform or provider know that outages can and do happen, the resources available to Canada’s major bank-owned brokerages (TD reported a profit of $2B this past fiscal quarter alone) mean that there is very little in the way of sympathy or patience for things to work right.

After all, if there’s one thing the parents of Canadian bank-owned online brokerages have, it’s money.

And, with the kinds of resources that kind of funding should buy, it’s a great example to DIY investors, that outages can happen anywhere or to any broker – big or small. The more important question DIY investors need to know the answers to is how effectively online brokerages prepare for and handle the mini-crises that inevitably will arise as trading relies more and more on technology.

Discount Brokerage Tweets of the Week

This week the big green (TD Direct Investing) was getting turfed by DIY investors for trading outages. Interestingly, Questrade didn’t miss the opportunity to try and reach out to unhappy TD Direct Investing clients and offer them a friendly (and functioning) alternative. Curiously, TD Direct Investing hasn’t yet responded in kind to the Questrade clients expressing concerns/complaining. Mentioned this week were Questrade, Scotia iTRADE, and TD Direct Investing.

From the Forums

Diamonds in the Rough

While bill payments aren’t a thing (yet) for most Canadian online brokerages, this post, from Canadian Money Forum, appears to reveal that certain account tiers (i.e. diamond level) may have access to this bill payment feature already.

Making a Fee Statement

With more regulations on fee disclosure coming into full force, Canadian investors should be getting a clearer picture of what kinds of fees they pay to their financial advisors and fund products. Of course, according to this post from RedFlagDeals.com, not everyone will be interested even if they are paying ‘high fees’.

Into the close

That’s a ‘Rap’ for this shortened Canadian trading week. It was an exciting run for the Raptors but alas they too will be heading into the weekend with a lot more time on their hands – time enough to catch up on their Game of Thrones. Whatever the adventures you may get up to, have a wonderful weekend and a quick reminder US markets closed on Monday for Memorial Day so expect lighter than normal trading volumes.

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Discount Brokerage Weekly Roundup – May 20, 2016

Source: Twitter

Even the best investors can be caught off guard by sudden moves in the market. It’s a humbling lesson and usually the tuition for poor risk management isn’t cheap. For Canadian discount brokerages, there are definitely signs in the US brokerage market that the risks for certain brokerages are rising.

In this week’s roundup, we take a deeper look into some interesting moves that took place in the US online brokerage market and what that might mean for Canadian online brokerages as the competition and race for technological supremacy heats up. Next, we take a look at standard online brokerage commission pricing, to see why it’s not exactly an apples-to-apples comparison across the board. From there we’ll take a look at the reactions from DIY investors on Twitter and close out with comments from the online investor forums.

Keep on Surviving

Why is a market so exciting? It settles debates from opposing sides using dollars and cents. The business of being a brokerage is something that we cover regularly in the weekly roundup and this past week there were some interesting developments that are shaping up to make the ‘online brokerage’ marketplace even more exciting.

On the one hand there’s a bullish case to be made with interest rates being telegraphed to rise. For borrowers this isn’t great news but online brokerages are also lenders and as we reported several weeks ago, significant portions of online brokerage revenues come from their margin lending. One of the long time messages Schwab has been trying to communicate to its shareholder base is just how material even small increases in interest rates will be for their financial performance.

On the other hand, there are the bears. Interestingly, the case is not entirely a bearish one considering the source, Thomas Peterffy, CEO of Interactive Brokers. According to a recent interview in the Financial Times, he is forecasting that 80% of brokerages in the US will disappear because of constrained revenues, changing investor habits, compliance costs and advances in technology. So, while this is clearly a bearish call for most of the players on the field, for some, including Interactive Brokers, it may be a self-fulfilling prophecy that they’re left standing after this massive cull.

This is not the first time he has pointed to this data this year either. Peterffy alluded to this point in a recent earnings conference call with an analyst which suggests that this forecast is both a clever marketing pitch to professional brokers that want to lower their cost and a way to showcase the merits of Interactive Brokers’ model of heavy automation. In either case, Interactive Brokerages certainly stands to benefit from brokerages either folding, being gobbled up or deciding to use Interactive Brokers for their platform of choice. Well played IB.

There is, however, one potential ‘canary’ in the Canadian online brokerage coal mine.

Now that Virtual Brokers has changed (i.e. raised) their commission structure and is starting to shift their focus towards ‘value’ rather than price, it may signal that they too are feeling the pinch of the low cost game. Unfortunately for small brokerages like VB, value is a game that the bigger financial brands in Canada have a clear edge over (think bundling of services and convenience).

To compound the challenges facing the independent brokerages they need the scale of client accounts (or trading activity per client) to be large otherwise commission prices need to be lower in order to offset the greater convenience offered by the bank-owned brokerages. The only other viable alternative for non-bank-owned brokerages is to invest in making their product experience exceptional – which is not a small investment in either the people running the brokerage or the technology needed to pull it off.

For Canadian DIY investors, ultimately, the scenario where costs/fees decrease is a good one.

Unfortunately for the non-bank-owned brokerages are now quite vulnerable to being priced out. There’s already proprietary data we’re seeing that shows they’re losing their edge against the banks, and the introduction of robo-advisors certainly doesn’t help matters either.

If the bank-owned brokerages were to drop their standard commission fees down even further, the traditional “low cost” or non-bank owned online brokerages would have a difficult time competing demonstrating yet again that the debate over the best online brokerage may just come down to who’s left standing.

Unpleasant Sur-price

Nobody likes discovering what’s in the fine print, especially after receiving a charge from their brokerage. Yet, despite all of the forms and acceptance of terms and conditions, so many DIY investors get tripped up by the fine print put forward by online brokerages.

Interestingly, this past week there were two examples of two different investors who unfortunately appeared to get dinged for fees they didn’t see coming.

The first was in a post in the Canadian Money Forum in which a Qtrade Investor client was charged $22 commission for a trade they thought should only cost $8.75.  In the second case posted on Twitter, a user was clearly caught off guard by the commission rates.

Of specific interest is the situation of the trade at Qtrade Investor. In this particular instance the individual in question stated they were charged a fee that was generated on top of their ‘commission fee’. As it happens, this fee appears in the “other fees” section of the Qtrade website pricing page where it states that a charge of 1/30th of 1% or (0.00033) of the value of the trade.

Breaking down the math of the trade, the standard rate of $8.75 per trade means that this individual incurred a charge of $13.25 in ECN fees for this trade. In order to generate that level of ECN fee they would have had to have a trade value of $39,750. Now since we know they sold 500 shares of BMO.TO that gives us a trade price of $79.50 (sounds like a good round number limit order price) which turns out to be a plausible price for BMO to have hit on April 12th – so the math checks out (13.25 divided by 0.00033333 = 39,750).

There are a number of interesting things about this scenario.

