Category: Discount Brokerage News

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Discount Brokerage Weekly Roundup – May 6, 2019

It’s hard to believe that May is already upon us and there’s talk everywhere about untimely ends. Whether it’s from King’s Landing, or the basketball court, or deals and promotions, there’s clearly some drama ahead in May that will make for gripping entertainment.

In this edition of the Roundup we’ll review the latest interesting twist in the deals and promotions space from a rather large player, as well as profile a novel way to derive income for buy & holders. As always we’ll toss in some forum posts and Twitter conversations for good measure.

Deals and Promotions Update

If you’re looking for a safe place to hide from Game of Thrones spoilers, this may not be the best spot to seek refuge. So, what does this legendary television show have in common with Canadian online brokerage deals and promotions this month? Plot twists.

Heading into May, things were looking somewhat grim in the deals and promotions space. After an incredibly hectic start to the year, there were many promotions set to unceremoniously end in April. One of the more noteworthy offers that wound down last week after itself having been extended through the income tax filing deadline was CIBC Investor’s Edge cash-back promotion.

But, like any good market, competitors giving one another a free pass wasn’t going to last very long.

The first bit of good news for DIY investors came from an unlikely source, as the usually reserved HSBC InvestDirect decided to extend their cash back promotion by another month. While it wasn’t a major extension, it nonetheless bulked up the cash back offerings for DIY investors. This meant that BMO InvestorLine and Questrade were not alone in offering a cash-back promotion.

The second bit of good news for DIY investors that crossed our radar last week was that they wouldn’t be waiting for a new offer for very long at all. RBC Direct Investing rolled out a new cash back promotion for the better part of May which serves up between $100 and $1,000 in cash back bonuses to investors who deposit between $25,000 and $500,000 or more.

Despite the modest size of the cash-back amounts, the latest move by RBC Direct Investing is kind of a big deal as they themselves are also kind of a big deal. The size and profile of RBC Direct Investing means when they bring an offer or new feature to market, other online brokerages will have to pay attention, if not figure out a way to respond in kind.

While it is likely by design, this deal was not in the public spotlight the way that previous mass market promotions were. In fact, this promotion came to light because it was emailed to investors who in turn, posted the information about it on investing forums. For a modest-sized offer to create any chatter online is largely the result of who is offering it – in this case a major provider. The lesson for other online brokerages is clearly that if they want to generate buzz about themselves then it is going to take a serious investment in incentives (such as deals) and advertising.

The second important observation about this offer is its duration. According to the terms and conditions, this offer was technically live as of April 25th however the deadline to take advantage of it is May 24th.

This is an unusually short duration for a promotion from an online brokerage – especially a larger one – so it indicates that there is more to this deal than meets the eye. Digging deeper into the terms and conditions, what is interesting to take note of is that to qualify for this offer, accounts must be opened by May 24th but deposits or transfers don’t have to be received by RBC Direct Investing until July 26th. Finally, another observation related to timing is that the requirement that clients who take advantage of this offer need to keep these assets with RBC until December to qualify for the payout.

Where the rest of the online brokerage space goes from here will be interesting. As we had referenced in last week’s Roundup, there’s clearly a fundamental case to be made for online brokerages to get in front of the IPO wave currently washing over markets. With stories like Beyond Meat debuting and doubling to serve as a counterpoint to the disappointing Lyft IPO, it means that investors on the sidelines of these “unicorns” might be coming back to the market to invest, and the deals or promotions on offer will certainly factor into which online brokerage gets chosen.

Of course, the fact that RBC has timed their promotional offer to last about one month only, means that other brokerages might be less inclined to launch their own promotion and hope they can ride out the storm. Regardless, there’re clearly more twists and turns left in the deals and promotions story in May, and that’s a great net result for DIY investors.

Interactive Brokers Enables Stock Yield Enhancement in Canada

The old saying goes that it takes two to make a market. When it comes to the stock market, however, it is important to remember that every trade requires a buyer and a seller. Of course, there’s one other necessary ingredient: shares. While buyers typically don’t run into problems finding shares to purchase, the same cannot be said for shares for short selling.

Last week, Interactive Brokers expanded its unique Stock Yield Enhancement program to now include eligible Canadian securities. The Stock Yield Enhancement program effectively lets Interactive Brokers clients who happen to be owners of a security lend that security out into a pool overseen by Interactive Brokers. More often than not, these shares/securities will be lent out again for short sellers to take advantage of.

The announcement last week is an interesting example of how a previous dark-horse online brokerage is creating something investors will benefit from, particularly in Canada. This move changes the value proposition so that Canadian investors can monetize the stocks sitting in their portfolios.

It is also worth noting that Interactive Brokers Canada rolling out new features for Canadians is taking place at the same time that other brokerages are trying figure out how to reduce costs. This juxtaposition is both a reflection of and warning to other online brokerages that in addition to lowering prices, Interactive Brokers continues to innovate with technology tools and pass those savings to clients.

Discount Brokerage Tweets of the Week

From the Forums

Above Average Joe

A DIY investor wants to know if it’s possible to generate a significant amount of passive income per day through investing. See what other forum users had to say in this Canadian Money Forum thread.

To Pay or Not to Pay

A student has questions about whether to invest or pay off their student loan. Find out what advice fellow Redditors offered here.

Into the Close

That’s a wrap on the latest action at Canadian online brokerages. From new features to new deals, it appears that anyone planning to take it easy this summer at an online brokerage may want to rethink that one. Of course, with all that is going on in real life and on television, it’s going to be tough not to need a vacation from all the angst being shared on Twitter. Regardless, have a profitable week!

 

 

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Discount Brokerage Weekly Roundup – April 29, 2019

The end of April is almost here and for Canadians, that means tax time and deadlines. While some folks are taking their cues from the Game of Thrones and making things dramatic into the finish, it seems like there are also a few interesting cliff-hangers emerging in the deals space heading into May.

In this edition of the Weekly Roundup, we take a look at the state of the deals & promotions space heading into the new month, and what the current deal deadlines portend for Canadian brokerages and investors with a wave of IPOs on the horizon. Next, we dive into yet another story emerging from the US online brokerage space, a signal of a very “interesting” trend emerging at US online brokers that could make its way north of the border. Keeping in the spring spirit, we also have a few online brokerage potpourri stories that caught our attention, which we’ve included in this week’s roundup. As always, we’ll cap things off with chatter from the investor forums and on Twitter.

Deal Countdown

Like anyone watching Game of Thrones, folks tracking the discount brokerage promotions heading into May are asking a similar question: What’s going to happen next? As we move into the new month there are several important promotional offers that are set to expire, and as those deals go, the field of brokerage deals will have thinned out considerably.