Perhaps the most fascinating is that this person described themselves as a relatively infrequent trader (<20 trades per year) with a six-figure portfolio. Yet for the surcharge of an extra $13.25 of a $39,750 order, the individual went through the motions of reconsidering their relationship with Qtrade Investor to consider moving their crosstown rival Credential Direct (or others who may offer truly flat pricing). And, not so much because of the $13.25 but as noted by the individual it was “the principle of paying double”.

It is important to mention that, while Qtrade Investor does offer to waive this fee for clients who make over 150 trades/quarter or who have at least $500,000 in assets across all Qtrade accounts, for this investor, the standard pricing rules applied.

From a business perspective, the bigger question is what is it worth to an online brokerage have that client or to try to win them back? The answer to this question is probably why, in some part, many bank-owned brokerages have decided to offer flat commission pricing rather than pass through the ECN charge.

For DIY investors, flat pricing is usually a more favourable option to have than variable pricing and the difference can certainly add up depending on the manner or volume of trade being executed. Flat pricing also simpler and more predictable.

Interestingly, Virtual Brokers is the only non-bank-owned brokerage to offer the flat commission pricing as a standard option. It should be noted that Virtual Brokers does pass through the SEC fee for US securities trades at the rate of $0.0002/share.

Brokerage Standard Commission Price
BMO InvestorLine 9.95 flat
CIBC Investor’s Edge 6.95 flat
Credential Direct 8.88 (not flat)
Disnat Classic 9.95  (not flat)
HSBC InvestDirect 9.88 (not flat)
Interactive Brokers 0.01/share (not flat)
Jitneytrade Variable pricing (not flat)
National Bank Direct Brokerage 9.95 flat
Qtrade Investor 8.75 (not flat)
Questrade 4.95 – 9.95 (not flat)
RBC Direct Investing 9.95 flat
Scotia iTRADE 24.99 (not flat)
TD Direct Investing 9.95 flat
Virtual Brokers 9.99 flat
Note: Flat is defined as no additional charges on the trade (e.g. no ECN fees will be charged)

With flat commission pricing the independent or “low cost” discount brokerages in the Canadian market are now not necessarily less expensive than the bank owned discount brokers. Other fees, such as account administration fees or inactivity fees certainly bear consideration but when looking at flat vs variable cost on a per trade basis – flat makes a compelling case.

Coming back to the bigger issue of changing a brokerage on principle, this example offers an important insight into the value that DIY investors place not only on transparency of fees, but also on clarity and customer choice.

DIY investing does mean that there will be fine print and unfortunately as individual investors, everyone who signs up for an online trading account is responsible to know some of the “quirks” and important conditions for trading through a particular online brokerage.

1/30th of 1% may not seem like much but it was enough to cause one client to take to the internet to voice their displeasure.

The lesson to brokerages seems clear: leave the surprises in price to the stock market and not in the commission structure of those doing the trading.

Discount Brokerage Tweets of the Week

We had a few technical difficulties with the tweets of the week, so only a selection of tweets are shown here. We will update this when we’re able to access the other tweets. In the meantime, there appears to be no shortage of reasons that caused investors to reach out – most notably an outage from TD Direct Investing’s web broker.

From the Forums

The Price of Advice

In this post from Canadian Money Forum, a product that we don’t often hear much about – BMO InvestorLine’s Advice Direct, was mentioned by someone considering the service. Interestingly there was also the mention of bonus trades for InvestorLine to sweeten the deal to the tune of 160 free trades per year. There’s an interesting debate about robo-advisors in there as well. Worth a read.

The Cost of Advice

In this post from reddit, an alleged interaction with a Questrade representative stating that someone should over contribute on their TFSA sounded alarms with other readers and also with Questrade community reps who replied. An interesting example of why it’s always good to trust but verify.

Into the Close

That’s a wrap on another week. Heading into the May long weekend remember that Canadian markets will be closed on Monday. Have a safe and fantastic weekend and for all the Raptors fans, hang in there!

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Discount Brokerage Weekly Roundup – May 13, 2016

Even in a world of robo-advisors and trading algorithms, human traders and investors are still prone to believing in the power of luck. Of course, it being Friday the 13th, the more superstitious folks probably are focused on avoiding the bad luck. For Canadian discount brokerages, however, it seems like they’re betting on the power of luck to reignite interest in the world of DIY online trading.

In this week’s edition of the roundup, we highlight the latest online brokerage-run contests that have come to market. Next we’ll do a quick scan of updates from across several brokerages that are busy rolling out new features. As always we’ll take a look at the latest tweets from the online brokerage space and close out with what investors were talking about this week.

Exchanges Only: Scotia iTrade Launches Contest

After sitting on the sidelines for April, Scotia iTrade rolled back into action launching the latest revival of their commission free trade offer. This latest version of the offer, however, comes with a twist. First there are no ‘cash back’ choices as there were previously. Second, there is also a contest that is being branded as a ‘shopping spree on the TSX’ worth $10,000 attached to the promotion. Also back on the list of deals is the refer-a-friend offer at Scotia iTrade. More information can be found in our deals and promotions section.

This is not the first time (nor probably the last) Scotia iTrade has tried their hand at a contest. Last year they tried to entice visitors to their Investor Centre with a Twitter selfie contest, the prizes for which were movie passes.

So why do online brokerages run contests? Do they work? For the most part, contests are a great way for online brokerages to a) get potential customer information and b) to lower the cost of getting a client. As for whether or not they work, the question is really whether or not they are cost-effective which is tricky to measure.

What is interesting about the latest offer from Scotia iTrade is that it pairs together their familiar offer of commission-free trades with a headline grabbing amount of cash as part of a contest. While 50 free trades may not get attention, $10,000 most certainly will. Headlines aside, it’s important to take a look at all deals with a clear understanding of what’s being offered and what special conditions are associated with the offer.

When looking at the tiers of the offer itself, it is worth noting that individuals typically don’t see the number of free trades go up proportionately to the amount of money being brought in. For example, whether individuals deposit $100,000 or $1M, the number of free trades offered differs by 50. In fact, at $250,000 the number of commission-free trades does increase even if deposit size does; the ‘sweetener’ is the contest ballots which increase the odds of winning. It will be interesting to see whether someone would move and/or park $1M with Scotia iTrade for a few extra chances to win $10K.

Scheduled for January 2017, the draw for the shopping spree is quite some time away. For DIY investors who’ve entered and stayed within the terms and conditions, at least they’ll have enough time to make a list and check it twice.

Jumping into Fintech: BMO InvestorLine Stirs the Technology Pool

It almost goes without saying these days that technology is evolving exponentially. For banks and bank-owned brokerages in particular, the buzzword of the day is “fintech” or the convergence of finance and technology.

There are signs everywhere that startups are already provoking change at the bank-owned brokerages. Robo-advisors, for example, are directly challenging the wealth management divisions of the major Canadian banks so much so that several brokerages have either partnered with or created their own in-house robo-advisor (although they don’t want to label it as such).

This week, BMO InvestorLine showed signs they are stirring as they launched an invitation to clients to participate in an ‘advisory panel’ survey and are rolling out some changes to their login protocols.

In terms of the survey to clients, the survey itself is about 25 questions and covers topics designed to get to know who their clients are demographically but also where they may have other accounts and how users interact with the services provided by BMO InvestorLine.

One of the questions that was particularly interesting was a question in which users were asked about any other brokerages where they held accounts.

Screenshot from InvestorLine Survey

On that list were all of the major Canadian online brokerages, however there were also 3 robo-advisor firms on the list: Wealthsimple, Nestwealth and Wealthbar. This is clearly a signal BMO InvestorLine is curious to know what kind of presence the robo-advisors are gaining with their clients.

To encourage users to participate in the survey, BMO InvestorLine is offering a draw for $1,000.

In addition to the survey, respondents can sign up to be a member of the BMO InvestorLine “advisory panel.” It appears that BMO InvestorLine is hoping to create and tap a pool of individuals for feedback and create an engaged community of brand loyalists. Fortunately, there are also opportunities for participants to win money via ongoing draws that users get entered into for completing surveys.

Another interesting angle to the evolving ‘fintech’ story at online brokerages is that of security.

As client data and interactions shift decidedly to the online experience, security is of paramount concern at all Canadian brokerages. To that end, BMO InvestorLine is about to roll out 2 step verification in which users attempting to log into their BMO InvestorLine account may need 2 steps (such as entering in a username & password on the website followed by a notification code being sent to their mobile device) to confirm their identity.

The story on fintech goes beyond security and automation. It also means rapidly evolving features and functionality at a pace never seen before in this space.

Questrade, for example, is repositioning itself as a leader in the ‘fintech’ race among brokerages. Already they’ve opened up their app marketplace which enables 3rd party technology partners to add functionality to the Questrade platform. In addition, and most interestingly, they’ve also created an API that allows the community of Questrade users to come up with interesting tools and improvements to their trading experience in true DIY fashion.

For brokerages big and small, the race to adapt to a leaner technology model is ramping up. The future investors and traders – the ones who have the time horizon and risk profile to actively trade equities and options – are going to demand smooth user interfaces and digital experiences that look and feel current. This means that online brokerages, like BMO InvestorLine, will increasingly be asking and listening to what customers want and, most importantly, now they’ll have to figure out how to build it quickly.

Discount Brokerage Tweets of the Week

In this week’s tweets, technology is giving brokerages lots to keep them busy. Mentioned this week: Questrade, Scotia iTrade, TD Direct Investing and Virtual Brokers.

From the Forums:

Getting a DRIP

In this post from the RedFlagDeals.com investing forum, one user is interested in harnessing the power of compounding by using a DRIP. The only catch was actually knowing how to set it up at TD Direct Investing. Hear what others had to say about setting up a DRIP at their broker and at TD.

Earning for Learning

Putting funds aside for a child’s future educational needs is sound financial planning. Figuring which brokerage was best for RESPs was the focus of this post from reddit. Find out why one user was weighing either Questrade or TD Direct Investing as their top 2 choices.

Into the Close

It’s been quite a roller coaster week for folks trading on Bay St as well as those further south on Bay in the neighbourhood of Jurassic Park. We’ve talked a lot about luck in this week’s roundup and heading into the weekend it looks like the Raptors are going to need all the luck they can get their claws on. On a slightly different note – it’s great to see the magnificent response to the needs of folks in Fort Mac as the outpouring of support continues. Certainly there are things and people to feel lucky to have. Enjoy the weekend!

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Discount Brokerage Weekly Roundup – May 6, 2016

Source: Twitter

Crisis and opportunity. For traders it’s often two sides of the same coin. The human toll of the tragic events in Fort McMurray are impossible to quantify however for those seasoned veterans of markets who can only watch in disbelief at this surreal disaster, the scale and impact of these wildfires are what need to be traded around – which means speculators are trying to quantify the impact to oil, the Canadian dollar and the insurance industry. That said, like markets, it is encouraging that because of the bravery of first responders and the steely resolve of those displaced by these unrelenting fires, individuals are looking to the future, patiently awaiting the chance to rebuild.

In this edition of the roundup we’ll take a look at the latest deals and promotions to hit the stands at the outset of the month. Following that, we do a lightning round of small updates at several brokerages which show that the ground is still shifting and highly dynamic. We close out the roundup with chatter on Twitter and in the Canadian investor forums.

Making a Market for Promotions

Even though markets seemed to have had a solid bounce off their February lows, for online brokerage deals, it seems that the case is quite the opposite. The number of deals and promotions from Canadian brokerages has steadily receded so that heading into a new month we’ve now spotted 17 advertised promotional offers.

Despite a couple of brokerages flashing bearish signals on offering DIY investors deals, the great thing about competitive markets is that there are other brokerages who are bullish, and as a result, the next few months should have some really interesting changes start to take shape.

Since March, it appears that Questrade and Scotia iTrade in particular have turned bearish on deals. After years of promotional activity that typically resulted in a new offer every few weeks, these firms have been noticeably more quiet – perhaps too quiet. In such a dynamic space, sometimes it not what players do but what they don’t that raises eyebrows. In this case, such a longstanding practice of headline grabbing offers suddenly pulling back is sign that something is definitely up.

In contrast, Virtual Brokers has decided to pick up its promotional pace in 2016. They head into May with a contest driven promotion ($500 Apple gift certificate prize draw) and more recently they’ve also teamed up with 5i Research to provide special access to this newsletter/information service to VB’s clients whose balances are greater than $4,000 (this is being marketed directly to existing clients for the moment although it is open to new clients).

Another brokerage that stepped back into the promotional arena this month was National Bank Direct Brokerage. In NBDB’s case, they are once again sponsoring the Horizons Exchange Traded Funds “Biggest Winner” ETF trading competition. The simulated trading competition involves contestants trading Canadian ETFs to see who can have the best performance over the 6-week competition. Top prize for the ‘biggest winner’ is $7500.

Incidentally the contest sponsorship coincides with National Bank Direct Brokerage’s commission-free ETF offer (for Canadian ETFs only), so the contest promotion has some overlap with the free ETF promotion as well.

Overall, the number of actively advertised deals has declined since the start of the year, owing in large part to the retracement of Questrade in this space.

That said, certain brokerages are running unadvertised marketing campaigns to select clients and there are already brokers that have signaled a pickup of deals activity heading into the fall.

While brokerages may not be too enthusiastic about dishing out free trades or cash-back incentives, the challenge of attracting new clients and standing out from one another still remains. It looks like the strategy across multiple brokerages is to stay away from price drops and focus on the value added experience (i.e. getting additional research or getting promotional items).  The fact there are several brokerages actively running contests as part of their incentive program could be signs of an early trend emerging.

Whatever the route that brokerages choose to take, the reality of attracting new clients while staying ahead of the competition has only gotten more complex. The notion that you have to ‘give to get’ is one that will remain true for brokerages, so it will be interesting to see who does the giving and what form those gifts take.