On the chopping block at the end of April are offers from HSBC InvestDirect and National Bank Direct Brokerage, followed by a cash back promotion from CIBC Investor’s Edge, which is set to expire on May 2nd.  This contraction in deals will reduce the number of online brokerages offering either cash back or commission free trading deals down to three – BMO InvestorLine, Desjardins Online Brokerage and Questrade.

With both the RSP contribution season and the income tax deadline now behind us, whether or not there are catalysts for DIY investors to be opening online brokerage accounts or stepping into the market hinges on the popularity of the upcoming swell of IPOs, as well as general economic outlook.

In the case of the IPO “frenzy”, there are still some significant names coming to market, like Uber, Pinterest and Slack, which could help drive interest by younger, tech-savvier investors eager to participate in stories of stocks that they are familiar with.

With regards to economic outlook, although there are constant jitters with regards to political and economic stability, the consensus view from economic forecasts as of the past week point to a relatively stable market (sorry inverted yield curve).

For Canadian online brokerages, the macro picture suggests that the biggest catalyst over the summer months will be an especially hot IPO season and a generally favourable economic outlook. Importantly, most of the big stories are going to originate out of the US – something that tactically favours online brokerages that offer US accounts (registered and non-registered). This is a considerable cost savings for those active traders hoping to hitch their wagons to the fast action in the US markets.

With so many big US tech stories racing to the public markets, it would be hard to imagine a scenario in which Canadian online brokerages pass up the opportunity to win over new investors with promotional offers. These are undoubtedly interesting times for the Canadian online investing industry. While online brokerages may not be standing still during the summer months, they are likely going to be especially busy making the most of the IPO wave. So, while we don’t know for sure what’s going to happen next, the upside for Canadian DIY investors is that there’s a good chance deals action will pick up in anticipation.

Taking it to the Bank

It has been a newsworthy past few weeks for US online brokerage Robinhood. The zero-commission online brokerage is yet again on our radar as another story has popped up in April, this time relating to the application by Robinhood to become a chartered bank in the United States.

The way in which Robinhood is angling to offer high interest chequing and savings products is a direct response to their false start on the high interest savings account launch earlier this year. Nonetheless, it looks like they’re undeterred by the long compliance road ahead and are pushing to offer what would traditionally be “banking” services.

Far from a novel idea to offer investors something extra for holding their cash with a brokerage (Interactive Brokers does it and has met with some success in the US), the big picture for online brokerages is that sticking to just order execution is not going to be enough to sustain the business. The bigger lesson for bank-owned brokerages here in Canada is that nobody in the wealth management space is going to be respecting traditional boundaries anytime soon. With robo-advisors now becoming more accepted by mainstream investors, and those same robo-advisors wading into the online brokerage space (ahem Wealthsimple Trade) or online brokerages wading into the robo advice space, the “one stop shop” for wealth and financial management appears to be the model that many of these brokerages will be pursuing.

As such, it feels like it’s not so much a matter of if, but rather when and who will be the first ones in Canada to offer much more competitive interest rates on cash sitting idle (i.e. the “dry powder”).

Of course, opening up the “high interest” account for uninvested cash would almost certainly be a slippery slope. Once one major firm does it, the rest will undoubtedly follow. Whether it follows the model of commission fees being dropped (as RBC Direct Investing did in 2014), like most new feature roll outs in Canada, there will definitely be a “wait and see” if it’s anyone other than a big-bank owned brokerage.

Ironically, for Robinhood, as they continue to pursue offering interest, the consumer interest in the brand will likely grow. In Canada, where the competitive dynamics are slightly different, it would be interesting to see what would happen if one of the smaller online brokerages were to get creative for online investors holding idle cash. One fan theory: Canadian DIY investors would be much more inclined to stick things out rather than transfer brokerages.

Online Brokerage Potpourri

Here are some more quick highlights of items that crossed our radar.

Booking an Interesting Detour

TD Direct Investing is the title sponsor for an upcoming session with two influential voices in the personal finance & investing space: Erin Lowry, author of Broke Millennnial Takes On Investing and personal finance personality Jessica Moorhouse. In addition to doing a sponsored session on investing, it’s also interesting to take note of a paid promotional segment on YouTube in which Moorhouse walks through the TD Direct Investing GoalAssist feature.

With so many millennial eyeballs having moved to YouTube and social media rather than traditional media, this is another example of online brokerages looking to work with & enlist influential voices in the personal finance space to extend their message into harder to reach audiences.

Online Brokerage Summit Highlights

Another interesting industry event that took place earlier in April in Chicago was the annual online brokerage summit held by Trading Central. This year’s event marked the tenth edition of the conference and featured influential voices from the Canadian and US online brokerage spaces. An interesting recap of the event was written by Kathryn St. John from Trading Central and is available here. Among the key themes/challenges cited: the race for the millennial investor. In that light, it seems particularly timely to see events such as the TD Direct Investing sponsorship of a millennial-focused content provider, as well as a general tilt towards making platforms more appealing and accessible to a new “crop” of investors.

Discount Brokerage Tweets of the Week

From the Forums

Pump up the Volume

One new DIY investor wants more information on the significance of ETF trade volume. Forum users on Canadian Money Forum chime in here.

On Borrowed Dime

A DIY investor has questions about borrowing specifically to invest. See what other forum users had to say in this Reddit thread.

Into the Close

Talk about a hard act to follow – the week ahead will certainly be filled with no shortage of reaction to an epic Game of Thrones episode and a record-breaking opening to Avengers Endgame and basketball playoffs. Of course, with winter still sticking around (amirite Calgary?) in different parts of the country, it’s not a bad time to stay indoors. Here’s hoping there will be some warm patches (like GDP in Canada) to look forward to as well as a profitable trading week ahead.

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Discount Brokerage Weekly Roundup – April 22, 2019

This edition of the weekly roundup is coming to you from sunny Indio California, home of the Coachella Valley Music Festival aka Coachella. There’s nothing quite like the example of supply and demand in action – and judging by the crowds, lineups for merch and the water refill stations, demand is certainly hot. Ironically, the same can be said about the stock markets recently as crowds of investors rush to find their next big investment and congregate around the headline IPO acts continuously coming to market this year.

So, in keeping with the Coachella theme, here is the “This is America” inspired edition of the weekly roundup. Of course, it’s through the lens of a Canadian DIY investor so we’ve made sure to include the requisite Canadian spin. First up, some interesting Easter eggs were dropped in an earnings call last week from one popular US online brokerage that provide a somewhat challenging picture of the future for the online investing space. Next, we take a look at the flurry of activity taking place at another US online brokerage, and their efforts to make their platform more sticky to mobile users. In keeping with tradition, we’ve also lined up the crowd favourites: tweets from the week and chatter from the investor forums.

Interactive Brokers Earnings Call Drops Hints of Big Things to Come

Like most earnings calls, there’s generally a mix of updates about the financial and operating performance of the company, as well as some perspectives on how the business performed and where they are looking to for future opportunities.

Despite having the traditional structure for the updates to the company as well as taking questions from financial analysts on the call, the latest Interactive Brokers earnings update this past week also had several important ‘Easter eggs’ that offered some insight into the condition of the business and online brokerage landscape, as well as providing some hints about what’s coming up next.

Starting first with some important context around performance: Interactive Brokers has been on a relative tear for the past several years, showing strong growth across all important metrics of their business. In the most recent earnings call, Interactive Brokers shared that their client base has now surpassed 600 thousand accounts, and that their client equity is just about $148 billion, both record highs for the firm.

As successful as a growth story that Interactive Brokers has been, the first nugget revealed is that it appears they’ve hit “peak investor.” The following quote by Nancey Staube – Director of Investor Relations from the earnings transcript explains this development further.

“I must tell you that any way we slice it new account growth at Interactive Brokers over any 12-month period peaked in April 2018 at 27.8% and has been declining since reaching 20.3% in March of 2019. 20.3% would still be very good but annualizing our sequential quarter account growth from the end of December to the end of March shows it leveled off at 16.2%, which is not so good. We would like to see this rate go back to over 20%, but for that we will have to pull a rabbit out of a hat.”

There are a couple of noteworthy takeaways from this quote. First, these account growth figures are relatively strong, especially considering the competitive nature of the US online brokerage space. There are likely many Canadian online brokerages that would love to hit those numbers that Interactive Brokers is stating are problematic, however expectations for their firm run much higher.

Another important takeaway is that being able to hit their prior account growth pace, they would need to “pull a rabbit out of a hat.” That is a drastic characterization of the marketplace conditions in which they are trying to grow and indicates a much tougher road ahead to achieve previous account growth rates. Fortunately, Interactive Brokers is not the kind of online brokerage that stands still when it comes to innovation or features to entice investors to open an account. Their recent deployment of the Portfolio Analyzer and their high interest payments on USD cash balances over $100K are both examples of relatively recent moves that Interactive Brokers has undertaken to attract and retain clients.

In that vein, another interesting insight from the earnings report transcript was that Interactive Brokers IS planning a “rabbit out of a hat” kind of new feature deployment. To manage expectations and competitive advantage, founder and CEO of Interactive Brokers Thomas Peterffy was understandably evasive when it came to details about this new program but what he did say was that this new feature was part of a separate line of business.

Peterffy stated that “For the last nine months, we’ve been working on just such a rabbit that we plan to introduce at a test location near the beginning of the third quarter and in other locations gradually over time. For several good reasons, we are not prepared to say much about the rabbit at this time. We can say it will be a new product development in an area only tangentially related to our traditional business, but if successful would expand the opportunity to grow our customer base.”

Importantly, he used the word “location” to refer to this program which suggests that Interactive Brokers is moving from being almost exclusively online to something that could be accessible in person. Interestingly, and perhaps related, Interactive Brokers’ costs have also been increasing because they have been investing in “client service.” According to their recent earnings statement, the total headcount at Interactive Brokers tallied up to 1,458 – a 16% increase over last year, with “aggressive hiring” taking place in client service (as well as software development and network engineering).

Finally, another very curious comment from their CFO, Paul Brody, was that the aggregate number of shorts being carried for customers has “definitely risen.” It is particularly interesting given the levels the stock markets are currently at, and when combined with the perspective shared on the call that volatility has abated somewhat, it appears that traders are starting to build short positions against the current market. Market timing is notoriously difficult to do, but there appears to be a genuine negative sentiment developing around the latest rally for stocks.

For online brokerages, especially in a low-commission cost environment, achieving a critical mass of clients is key. Interactive Brokers has taken on this challenge to be a world-class online brokerage by going after growth all across the world. Even so, what is telling about the online brokerage space – at least the segment that they wish to play in – is that growth conditions are going to be challenging.

While Canadian DIY investors might represent a relatively small segment of their client base, what is neat about Interactive Brokers is that they tend to roll out new features across their platform for all clients. The recent addition of new services and tools means Canadian online brokerages will need to pay attention to what is possibly coming around the corner from an increasingly influential global online brokerage.

Robinhood and the Pursuit of Trading Happiness

In keeping with the interesting activity in the online brokerage space in the US, after a bit of a hiatus following the stumbled roll-out of the high interest savings account, Robinhood appears to be pressing the gas pedal on new features and important changes. This April, they have published three significant pieces of news relating to new features related to charting and depth of market, as well as announcements of new members of their management team.

While “high interest savings” has now been replaced by “cash management” and is still actively in the works, the two features that stood out that were of particular interest relate to new charting tools available for the mobile experience as well as the depth of market (Level 2).

For a bit of context, Robinhood the US online brokerage is best known for its zero-commission stock trading offering and has grown rapidly since its launch in 2013 to having more than 6M accounts now a part of its platform. It serves as an interesting example for the zero-commission model, something that recently came to Canada through the launch of Wealthsimple Trade.

Even though philosophically Robinhood and Wealthsimple Trade have different starting points, the fact remains that revenues of each firm increase when trading activity increases. Both firms want to attract assets and have clients making trades. To that end, it is interesting to see the features that Robinhood has deployed on its path to monetizing features and experiences while keeping commissions at zero cost.

The first is depth of market. This was likely a frequent request to the client service team so it is great to see this kind of market data rendered in the ultra design-savvy Robinhood environment. Real-time bid/ask information enables active investors to plan where they would like to place their orders and, secondarily, makes for a more engaged experience. Anecdotally, even for less active investors, knowing that there is level 2 information available piques curiousity enough to check to see what interest there is before placing an order.

So, in short, by providing real-time information on market depth, Robinhood has increased the stickiness of their product (it’s hard to look away from blinking lights!). Accompanying this release was the announcement that market research from Morningstar was also being rolled out – yet another feature to encourage clients to spend time in the app rather than outside of it.

Of course, these new features are part of a premium experience, and as such, have been included as part of the subscription-based Robinhood gold program. For the rather affordable rate of $5 per month for access to the premium program, users will be able to access both the research as well as the level 2 information. Additionally, as part of the new Robinhood gold program, users can access the first $1,000 dollars of a margin position interest-free. Amounts over $1,000 will be charged at an annualized rate of 5%.

Another interesting feature just announced is the rollout of improved charting that includes technical indicators and candlestick charts. Once again, this feature enables users to do research on price action on a security and as a result they do not have to leave the app to look elsewhere for technical analysis. Combined with the level 2 data, this offers a very feature-rich experience for more active traders interested in discovering and timing entry and exit points on an investment. It is particularly relevant for the fast moving and volatile world of cryptocurrency trading, something that Robinhood offers on its platform. The technical indicators available as part of this rollout are:

  • Volume
  • Moving Average (MA)
  • Exponential Moving Average (EMA)
  • Relative Strength Index (RSI)
  • Moving Average Convergence Divergence (MACD)

For online investors, the ability to do technical research, charting, and to track depth of market in a mobile is somewhat of a rare animal. Yes, other online brokerages in the US do offer a mobile user experience, however now that Robinhood does too, and does so in their award-winning user interface environment, this means that their competitors need to step up their design game because it now will become a value driver. Having tools and features is not the same as having easy to use and appealing tools and features.