Lightning Roundup

This week there were a number of small developments across the online brokerage space. Though they might be small, however, they do highlight that this space is still a dynamic one, even heading into the second half of spring.

Qtrade Shifting the Focus

In an interesting shift of messaging on the front end of their website, Qtrade Investor has replaced their now-expired deal announcement with an image focusing on the customer service aspect of dealing with Qtrade.

Source: Screenshot of Qtrade Investor website

The choice of what to make front page news on a company’s website homepage is a deliberate and important one. In Qtrade’s case, the focal point on good service is one they most likely want to ensure gets equated with their brand.

This is another in a series of front-facing improvements Qtrade has made so it is interesting to see what this evolves into.

Interactive Brokers Trading Metrics

Interactive Brokers once again released their trading and company metrics for April. While there were mixed performances across different metrics, what continued to show consistency is their account growth. On a month over month basis, client accounts grew by 1% but on a year over year basis, this figure was +15%.

Interactive Brokers continues to attract more clients than they lose, a sign that traders are still stepping up to the plate. Looking a little deeper, they are continuing to maintain their dominant position with highly active traders with the average number of trades per client estimated at 444/year.

The Digital Transition

One of the biggest advantages that bank-owned brokerages have enjoyed over the non-bank owned brokerages has been the fact that there is the convenience of a physical branch to go into. That notion of convenience, however, is clearly becoming increasingly digital.

An area in which that has become particularly evident has been in investor education. Specifically, in looking at the educational events provided by TD Direct Investing, there has been a noticeable shift away from doing in-person/live events and towards doing online webinar style events.

Here are two images comparing the educational events across Canada from 2014 and that same picture heading into May 2016. It is interesting to note that there are more in-person events taking place in BC than there are in Ontario, despite the population size difference. Further, there are now fewer (if any) in person events in Quebec and regions outside of Ontario, Alberta and BC. For what it’s worth, TD Direct Investing also does in person events (such as their Tastytrade event in Toronto last fall) which are bigger in scale and offer much more of a spotlight on their brand than perhaps the network of small educational seminars could offer.

Source: Screenshot TD Direct Investing Seminars Page

Interestingly, looking at other educational event providers at the bank-owned brokerage level, Scotia iTrade tends to hold almost all of their educational events as online webinars while their in person events are largely as a sponsor of Larry Berman’s educational ‘road show’.

National Bank Direct Brokerage, on the other hand, does not tend to do large/big name events and tends to concentrate their efforts primarily in Quebec. Over time they’ve shifted from being mostly in-person events to now about an even split between online and in-person events.

The reality of busy people today is that technology exists to give investors the convenience of webinars rather than forcing them to commute and coordinate being in a room to listen and learn. Although this transition has clearly taken some time to manifest, the trend towards digital transition in financial services is evident and there’s really no going back from here. As everything around consumers gets more and more digital, the expectation that banks and online brokerages demonstrate leadership and agility with technology will be key to their survival. It is perhaps why Scotiabank announced a mindboggling spend of $275M to upgrade their technological infrastructure. The technology arms race has already begun so it will be interesting to see how and where online brokerages continue to digitize going forward.

Discount Brokerage Tweets of the Week

It looks like customer service in the digital age includes being able to connect on Twitter. Online brokerages that had their customer service skills tested included BMO InvestorLine, CIBC Investor’s Edge, Questrade, RBC Direct Investing, Scotia iTrade, TD Direct Investing and Virtual Brokers.

From the Forums

As they say in the markets, sometimes the volume thins out. This week in the forums discount brokerages weren’t making waves. Nonetheless, there were a few ripples in the water.

Questrade vs Wealthsimple

The battle of the brokerages has now spilled over into the robo-advisor arena. This post from reddit’s personal finance Canada section is a great example of what might be facing brokerages with and without their own robo-advisor service.

Mutually E-xclusive

In this post, also from reddit’s personal finance Canada section, there was an interesting example of an individual seeking some direction on how to access the TD e-series low cost mutual funds and the kinds of information they encountered along the way.

Into the Close

It’s been an incredibly tough week for the folks in Fort McMurray. While we typically hope for sunnier skies for the weekend, here’s hoping that Fort McMurray gets the rain and relief it needs.

Amidst the tragedy and fear, there are tremendously courageous folks who are going above and beyond the call of duty to help. Thank you to all the good Samaritans and first responders for their efforts and for Canadians for being Canadian when it counts the most.

On a slightly different and more positive note, here’s a great reminder of what Canadians know about one another when it comes to rising to the occasion.

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Discount Brokerage Deals & Promotions – May 1, 2016

*Update May 9* Sell in May and go away. It’s a phrase many traders are familiar with and now that May has arrived it looks like there will be sales – just not a whole lot more from certain discount brokerages.

As we head into a new month, it looks like there’s a definite pull back in place with certain brokerages – notably Scotia iTrade and Questrade. Questrade has placed its bets on a handful of standing offers heading into May and appear to be taking a ‘wait and see’ approach while Scotia iTrade also appears to be in a holding pattern. Nonetheless, there are other brokerages that appear to be taking advantage of the pull back by ramping up their promotional activities.

This month the theme appears to be “contests” with two online brokerages now trying to win over clients with the lure of being a prize winner. One from Virtual Brokers, launched late last month, and the other from National Bank Direct Brokerage, are meant to either directly or indirectly shine a spotlight on their respective brokerages. It is also worth mentioning that RBC Direct Investing is still running its $1,000 draw for clients to join their investor community feature.

We’ll continue to monitor the deals and promotions activity heading into May, however it seems like there may be a tactical shift by brokerages to highlight “value” in place of things that reduce price.

Expired Offers

There were a couple of notable deals that expired in April. Midway through the month, TD Direct Investing’s free trade offer expired and at the end of the month, Desjardins Online Brokerages’ long running commission credit promo technically expired (see update in extended offer below). Qtrade’s lowered threshold transfer promotion also went dark as did Questrade’s tax-themed promotion.

Extended Offers

*Update May 9* It took some time but Desjardins Online Brokerage renewed their long-running $500 commission credit promotion. This deal has been extended to the end of June.

We didn’t spot any extensions at the outset of May.

New Offers

*Update May 9: Scotia iTRADE has re-appeared in the deals and promotions section reviving one of their multi-tier offers while at the same time getting on the contest bandwagon with an offer to win a “TSX shopping spree” of $10,000; there are also 5 runner-up prizes of $1,000 each. For individuals opening a new Scotia iTRADE account, the number of ballots for this contest increase as the amount deposited increases. See the table below for more information.*

Two new offers were noted by Virtual Brokers and National Bank Direct Brokerage.

Virtual Brokers’ latest promotion involves a draw for a $500 Apple gift certificate. In order to be eligible, a new account must be opened by June 30th with a deposit of at least $1,000. The draw for the gift card takes place at the beginning of August.

For National Bank Direct Brokerage, they are once again co-sponsoring the Horizons ETFs Biggest Winner Contest. This contest offers up $7,500 to the grand prize winner, $2,500 to the runner up and weekly prizes of $500. The competition starts on May 9th and runs until June 17th.