In terms of what the implications may be for Canadian online brokerages, it’s clear that having a commission-free trading competitor is only one part of the online investing experience. Investing in strong design features that make it easy and accessible for users to get onto the platform lowers the barrier for many users and eliminates possible frustration – especially in a mobile environment.

It will be interesting to see what the feedback is on the new feature set from Robinhood. And, assuming these technology experiences are stable and reliable (e.g. how real-time is a price that is being pushed through a mobile internet connection), there’s a great chance that these new components will end up improving design and user experience for active investors who want to invest from anywhere – including from a music festival in the middle of the desert.

Discount Brokerage Tweets of the Week

From the Forums

Hands On

One DIY investor has questions about the highly-customized portfolio they created. Read on for opinions and advice from fellow forum users in this Reddit thread.

RESPect the Process

A poster on RedFlagDeals wants to know more about saving for their children’s future with RESPs, and other forum users chime with answers and clarifications. Read more here.

Into the Close

That’s a wrap on this special edition of the roundup. It’s been a fun way to spend a long weekend but it’s time for the spotlight to turn onto earnings and what seems to be even more big news with waves of IPOs coming to market. Ironically, both Lyft and Uber were the big stars of the show getting people to and from Coachella, so here’s hoping that translates into stellar performances like the ones on the stage! Have a profitable week!

 

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Discount Brokerage Weekly Roundup – April 15, 2019

In case you were wondering why Bran might be trending on Twitter, it’s not because the world suddenly discovered fiber was going to be bigger than avocado toast. No, it was because fans around the world couldn’t be content keeping their excitement to themselves about the kickoff to the final season of Game of Thrones. Even in the midst of all of the ‘Winter is Coming’ memes, the big picture for online brokerages here is that audiences get excited about great content/products/performances – something that is particularly important when brokerages are fighting their own battles for attention and engagement from DIY investor audiences.

While there are no dragons in this edition of the roundup, we do cover a major competition for DIY investors to take home some serious coin and for one online brokerage to get some important marketing wins. From there we peer over the fence to see what US online brokerages have been working on and how they’re getting creative to provide DIY investors what they want when it comes to trading experiences. As usual, we’ll also serve the staple Twitter chatter and forum discussions from DIY investors.

Let the Games Begin

While vying for control of Kings Landing might’ve been the biggest competition to make headlines this week, a slightly distant second was the launch of the annual “Biggest Winner” competition from Horizons ETFs.

Sponsored once again by National Bank Direct Brokerage, this competition, which kicks off on May 6th, is for DIY investors of all stripes who want to try their hand at growing a portfolio as much as possible across the challenge time frame of six weeks. The catch is that contestants are restricted to using Canadian ETFs listed on the TSX rather than picking individual securities.

Prizes for this contest consist of six weekly cash prizes of $500 and a grand prize of $7,500 for the best performance across the duration of the competition, followed by the runner up prize of $2,500.

As far as trading competitions go for Canadian DIY investors, this is by far the most regular and offers the best prize value to be won. In terms of exposure, in the incredibly competitive ETF and online brokerage markets here in Canada, this competition is a tactical way in which Horizons and National Bank Direct Brokerage can be on the radar of lots of investors.

Interestingly, during the registration portion of the contest, the form includes questions about which online brokerage (if any) individuals use. Conspicuously absent on the list of online brokerages are Desjardins Online Brokerage, Interactive Brokers, Virtual Brokers, HSBC InvestDirect, WealthSimple and JitneyTrade, signalling that there are a handful of brokerages of particular interest to NBDB and others that likely aren’t.

While brokerages offer the occasional contest, it is remarkably rare. In a world where getting investors to pay attention, let alone offer up information (such as an email address), contests often draw the curious in to participate. For NBDB, this contest not only gives them access to DIY investors from competitor firms, it also offers them a unique opportunity to market their commission-free ETF program. Incidentally, the contest does charge virtual commissions on trades executed so there is some semblance to real life in which commissions can bite into profitability of trading.

Moving in Concert

This weekend, the biggest names in music and their cadre of fans travelled to Coachella. This massive music festival, just around the bend from Palm Springs, is forecasted to bring in almost 250 thousand revelers across two weekends, and helps to put into perspective the scale at which the US market operates.

For the US online brokerages, the power of scale is something they continuously look to leverage with their feature releases. This past week and earlier this month, there were some interesting moves south of the border that once again highlighted the direction that DIY investing (and more broadly online investing/wealth management) is trending towards.

One of the biggest names in the US online brokerage space, TD Ameritrade, for example, announced that they are expanding 24-hr trading capabilities in certain securities. Last year, TD Ameritrade launched their foray into 24-hour trading of select ETFs and changed the way in which investors could access after market trading. It probably didn’t make as big of a splash at the time as cryptocurrency was all the rage (and already tradeable 24/7).

But in a market place like the online brokerage space that is so ultra-competitive, the small improvements or boosts to their bottom line or client satisfaction are the types of things that ultimately help to maintain their market position.

Being able to trade 24 hours a day is something that appeals to only a certain niche segment of investors but the decision to expand a selection of securities indicates at least enough interest in the program to warrant further investment. Buried at the end of an article on Benzinga announcing the latest move by TD Ameritrade are a few key lines that highlight the potential motivation behind catering to this niche segment:

“According to the retail brokerage, 70 percent of clients interact with the firm’s research and education resources outside of regular trading hours. They also found that clients who trade during the 24/5 session are 10 times more active and have 3-4 times more assets than typical retail clients.”

Whether Canadian online brokerages ultimately decide to jump into offering this kind of innovation is a function of a number of economic and regulatory realities. The point, however, is that there are examples of product lines that can be a win-win for investors looking to access certain trade opportunities and brokerages who are looking to boost earnings and gain traction with active traders.

Of course, one of the drivers for the move by TD Ameritrade was the need for investors to be able to react to news. And late last month, US online brokerage Robinhood announced a rather intriguing acquisition of a market news provider MarketSnacks.

Interestingly, providing access to news – especially financial news and market information – goes hand in hand with how investors formulate trading decisions and evaluate trading opportunities. Whether it is a good idea to go/stay long Boeing (or short it), whether yield curve inversion portends a recession or there’s still time in this bull market to run higher, these kinds of event-driven trading or investing decisions also appeal to a more engaged investor base. The challenge, however, is finding a format that resonates with audiences. Of course, traditional business news channels and market reporting are familiar but in 2019, they’re struggling to win a battle for attention against robots/AI who can report the ‘stats’ of the news in a fairly formulaic fashion.

So, enter a format like the daily digestible news story and podcasts provided by MarketSnacks or even the full day market programming provided by Tasty Trade and the takeaway is simple: focus on the content being engaging and accessible and (funny thing) an audience will gravitate towards that content. As a result, MarketSnacks got acquired by an online brokerage looking to feed clients more market coverage and Tasty Trade’s founder Tom Sosnoff has captured the attention and admiration of a loyal audience base.

Whether it’s opening up securities to being traded after hours – at any hour – or providing engaging content to DIY investors about market action in a format that fits their increasingly fragmented digital lifestyle, US online brokerages are providing yet another example of competition fueling better user experience for investors. In the case of Ameritrade, they’re getting creative about how to grow revenues based on the fascinating insight about when their users actually access the system – the point here though is that they didn’t have to lower commission prices to do it. For Robinhood, it’s especially interesting because the focal point isn’t about lowering commission prices (they’re already at zero) but rather making a tactical choice to provide value to people who are active consumers of market news – something that will invariably generate more trading activity the more engaged people are.

Like planning a ridiculously over the top music festival in the middle of the desert, the fact is that people show up, endure and even look forward to the journey for the content and the experience. If there’s anything that Canadian online brokerages can take away from these developments south of the border, it’s hopefully to start thinking about getting much more creative with how they reach online investors.

Discount Brokerage Tweets of the Week

From the Forums

Ahead of the Learning Curve

A newcomer to the DIY investing world has questions about how long it might take to build their knowledge base. See what advice other Redditors provided here.

Golden Years

One forum user wants to know if changes to their portfolio are necessary as they get closer to retirement. Discover what fellow forum users had to say in this Canadian Money Forum thread.

Into the Close

So much for investors to be on the look out for in the week coming up. In addition to actual Easter eggs, it’s earnings season again and that likely means people are bracing themselves for (even) more ups and downs. Whether that ending to Game of Thrones or general market volatility leaves your head spinning, the world can rest easy knowing that Idris Elba also spins (and will be doing so again at weekend 2 of Coachella!) and apparently so does Hodor (in real life!). Have a profitable week!

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Discount Brokerage Weekly Roundup – April 8, 2019

Even though spring has clearly arrived, there are still many folks anticipating the coming of winter. After years of anticipation, the finale of Game of Thrones is almost here, bringing an end to an amazing decade plus run. If it sounds eerily familiar to the reporting on the decade-long bull market run up – it just might be.

In this edition of the roundup, we take a look at the pullback in deals and promotions heading into April that may leave brokerages scrambling to ride the tech IPO wave set to wash over markets later this year. Also in the spotlight this roundup is the latest move by one online brokerage to shuffle the deck on their premium account offering – perhaps creating an unintended race for lucrative clients in the months ahead. As always, we’ve tapped into the investor forums and Twitter to see what online investors were curious about this past week.

Deals Update for April

Let’s face it, by now most Canadians have had their fill of winter. One of the downsides of the end of the winter stretch for DIY investors, however, is that discount brokerage deals activity tends to melt away much faster than the snow on a Vancouver sidewalk.

With the RSP contribution deadline in the rear-view mirror, the start of April saw a pullback in the number of offers and the number of online brokerages actively trying to recruit new clients or assets through the use of promotions.

Deal attrition in March resulted in the following online brokerages allowing their existing offers to expire:

The news at the beginning of the month wasn’t all negative, however. There were two important extensions from online brokerages popular with highly price sensitive online investors: CIBC Investor’s Edge and Questrade.

In terms of CIBC Investor’s Edge, their cash back offer has been extended through to the beginning of May. This positions their offer against only a small number of other active cash back offerings currently in the market. For CIBC Investor’s Edge, a less crowded deals space offers a double win: first, this means more spotlight on their brand and second, more spotlight on an offer that is particularly compelling to DIY investors – the cash back bonus.

For Questrade, their unique transfer fee coverage promotion has been extended through to the end of June. This means that they are actively challenging other brands and competitors by offering to pay for transfer fees imposed by those brokers on clients who wish to leave. It is worth restating that for investors with smaller-asset portfolios (under $15,000 – $25,000) who are looking for a different provider, this is the best exit plan currently available.

In most years the last big possible spike in investors seeking out new investment opportunities, including investment accounts, would be the income tax refund window, which would typically wrap up in May. That said, 2019 is a unique year for unicorn tech stories going to IPO. Names like Uber, Airbnb, Slack, and more are still scheduled to come to market, which means investors will be keen to access these investment opportunities and, as a result, will be kicking the tires on which online brokerage will be best for these IPOs. For that reason, even though there have been a few April showers when it comes to discount brokerage deals, it seems like this year there will likely be a few savvy brokerages bringing some flowers (or promotions) to win over DIY investors ahead of the big rush to step into the IPO wave.

Aim for the Stars

Earlier this month, BMO InvestorLine rolled out some important changes to their “5 star” program, a premium set of services that are offered to higher value clients. Prior to these changes, the 5 star program consisted of three tiers – Silver, Gold, and Platinum – which offered qualifying clients discounts on trading commissions (when first launched), preferred interest rates, reduced fees on non-trading transactions as well as real-time quotes, level 2 quotes, service perks and access to their top tier trading platform. Importantly, the threshold to qualify for the 5 star program started at $250,000 for the Silver tier. Clients with assets of $500,000 or more qualified for the Gold tier, and assets of $10M or more qualified for Platinum status.

Under the new structure, the 5 star program features three tiers – Gold, Platinum, and Diamond to replace the Silver, Gold, and Platinum. Qualifying for the first tier in the new structure requires $250,000 or more, which suggests that the previous Silver and Gold tiers have now been amalgamated into the Gold tier. The threshold for Platinum Star is $2M in assets or higher and Diamond Star is $5M or higher.

What has certainly gotten forum users chatting is the fact that under the new system, certain benefits are no longer available to Gold tier clients, such as access to BMO’s premium platform, Market Pro, which was replaced by a “lite” version. Also no longer available to Gold tier clients is streaming level 2 trading data, which, for active traders, will be a big adjustment.

Despite the turbulence encountered on the forums, it is an interesting move by BMO InvestorLine to redraw the lines on the premium account experience – especially lowering the threshold for Platinum and creating a new tier, Diamond.  On the one hand, it makes more premium experiences available for valuable clients more accessible, but on the other, it clearly creates a sore point for some other of their clients.