*Update May 9: Database issues have been resolved and we have now updated the deals section for May 2016. Thanks for your patience!*

*NOTE: We’re experiencing some technical difficulties with our database at the moment. We will update the data tables below when this issue has been resolved.*

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 Virtual Brokers and they may cover up to $150 in transfer fees. $150 $25,000 Apple gift card promo June 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 June 30, 2016

Expired Offers
Last Updated: May 9, 2016 15:30 PT

Referral 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 sponsoring the latest edition of the Horizons ETFs Biggest Winner simulated trading competition. Top prize for the contest winner is $7,500 with a runner up prize of $2,500. There will also be weekly prizes of $500. Be sure to read terms and conditions for full details on timing and eligibility. n/a Horizons ETFs Biggest Winner 6 June 17, 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 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
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: May 9, 2016 14:30 PT

Transfer Fee Promotions

Company Brief Description Minimum Deposit Amount Commission/Cash Offer/Promotion Type Time Limit to Use Commission/Cash Offer Details Link Deadline
Jitney Trade A Sparx Trading exclusive offer! Use the promo code “Sparx Trading” when signing up for a new account with Jitneytrade and receive access to their preferred pricing package. n/a Discounted Commission Rates none For more details click here none
Open and fund a new account (TFSA, Margin or RRSP) with at least $1,000 and you may be eligible to receive 5 commission-free trades. Use promo code 5FREETRADES when signing up. Be sure to read terms and conditions carefully. $1,000 5 commission-free trades 60 days 5 commission-free trade offer December 31, 2016
Open and fund a new account at Virtual Brokers with at least $5,000 and you may be eligible to receive 3 months of commission-free equity trading and a $150 USD/mo credit towards Edge Trader Pro for 3 months. Use promo code sent at sign up to qualify. Be sure to read full terms and conditions for details. $5,000 3 months commission-free equity trading + $150 USD/mo platform fee rebate. 3 months 3 months free trading / Sign up form for promo code available here none
Scotia iTrade Open and fund a new account at Scotia iTrade with at least A) $25,000; B) $50,000; C) $100,000 D) $250,000 E) $500,000 or F) $1,000,000+ and you may be eligible to receive up to A) 75 commission-free trades and 5 contest ballots; B) 150 commission-free trades and 10 contest ballots; C) 200 commission-free trades and 25 contest ballots; D) 250 commission-free trades and 50 contest ballots; E) 250 commission-free trades and 100 contest ballots; or F) 250 commission-free trades and 200 contest ballots. Use promo code SP16FT when opening account to be eligible. Be sure to read terms and conditions for full details. A) $25,000 – $49,999 B) $50,000 – $99,999 C) $100,000 – $249,999 D) $250,000 – $499,999 E) $500,000 – $999,999 F) $1,000,000+ A) 75 commission-free trades + 5 contest ballots B) 150 commission-free trades + 10 ballots C) 200 commission-free trades + 25 ballots D) 250 commission-free trades + 50 ballots E) 250 commission-free trades + 100 ballots F) 250 commission-free trades + 200 ballots 90 days for free trades TSX Shopping Spree Contest . For full contest rules, click here July 31, 2016
Disnat Disnat is offering new & existing clients up to $500 in commission credits which can be used for up to 6 months. To be eligible, new/existing clients need to deposit $50,000 into a Disnat account. You’ll have to call 1-866-873-7103 and mention promo code Disnat500. See details link for more info. $50,000 $500 commission credit 6 months Disnat $500 Commission Credit Promo June 30, 2016
BMO InvestorLine Open a new qualifying account with BMO InvestorLine, and fund it with at least A) $100,000 or B) $250,000 or C)$500,000 in net new assets and you may be eligible to receive A) $200 cash back, B)$500 cash back or C) $1,000 cash back. Use promo code Summer1000 when signing up to be eligible. Be sure to read the terms and conditions for more details on the offer. A) $100,000 – $249,999 B) $250,000 – $499,999 C) $500,000+ A) $200 cash back B) $500 cash back C) $1,000 cash back Cash back will be deposited the week of Mar. 6, 2017. Summer 2016 Promotion July 31, 2016

Expired Offers
Last Updated: June 1 16:25 PT

Other 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 – $9,999 B) $10,000 – $24,999 C) $25,000 – $49,999 D) $50,000 -$99,999 E) $100,000+ $25 cash back (for referrer per referral; $50 bonus cash back for every 3rd referral) For referred individuals: A) $25 cash back B) $50 cash back C) $75 cash back D) $100 cash back E) $250 cash back Cash deposited into Questrade billing account within 7 days after funding period ends (90 days) Refer a friend terms and conditions Code Number: 476104302388759 none
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 June 30, 2016
If you (an existing Virtual Brokers client) refer a friend or family member to open a new account with at least $5,000 you may be eligible to receive $25 cash per referral. For 3 or more referrals Virtual Brokers will add a $50 bonus. Referred individuals depositing either A) $5,000 – $50,000 or B) $50,000+ may be eligible to receive A) $25 or B) $50 cash back. Be sure to read the full terms and conditions carefully for full details. Be sure to read the terms and conditions to this offer carefully for full details. A) $5,000 – $50,000 B) $50,000+ Referrer: $25 per referral; $50 bonus for each 3 or more referrals. Referee: A) $25 B) $50 Cash to be deposited to VB account by August 15, 2016. Cash Referral Program May 31, 2016
BMO InvestorLine If you (an existing BMO InvestorLine client) refer a new client to BMO InvestorLine and they open an account with at least $50,000 the referrer and the referee may both be eligible to receive $50 cash. To qualify the referee must use the email of the referrer that is linked to their BMO InvestorLine account. See terms and conditions for full details. $50,000 You(referrer): $50; Your Friend(referee): $50 Payout occurs after 45 days (subject to conditions). BMO InvestorLine Refer-a-Friend June 30, 2016

Expired Offers
Open a new account (TFSA, Margin or RRSP) and receive $50 commission credit . Use promo code: kdkfnbbc $1,000 $50 commission credit 30 days none none
Last Updated: June 1, 2016 16:45 PT
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Discount Brokerage Weekly Roundup – April 29, 2016

It’s hard to believe but here we are at the end of April. For some, it’s a sprint to the tax filing deadline. For sports fans, it’s been a lottery filled week with ‘mathletes’ trying to calculate who pick up prospects in the NFL and NHL. Of course, Canadian discount brokerages know all too well the value of being a first round pick for DIY investors – and they also fortunately know not to tweet embarrassing videos of themselves (at least they haven’t yet).

In this week’s roundup, we take a look at the latest Canadian discount brokerage comparison to see which brokerages ended up gaining accolades. Next, we take a look at a fascinating court case involving a trade gone wrong and a discount brokerage on the bad end of an unhappy trader. From there we cap off this week’s roundup with a look at more unhappy traders in the discount brokerage tweets of the week and close out with chatter from the investor forums.