Other bank-owned brokerages have comparable programs in place for higher value clients so it will be interesting to see how they respond in kind. The table stakes are highest with this segment of client, and most premium programs have a minimum threshold that starts at $250,000 which creates an interesting opportunity for competing firms in some areas, and potential hurdles in others. Specifically, if the forum posts offer any indication of what clients are thinking, the segment between $250,000 and $2M might be more volatile than in previous years.  Quite possibly, competitors may take this signal to draw more attention to their typically hushed premium programs – especially if they’re prepared to offer streaming level 2 quotes.

Discount Brokerage Tweets of the Week

From the Forums

Getting Ahead of the Curve

A DIY investor on RedFlagDeals wants to know how to readjust their portfolio to weather a possible looming recession. See what advice other forum users provided here.

Feeling Robotic

One new online investor has questions about wading into investing and the differences between robo advisors. Check out this Reddit thread for other forum users’ opinions.

Into the Close

Talk about mixed signals. Even though ominous signals for markets loom in the distance, there’s all kinds of economic data and exciting stories to make 2019 another volatile adventure. While everyone is trying to figure out the market’s endgame, there are other endgames close at hand. Between the Avengers and Game of Thrones, there’s going to be no shortage of reasons to avoid April showers to get in some serious screen time.

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Discount Brokerage Weekly Roundup – April 1, 2019

And just like that, the first quarter of the year is now in the books. Of course, we all know that time flies, but just like the sci-fi world, for investors time and money are also bending – in this case – because of the yield curve inversion. If it sounds like the financial equivalent of the upside down, it is, and for DIY investors as well as for online brokerages, it portends some stranger things ahead.

In this edition of the roundup, we take a look at the rollover of the deals and promotions activity from March to April and relative quiet (perhaps too quiet) state of affairs regarding commission-free trading. From there we serve up a delightful bouquet of recent developments and trends that DIY investors and online brokerages will want to put on their collective radars. As always, we’ll collect the latest chatter from investors on Twitter and the forums to cap off a busy week in the markets.

Betting on a Better Deal

While the CUSMA or USMCA or whatever it’s called is still being ironed out, the good news for DIY investors is that there are still free trade deals to be found at Canada’s discount brokerages. As we approach the new month, and in particular this month, there is quite a bit of turnover in the online brokerage deals section.

Offers from Scotia iTRADE, Virtual Brokers, RBC Direct Investing and Qtrade Investor all expired at the end of March. Encouragingly, CIBC Investor’s Edge have extended their offer through to early May which is just enough time for folks to take advantage of investing any tax refunds into the markets.

In addition to the turnover in deals, March has undoubtedly been one of the most eventful months in the online brokerage space in Canada in recent memory.

With the launch of Wealthsimple Trade, the conversation about promotions – especially commission-free trade ones – has forever changed. Of course, one of the interesting things about competitive markets (and the online brokerage space definitely counts as one) is how they respond to material developments.

Even though promotions have been an important method for online brokerages to compete with one another and attract new assets to their organization, what has been interesting to witness with the launch of Wealthsimple Trade is not what has happened, but rather what hasn’t.

Unlike the move in 2014 by RBC Direct Investing to lower their standard commission price to $9.95 per trade, the launch of Wealthsimple did not trigger an almost immediate repricing of commissions by existing online brokerages. There was not a domino effect of major online brokerages announcing they too would be dropping their trading commission structures to zero (although that still may come). Ditto for the deals and promotions – instead of more promotions or more enticing terms to steal the Wealthsimple Trade thunder, there has been nothing, which naturally begs the question, why not?

While it is likely that major Canadian online brokerages will eventually formulate a response, this certainly seems like a “wait and see” moment. Undoubtedly, there are individuals from other online brokerages who’ve signed up to test the experience of Wealthsimple Trade. That, combined with early feedback from consumers and the lack of registered accounts (like a TFSA or RRSP), seems to point to a lack of immediate concern by Canadian online brokerages for the zero-commission trading world now available to Canadian DIY investors.

Despite the lack of immediate movement by Canadian online brokerages with regards to the new entrant, it is almost certain that firms are already planning when the right time for a response will be and what that response will look like.

One of the potential benefactors in the meantime could be the deals and promotions section. Planning and deploying promotional offers can be quick and efficient and can give investors something extra to consider when kicking the tires on a new brokerage.

In addition to deals, there could also be tactical pricing adjustments that start to show up this year. With a whole suite of tech IPOs planned for 2019 featuring the likes of Uber and Slack, there is bound to be strong interest in participating in these now recognizable tech stories. Waiving or discounting forex fee markups on US trades could prove to be an interesting tactic to counter the current state of Wealthsimple Trade’s requirement for forex conversion to trade US-listed or USD-denominated securities.

So, while there will certainly be a noticeable downtick in the number of deals and promotions heading into the new month, we anticipate there will be more than a couple of surprises sprung on investors in the form of creative promotional or pricing offers. And, who knows, these new free trade offers might even offer better access to the US markets than the CUSMA does.

DIY Investing Potpourri

How you doin?

Although a catchphrase from the popular show Friends, it also appears to be an analogous way to cozy up to online investors – at least that’s what one popular US online brokerage is betting on. This past week, Interactive Brokers announced the launch of their new portfolio check up tool Portfolio Analyst which is aimed at simplifying the myriad of financial touchpoints that characterize modern day life.

In what appears to be a powerful, free tool that can integrate personal financial information ranging from banking accounts and credit cards through to investments, this is an exceptionally bold move from Interactive Brokers into the “traditional” banking space. Additionally, it represents an extremely potent way to get visibility into the whole financial picture of its users – a tool that has incredible marketing value for a firm like Interactive Brokers that is expanding its service offering into products like credit cards.

The Portfolio Analyst tool by Interactive Brokers also appears to be a part of a growing trend in the digitization of personal financial management. Increasingly, there are software tools being used to integrate information about an individual’s financial picture and then use that to communicate performance.

Recently in Canada, TD Direct Investing launched a tool called “GoalAssist” which pulls together information about the performance of a portfolio relative to stated investment objectives to help users determine how close or far they are from meeting their financial goals.

These portfolio and personal finance management tools are not new inventions, but it is interesting to see them start to show up in the online brokerage space. Increasingly, it appears that online brokerages are not going to be contained to just trade execution – they are likely gateways to digital wealth management platforms that take a holistic view of a person’s assets and financial goals.

Perhaps fortuitous timing, but another big name in the US online brokerage space, Charles Schwab, also announced last week that they will be launching a subscription-based approach to providing wealth management advisor access. While outside of the model of a pure discount brokerage, Charles Schwab provides a unique example of how an online broker took the path of diversifying their business to incorporate advice and advisory services into their ecosystem. As a result, they are playing for scale – to attract as much in terms of assets as possible, which in turn enables them to compete in a “zero commission” world much more effectively than their smaller peers.

Daytrading in TFSAs

Another important detail in the saga of individuals looking to actively trade their TFSAs was revealed this past week. The TL;DR version: the only one on the hook for paying potential taxes assessed against a TFSA deemed to be a “daytrading” (or trading for a business) will be the individual whose name the TFSA was in.

Prior to the update in the recent budget, both the institution that provided the account and the account holder were considered “jointly and severally liable” which means that institutions offering the TFSA could be held responsible for paying taxes if a client closed up their TFSA or transferred it to another organization before the CRA caught up.

It is interesting to see how this particular case will end up impacting the CRA’s rules about “day trading” for Canadian investors. Currently there is a very, very grey zone between “active investor” and “trader” – a source of much confusion, especially come tax time.

An individual making over 150 trades per quarter, for example, pushes the limit of what the original spirit of the capital gains tax exemption was probably intended to apply to. That said, there are incentives in place to do just that from online brokerages offering up discounted commission pricing on “individual” (read: non-business) accounts.

So, while online brokerages are abundantly clear about not offering tax advice, enabling individual non-registered accounts to trade beyond a certain activity threshold and calling them “non-business” accounts is a slippery slope that may ultimately attract the ire of the CRA.

Ultimately, choosing to go down the DIY or active investing route can actually lead to becoming viewed as a business in the eyes of the CRA. This is important for DIY investors to take note of as they get started with investing as there is very little that is explained about the tax implications of trading by online brokerages themselves. Certainly with the euphoria of early 2018 now about to play out in tax season, we fully expect there to be some tough lessons being learned by the “active investors” in cannabis and crypto stocks.

Discount Brokerage Tweets of the Week

 

From the Forums

Trading it In

One DIY investor has questions about the best way to move funds from one low-volume stock to another. Users on Financial Wisdom Forum provide helpful strategies and tips. Read more here.

Opposites Attract?

A Redditor seeks advice on how to create a balanced retirement portfolio with a partner who wants to keep their money off the markets. See what other users on Reddit suggest.

Into the Close

It’s hard to believe how quickly April has arrived. Keeping pace with the news cycle has been an endurance test to be sure, but that is something that the bearish market watchers should be used to by now. These past two weeks, however, it seems like their patience may finally be kicking in. With the inversion of the yield curve starting to raise the spectre of recession and another voice seemingly calling for a short on Canadian banks, the end of calendar Q1 for investors is ending on a somewhat ominous note. Not to be a party pooper, but the flood of IPOs coming to market this year might be one of those “top of the market” kind of events too where the final moments to tap positive investor sentiment are close at hand. All that said, spring is about growth and opportunity – regardless of the market direction, here’s hoping that you find a profitable way to play it.

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Discount Brokerage Weekly Roundup – March 25, 2019

Spring is officially here and what better metaphor for talking about growth than one that focuses so much about the promise of things to come. Ironically for many Canadian online brokerages, what’s to come may not be so favourable unless they learn to develop a digital green-thumb.

In this edition of the roundup, we take a look at some fees sprouting up early in the spring that DIY investors will likely encounter more of as the year rolls on. Staying on the floral theme, we also take a look at a potpourri of client experience developments that form a very interesting arrangement of choices for the online brokerage industry to confront when it comes to delivering client experience in a digital world. As always, we’ve also got some chirpy comments from Twitter and the DIY investor forums to close things out.

Additional Fee-tures

As the Canadian online brokerage market continues to adjust to a new competitor and new ways of competing, we anticipated seeing changes to the structure, scope and size of fees being charged for online brokerage services. Earlier this month we noted a small change to the fees being charged by BMO InvestorLine that are set to take effect at the beginning of April, whereby they’re increasing the transfer out fee from $135 to $150.

Among most of the big bank owned brokerages, the transfer out fees are $135 (the exception being Scotia iTRADE at $150 already) whereas at most non-bank-owned brokerages the transfer out fees are $150. Curiously, Wealthsimple Trade’s transfer out fee is $125 (as is Desjardins Online Brokerage’s).

While it might not be high on the list of criteria DIY investors use to choose an online brokerage with, it is always prudent to understand what it costs to get money into and out of any account, including and perhaps especially investing accounts. The slight raise in fees here by BMO InvestorLine might also trigger other bigger peers to do the same.

On the other hand, from a strategy perspective of the online brokerages, transfer fees might become an increasingly important lever with which to challenge other online brokerages when it comes to poaching customers.

Case in point: a recent transfer-fee promotion launched by Questrade.

While transfer fee coverage promotions are fairly standard, what made this promotion stand out was that there was no minimum balance transfer required to be eligible for a commission-fee rebate. This fairly aggressive maneuver could offer a favourable window to investors with assets under the usual $25,000 threshold to switch over and have their fees covered. Of course, the decision to switch online brokerages can certainly be challenged/impacted by the cost of doing so and if transfer fees were to increase, investors may think twice before switching away from a brokerage.

At Qtrade Investor, for example, there is a cost of $100 to a client who closes an account within one year of opening it. That kind of fee is uncommon at most Canadian brokerages but it is easy to see how a DIY investor who was contemplating or who tried Qtrade Investor, would need a compelling reason to leave and incur a charge of a $100.

With competition between Canadian brokerages now ratcheting up, hanging onto clients – whether it is through improving the service experience, or through charging more to leave – will likely be a more popular topic of discussion. As these exit costs do rise, however, the incentive to research online brokerages a little more closely also increases. So, before Canadian online brokerages go too far down that road, they should revisit the clarity of their value proposition for DIY investors and their plans for delivering a great client experience as falling short on those will also be why DIY investors would look to leave in the first place.

Client Experience Potpourri

When it comes to client experience for online brokerages, there are a couple of important moving parts. One is the traditional idea of “customer service” that DIY investors would come to expect from any financial services provider. Things like being able to contact an actual person when an important situation arises and have that interaction be effective and enjoyable are, in today’s digital world, becoming increasingly rare.

Interestingly, this past week, Fido, the flanker brand to Rogers, announced that they would be charging clients $10 for client service requests on live chat or via telephone that could have been done by the clients themselves online or in some other automated fashion.

Why this is relevant for the Canadian online brokerage space is because the “hands off” approach to service is a bigger trend that shapes expectations of consumers, especially younger and tech-savvier ones, and changes what “service” really means.

In the financial services space, there are an increasing number of digital-only financial services providers (e.g. EQ Bank) and with the launch of Wealthsimple Trade, this very “hands off” digital service experience has now found its way into the DIY investing realm. One of the items that wasn’t discussed in our coverage last week of the launch of Wealthsimple Trade was the customer service experience.

As it stands now, the only way to reach Wealthsimple Trade’s support (or “Client Success”) team is via e-mail. The following note on their support page was particularly instructive: “Note: Wealthsimple Trade is a self-serve platform! As such, our team is unable to submit any transactions on behalf of clients. This includes buy & sell orders, deposits, and withdrawals.”