Comparing Canadian Online Brokerages

This past week, the latest ranking and comparison of Canadian discount brokerages hit the digital news stands as Monysense published its guide to online brokerages (the digital edition of the June issue is now available to digital subcribers). Authored by Dan Bortolotti with research and commentary provided by Glenn Lacoste of Surviscor, this is the fourth year in which Moneysense has collaborated with Surviscor to provide an overview of the Canadian discount brokerage space.

Comparing online brokerages is not an easy task. With more than a dozen providers and so many features to consider, it’s great to have summaries and commentaries to help provide some perspective and hopefully narrow down the research required.

Unlike most of the other rankings and ratings of Canadian discount brokerages, the Moneysense approach tends to segment out top brokerages by key features or by the specific types of investors (e.g. beginner investors) that would find a particular brokerage attractive. In addition to the commentary, they usually also provide a good summary table that organizes a lot of the information DIY investors care about.

This year’s edition of the table has a neat inclusion of robo-advisors ETF services available at three brokerages: BMO InvestorLine, National Bank Direct Brokerage and Questrade (although most of these brokerages would not characterize their service as a “robo-advisor”).

Of course, when it comes to comparing brokerages, the devil is always in the details. And, as a recurring reminder to readers of SparxTrading.com, it’s important when looking at rankings and ratings to try and understand exactly what’s being measured and driving the title of “best online brokerage”.

To that end here are a couple of interesting items that stood out.

First, it was interesting that instead of crowning a “best online brokerage” overall Moneysense chose two categories that distinguish brokerages: either bank-owned brokerages or independent brokerages. The following table shows the breakdown of category winners and honourable mentions.

Category Top Pick Honourable Mention
Getting Started BMO InvestorLine Virtual Brokers
Ease of Use Scotia iTRADE Questrade
Fees & Commissions Questrade Qtrade Investor
Customer Service Qtrade Investor Scotia iTRADE
Reporting & Record Keeping Scotia iTRADE BMO InvestorLine
Market Data TD Direct Investing Credential Direct
Best Overall Bank-Owned Scotia iTRADE BMO InvestorLine
Best Overall Independent Qtrade Investor Questrade

While the distinction between bank-owned and independent does exist, the piece did not really dive into why this was a critical distinction to make.

As a result it was a challenge to get an ‘apples to apples’ view of the online brokerage field especially since both independent and bank-owned brokerages were compared side by side according to particular features.

Another interesting component to the comparison was the reporting of the average time to respond. As was drilled into me by multiple university stats profs, the average alone is not as informative as knowing both the average and standard deviation. Reporting the range and number of attempts at each firm would give a much clearer picture of how consistent that average really is.

Finally, a place in which readers should be cautious with this comparison is in the standard commission fee category.

Given the importance of the standard online commission fee for equity trades to consumers who want to find out how much they would presumably have to pay per trade, the way in which these numbers were reported was slightly confusing.

In particular the standard equity trade for Scotia iTRADE is reported as $9.99 per trade which happens to only be true for individuals whose account is worth at least $50,000. For individuals who do not achieve that threshold, the standard equity commission is at least $24.99 per trade. Unfortunately the “basic” commission at Scotia iTRADE according to this table seems like it is $9.99 (the fact that it is $24.99 is reported in the next row). The fact that a minimum account value is required in order to receive a ‘basic’ value is confusing, especially since it would imply that $50,000 is a ‘basic’ balance. Further, it would mean that HSBC InvestDirect’s commission would be $8.88 per trade at that balance level and not the $9.88.

Another caution is in the choice was to not mention CIBC Investor’s Edge as having the lowest commission structure under the fees & commissions section. At $6.95 flat per trade, this is one of the most competitive standard equity trade commissions available to DIY investors, including those investors making frequent small trades. In particular it is the fact that the commissions are capped (inclusive of ECN fees) that makes CIBC Investor’s Edge (and any brokerage that caps fees) a compelling choice.

While the Moneysense discount brokerage ratings do offer a unique, user oriented overview, it’s clear that there’s lots of information for DIY investors to try and digest when comparing.

Ratings and summaries such as this do help with navigating the maze of data however it is always important to check brokerage fee schedules and the fine print as many of the terms/conditions can’t easily be captured or communicated in one easy view.

Oh no he DI-n’t

If you’ve ever been blown out of a bad trade and/or been on the unfortunate other end of a margin call, it can be about as much fun as a root canal, perhaps less so. Examples abound on Twitter and in forums, however, of traders who’ve had trades go the wrong way on them in a hurry and as a result have to take a significant hit. When it happens, it’s not pretty.

That said, there was an incredibly interesting (for those keenly following the discount brokerage space) case where one trader got caught (or taken) offside and tried to take their online brokerage to court for over $340M in damages.

The brokerage in this case was TD Direct Investing and (sorry for the spoiler) no, the trader was not successful in his attempt to claim anything back for his trades gone wild.

Given the length and detail of the examination and case, there is a trove of interesting stuff in the court filings. For those that don’t want to wade through the 14 thousand words, here are some of the highlights:

First, options trading is risky. And, while risky is a term that is synonymous with trading, it’s important to spell it out: when DIY investors trade, they risk losing their money. And when trading on margin it means that you can lose a considerable amount of it.  For added edutainment, here’s a South Park clip from Margaritaville that nails it:

The trader in this case (Frank Oktay Turkson) got caught offside when a company he had written put options on went belly up (the stock was GTAT). So, while he did manage to get himself a premium of about $14K (and paid a commission of $47.49 USD) the loss more than wiped out any gains he would have received (he also had to pay $43 commission for the assignment). The fact that he had his other securities liquidated to meet the margin call was a rather unpleasant lesson in the powers that brokerages have to ensure that an account is kept within its stated risk limits.

In this case, it was interesting to see it pointed out that ‘discount brokerages’ do NOT provide advice or recommendations on where or how to trade. Discount brokerages simply communicate over and over again in the terms and conditions, and in the sign up forms (account opening documents) that trading involves potential for financial loss and that by opening an online brokerage account, DIY investors accept that they could lose money.

This is even more so the case with options. This was a case where in spite of having gone through the terms and conditions, and having signed that they understood them, a trader got burnt and tried to go after the brokerage for margin call and loss on the position.

One of the most interesting revelations from this court case was that a brokerage has the option to liquidate a margin position whether or not the position is at a loss. This implies that even a high flying gainer on margin can be shut down at the brokerage’s discretion.

If there’s one takeaway it’s that the documentation that brokerages provide at the outset of opening an account basically protects them from having to take responsibility in the case that things go wrong on a particular trade. Discount brokerages are a business and they are not prepared to take on someone else’s risk or subsidize a risky trader with margin.

DIY investors need to be aware that the risks of trading and financial loss are seldom presented with as much excitement or fanfare as the prospect of winning or the ease with which trading can occur. The conversation is definitely in favour of “making money” and how easy it is to trade rather than stating how easy it is to lose money.

Options are especially risky so it is important to be clear on how they work and how to manage the risks associated with them before trading them. Unfortunately for the trader, they had to learn a very expensive and hard lesson that when it comes to DIY investing, it’s every party for themselves.

From the Forums

Counting Potatoes

While the ‘couch potato’ approach to investing is popular with many investors, it’s important to know what buying and rebalancing will cost in terms of trading commissions. In this post from reddit’s Personal Finance Canada section, one investor heeds some handy math when considering RBC Direct Investing for their ETF investing strategy.

Need a Joint?

Wedding season is soon to be upon us. As couples tie the knot they may start to find their finances starting to also get a little more complicated. In this post from Canadian Money Forum, one user asks about a potential joint TFSA with Credential Direct. Find out the interesting feedback that helped shed some light on how TFSA’s work and how to access a spouses account.

Into the Close

That’s a wrap for this week. In case you missed it, today was also International Dance Day and there was a running man challenge, both of which were captured in this football themed video courtesy of ‘Gronk’ of the New England Patriots. That’s a whole lot of meme action to close out the week (triple witching meme?). Enjoy the rollover into May and have a great weekend!

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Discount Brokerage Weekly Roundup – April 22, 2016

With storm clouds thicker than this week’s 420 protests-turned-celebrations and tension greater than the imminent showdown coming in the next installment of Game of Thrones, it seems the fog of war has set in with online brokerages. On the home front, things are nervously quiet, however from the revelations this past week in the US, the battle of the brokerages south of the border is raging.

In this week’s roundup, we extend our coverage of the latest performance of the major online brokerages in the US to glean where the industry there (and eventually here in Canada) is headed next. From there we’ll update the latest move from one independent brokerage that suggests a shift in strategy that other brokerages have yet to respond to. As always, we’ll scan the latest chatter from investors on social media and investor forums and also highlight some of the upcoming investor education events.

Quest for the Best

Last week we reported on the latest earnings from Schwab. This week saw earnings releases from the three other major publicly traded online brokerages in the US: E*trade, Interactive Brokers and TD Ameritrade.

Collectively, these four brokerages earned just under $2.5B (USD) in revenues and $1B USD in net income for the quarter. Overall, each of the firms posted relatively strong performances in the quarter, attracting new accounts, in some cases breaking records for earnings and trading activity.

Aside from these mind-boggling numbers (especially when compared to Canadian online brokerages) the real story is revealed by reviewing what gets said on the earnings call which feature commentary from senior executives (often CEOs and CFOs) as well as questions from analysts that cover these companies.

One of the biggest themes from this last set of earnings calls had some very real concerns about the impact of the latest investor protection measures (the “Fiduciary Rule”) being implemented in the US.

While the mammoth (apparently 1000 page long rule) being put forward by the US Department of Labor (DOL) impacts retirement accounts specifically and what it means to be considered a ‘fiduciary’ the online brokerages are still digesting exactly what the requirements and costs to meet those requirements will be. Ironically talking about the sheer volume of added paperwork this rule has generated and will generate on Earth Day underscores the unintended consequences of well-meaning regulation.

This push towards greater investor protection, especially within the ‘advice-based’ or managed wealth realm is not unlike the CRM2 regulations being phased in here in Canada. The goals of achieving greater transparency on fees charged for services and for improving the disclosure from financial advisors are aligned in both cases, although it appears the Canadian approach is less onerous.

While the DOL rule and CRM2 may make it more challenging for some advisors to convince investors to park their money in the ‘managed’ space, this move actually may play out in favour of the self-directed account providers. The thinking is that when investors see what they are being charged for their funds or for the advice they’re being provided, they’re likely to consider alternatives.

In addition to the self-directed route, one of those alternatives happens to be robo-advisors – a seemingly middle ground solution between the ‘human’ advice world and the DIY investor option.

Interestingly, after the DOL Fiduciary Rule concerns, robo-advisors and fintech appeared to be the ‘next big thing’ on the minds of analysts and executives. Specifically, all the brokerages were asked about robo-advisors and the extent to which they are either gaining traction (such as at Schwab which has pulled in $6B in assets within a year) or are not (such as with Interactive Brokers).  That said, there is a definite recognition of the importance of fintech.

One of the more interesting remarks came from the CEO of E*trade Paul Thomas Idzik who stated that they’re clearly interested in expanding the banking functions that a fintech solution could provide to their business. In other words, even though they’re an online brokerage, they’re looking to expand their financial services into what banks have traditionally done (such as bill payment and transaction processing).

The award for most interesting commentary, however, had to come from Thomas Peterffy, CEO of Interactive Brokers.

In response to a question from analyst Mac Sykes of Gabelli about the strategic direction of Interactive Brokers, Peterffy stated “Mac, I’m obsessed with trying to grow this to become the largest brokerage in the world. That’s the only thing I care about. I don’t care about the returns.”

Not only does this comment perfectly capture the intensely competitive nature of the online brokerage space within the US but it also shows Canadian brokerages that there are those in the space that have the capital and motivation to outperform those who don’t want to win badly enough.

Virtual Brokers Uptick

On this side of the border, the action is a bit sleepier. Nonetheless, this past week Virtual Brokers launched yet another promotion signaling their shift towards offering prospective clients more incentives and promotions than they have previously.

The latest promo from VB is actually a contest for a $500 Apple gift card (a promotion they’ve run previously) for individuals depositing at least $1,000 into a new Virtual Brokers account. Unlike many of the other promotions currently offered by Canadian discount brokerages, the ‘contest’ route doesn’t offer an immediate reward but it does offer those with low starting balances the possibility of getting another perk for signing up.  For the brokerages, however, this is a lower cost way of trying to attract new clients and/or leads for those who enter the contest.

While promotional activity at several other brokerages has geared down, it appears that Virtual Brokers (either by design or coincidence) is starting to ramp up their promotional strategy.

For VB the timing gives them an edge to get attention from DIY investors looking for an online trading account, especially since some of their closest rivals have elected to slow down in April. Heading into the end of the month, it should be interesting to see what May holds as even more offers (such as the free trade deal from TD Direct Investing) are scheduled to expire.

Tweets of the Week

This week’s tweets feature some interesting tech highs and lows. Mentioned this week are Questrade, RBC Direct Investing, Scotia iTRADE, TD Direct Investing and Virtual Brokers.

Event Horizon

Spring is in full swing, and it’s a glorious week ahead for discount brokerage-sponsored investor education events. Here are some upcoming sessions that may be of interest to options enthusiasts, those interested in networking with other investors, and technical and fundamental analysis. ETFs, a review of recent TD Direct Investing rate changes, and a fundamental landscape overview round out this week’s selection.

April 25

Desjardins Online Brokerage (Disnat) – ETFs as Precision Tools

TD Direct Investing – Stock Talk

April 26

NBDB – Introduction to Technical Analysis : Supports and Resistances – [Fr]

TD Direct Investing – Understanding the Rate & Fee Changes Effective March 15, 2016

Desjardins Online Brokerage (Disnat) – Macro Masters Foundations Course

April 28

Scotia iTRADE – Beginner Options with AJ Monte

Desjardins Online Brokerage (Disnat) – Macro Masters Foundations Course

TD Direct Investing – Introduction to Fundamental Analysis

From the Forums

Chatterbots

Given the interest all around in what’s going on with robo-advisors, it’s no surprise that DIY investors are starting to become a bit more curious about how effective (or not) the robo-advisor ‘promise’ will live up to the hype. In this post from the Financial Wisdom Forum, the topic of robo advisors rebooted with some more recent chatter on the subject.

A Series of Fortunate E-vents

While a lot of the conversation about brokerages online tends to skew negative, it was nice to see something positive emerge. In this post from reddit’s Personal Finance Canada section, one investor shares their experience with getting their TD e-Series funds.

Into the Close

Heading into the weekend, there is definitely a cloud hanging over music lovers with the passing of a musical genius this week. While the artist may gone, the art will continue to inspire. On that note here’s an encore performance showcasing a talent that the world will definitely miss.

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Discount Brokerage Weekly Roundup – April 15, 2016

While one basketball legend is retiring another one is seeing his star rise. Whether it’s professional basketball or the world of DIY investing, performance is what counts. For the race that is the Canadian discount brokerages landscape, however, coasting along is not an option.

In this week’s roundup, we take a look at continued signs of life with one online brokerage who is getting prepped to move deeper into the investor education space. Next we take a look at the latest results from online brokerage in the US to see what trends are emerging across the brokerage industry as a whole. From there we’ll preview the upcoming investor education events in the week ahead and close out the round up with comments from DIY investors on Twitter and around the investor forums.

Making the Grade

This first few months of 2016 have been busy for Virtual Brokers. After their recent commission price adjustments, Virtual Brokers has tried to distance itself somewhat from the “ultra low cost” discount brokerage image and in place of the label try to introduce features and services that offer up more value for the dollars being spent on commissions. A recent article in the Globe and Mail featured a quote from Virtual Brokers CEO Bardya Ziaian in which he stated “I want to go beyond the notion that Virtual Brokers is a cheap way of trading, we want to add value.”

In line with this move to offer greater value, Virtual Brokers appears to be ramping up efforts to provide additional market research information and education to DIY investors. Their latest move was noted this week as they announced a webinar in partnership with Morningstar to discuss the Morningstar economic moat feature. In addition to the webinar, there are also plans in the near term to offer more value-added research and analysis of markets to clients. While details are still to come, it’s clear that Virtual Brokers is actively moving towards a ‘value’ focused offering.

As one of the relatively newer entrants into the DIY investing space, however, Virtual Brokers still has to outcompete the massive amounts of advertising and marketing resources being spent by their peers. The boost in exposure by being crowned the top online brokerage in the Globe and Mail has certainly made a material difference to Virtual Brokers. And, in order to keep atop the standings, there has to be a clear focus on delivering innovative and useful features. In other words, for Canadian online brokerages, the best way not to be noticed is to stand still.

Let’s Get Digital

Earnings and quarterly reports from US online brokerages are kicking off once again. What’s particularly interesting about this round of reports is that Charles Schwab, the largest online brokerage in the US, has just crossed the one year mark since they launched their robo advisor service (or as they call it the ‘digital advice’ segment), and, according to the numbers, there are about 6.6 billion reasons to celebrate.

On a year over year basis, Schwab had very healthy gains in net revenues (+16% to $1.8B), net income (up 36% to $412M) and modest account growth (+3%). Part of the reason for those gains came from their robo-advisor segment which attracted $6.6B in assets in just over a year’s time.

Despite being an online brokerage, Schwab makes the majority of its revenue from interest revenue, asset management and administration fees whereas trading revenue made up 13% of net revenues for the quarter. And, while the volatility over February and March may have provided a 12% quarter over quarter increase in trading revenues, the notion of what it takes to succeed in the online brokerage space clearly points to having something more than trading revenues to keep you going.

The reason these numbers matter is because they clearly demonstrate that there is a market for the ‘managed wealth’ that appears to be outpacing the DIY trading segment. Further, it also shows how sensitive the earnings at online brokerages are to interest rate moves and why low rates are a challenge to the business model.

For Canadian online brokerages, there has clearly been an interest in following suit with Schwab’s model of deploying robo-advisors; Questrade and more recently BMO began offering these ‘digital advice’ products as a way to capture market share from the not-so-do-it-yourself crowd. Virtual Brokers also appears to be positioning themselves within this space as they were recent sponsors of the Morningstar robo-advisor conference.

While the scale of the US wealth management market is considerably larger than Canada’s, it is interesting nonetheless to see how online brokerages are going to have to adapt their offering and business for a robo-world. Earnings for E*trade and Interactive Brokers are also on deck for the upcoming week so the picture of where investors are (or aren’t going) will be even clearer heading into the end of April.

Event Horizon

Patio weather has arrived, and it’s a refreshing week ahead for discount brokerage-sponsored investor education events. Here are some upcoming sessions that may be of interest to options enthusiasts, those interested in international investing, and ETFs. Technical analysis, trading strategies, and a fundamental landscape overview round out this week’s selection.

April 18

NBDB – Technical Analysis with Mr. Gaetan Royer of Cobalt Investments – [Fr]

April 19

Scotia iTRADE – Dogs of the Dow – Easy as 1, 2, 3 with Pro Market Advisors

April 20

TD Direct Investing – Introduction to Investing in Options

NBDB – International Investing – [Fr]

April 21

Scotia iTRADE – Options Trading Using Technical Analysis with Montreal Exchange

TD Direct Investing – Introduction to Investing in Options

Desjardins Online Brokerage (Disnat) – Macro Masters Foundations Course

Virtual Brokers – Understanding Morningstar’s Economic Moat

Discount Brokerage Tweets of the Week

Spring is here. And while it brings flowers, and showers it also seems to bring bugs – at least for some. Mentioned this week are: BMO Investorline, Questrade, Scotia iTrade TD Direct Investing and Virtual Brokers.

 

From the Forums

Clouds Forming

For many investors keeping a handle on all of the official slips and forms and calculations can be, well, taxing. In this thread from reddit’s Personal Finance Canada section, however, the stress level for some of Questrade’s clients (and for many Questrade staff) spiked as it appears T3 forms for some clients were being sent to others. Whoops. The link is worth a read to see the reactions of investors as well as how Questrade stepped up to address the situation.

Green or Red?

It seems many investors looking for an online brokerage account tend to narrow the field down to a couple of choices and from there the hair splitting begins. In this post from Redflagdeals.com’s investing forum, the community weighs in on TD Direct Investing vs CIBC Investors Edge vs Questrade.

Into the Close

That’s a wrap for this week. With earnings season in full swing and a rally that nobody seems to trust, the next week will be fun one for traders. In the meantime, enjoy the spring weather and the human highlight reel that is Kobe Bryant (arguably a great DIY’er) in his last game.