Against this important digital trend, earlier this month Questrade announced that they had earned the DALBAR Seal for Service Excellence. This seal can be obtained “after a company undergoes a thorough audit of their customer service, and in order to qualify it must exceed stringent benchmarks in criteria covering all aspects of its customer service interactions. Criteria include both the interpersonal aspects of the customer relationship, as well as addressing important transactional aspects of the customer request.”

The other Canadian online brokerage to whom the DALBAR Seal for Service Excellence was awarded to this year was HSBC InvestDirect. And, as part of the DALBAR blog post in which that was announced, DALBAR stated “While the lowest fees or slick new platform features grab the headlines, when complicated issues arise, having a competent and engaged human being to talk to goes a long way.”

A final observation with regards to client experience in this increasingly digital age actually comes from a forum post on RedFlagDeals.com.

The forum post itself started off having nothing to do with client service directly – it was a thread about transfer fee coverage from Questrade (mentioned earlier). Quite interestingly the conversation between DIY investors in the forum shifted from being about the transfer fee and turned instead to another firm altogether (Qtrade Investor) and the observation of a slow-to-load web page that created some pan-worthy display about the quantity of expertise and assets under management by the parent firm Aviso. Why this matters is because even though the web page eventually displayed the correct number, one consumer was able to shift a conversation away from transfer fees and talk about digital experience in a way that reflects the holistic manner in which technical design impacts brand experience and perception. Things like a fast loading website actually matter and may have become the digital equivalent of customer wait times on the telephone.

For Canadian discount brokerages, this is clearly an interesting moment in their business model whereby “service experience” can mean something very different to different customer types.

Figuring out how to cater to those different customer needs is no easy feat but it’s clear that trying to shift too much of the service to “online only” means investing heavily in speed, reliability and ease of use. And, in that light, brokerages who offer a multichannel service (including being able to speak to someone on the phone) experience seem like they can then show DIY investors where their commission costs go to.

Discount Brokerage Tweets of the Week

From the Forums

Guaranteed Good?

Are some things too good to be true? One DIY investor wants to know more about portfolios that guarantee the value of their investment. See what other forum users on RedFlagDeals had to say here.

Drain the Swap?

While there were a number of changes in the most recent federal budget, there was one that rattled investors in swap-based ETFs. Find out what got DIY investors buzzing in this reddit post.

Into the Close

That’s a wrap on another eventful week. While spring officially rolled around this past week, the week coming up will undoubtedly be focused on someone who feels like they’ve just gotten sprung (aka the “Mueller Report”) by the “no collusion” report. Seems like there’ll be a whole lot more madness in the final stretch of March and almost certainly more uncertainty. Have a profitable week!

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Discount Brokerage Weekly Roundup – March 18, 2019

With spring around the corner and coming off St. Paddy’s Day weekend, green is definitely a theme colour for March. Of course, while investors are seeking a green of their own, Canadian online brokerages are also green with envy (perhaps even seeing red) with the official roll-out of a new competitor.

In this edition of the roundup, we cover THE story that has been waiting in the wings now for many months: the launch of Wealthsimple Trade. We’ll take a deep dive on the new platform and the early responses to see what DIY investors and online brokerages alike can expect with a zero-commission trading experience. For a little extra variety, we’ll also toss in some of the other things DIY investors were buzzing about on Twitter and in the forums.

Wealthsimple Trade Goes Live

The day that many of Canada’s discount brokerages were hoping would never come is finally here. Zero commission trading for Canadian DIY investors is now available thanks to the official roll out of Wealthsimple Trade.

Although it wasn’t clear exactly when this moment would come, it was just a matter of time, since Wealthsimple Trade was officially announced last year and beta testing has been taking place over the past few months. So, while it wasn’t necessarily a surprise, the official release brings with it the impetus for existing online brokerages to decide how (and how quickly) they want to compete with Canada’s newest online brokerage.

Now that Wealthsimple Trade is officially live, we can shine a spotlight on the new discount broker to see how it stacks up against existing online brokerages, and see what early reactions by consumers suggest are the strengths and limitations of the new provider.

Platform: Wealthsimple Trade is Mobile Focused

One of the first ‘features’ that is bound to be a source of contention with DIY investors and traders is that Wealthsimple Trade is only available (for now) on a mobile device – specifically those running either iOS 11+ or Android 7+.

Going mobile first with a launch is a radically different user experience for investors who are used to desktop (including laptop) environments to place their trades and manage their portfolios.

To be fair, the mobile-first approach does put a focus on making trading on the go or from other locations in one’s house, hotel or from wherever, a feature rich experience.  That said, the decision to go ‘mobile-first’ means that Wealthsimple Trade skews towards users who are generally younger and more comfortable interacting via smartphone instead of on a desktop/laptop, and who could conceivably spend hours on their phone researching and monitoring stock prices and news. So, in a nutshell, zero commission trading is probably great for your wallet but not so much for your posture.

Early responses from the respective app reviews show that there are mostly positive experiences, with iOS users rating it 4 out of 5 stars (based on 87 reviews) and Android users giving it 3.8 stars (out of 5) based on 34 reviews.

Security: Read the Fine Print

Another very interesting set of concerns raised by DIY investors out of the gate relate to security. While Wealthsimple Trade (like other online brokerages) is covered by the CIPF, it is actually funding the account where the trepidation lies.

To fund your trading account, Wealthsimple Trade requires that users provide their banking information to a third-party platform, Plaid, that is then able to authenticate and transfer funds into (and out of) a Wealthsimple Trade account.

Many initially curious users pointed out that by providing their bank details (i.e. their username and password) to this third party, their bank’s anti-fraud guarantee would no longer be valid.

This means that anyone who has provided Wealthsimple Trade their banking login information might be trading away their coverage in case of theft or fraud. For some, it is clearly a deal breaker – and seemingly unnecessary as other online brokerages (such as Questrade) do not require login information from a user’s funding source to deposit funds.

Of course, for others, the trade-off appears to be acceptable – perhaps a younger demographic is not as skeptical or cautious about third party vendors being part of Wealthsimple Trade’s process; the lure of commission-free trades is worth possibly waiving their agreement with their banking provider.

Interestingly, it is not possible at this time to be able to transfer funds in from either Wealthsimple or a Wealthsimple savings account, which means to get money into a Wealthsimple Trade account, it has to come from an external bank account.

Frequency: How Much is Too Much?

When it comes to commission-free trading, there is going to be one category of user that immediately perks up to take notice – the folks who typically generate a lot of commissions trading. That said, the idea of active trading or trying to outperform the market by trading securities rather than passively and over the long term appears a tad antithetical to the Wealthsimple approach. As a result, and perhaps to keep costs from spiralling out of control, Wealthsimple Trade imposes a somewhat ambiguous restriction on the frequency with which an individual can trade intraday.

Wealthsimple Trade’s official position on “day trading” (i.e. buying and selling a security on the same day) is that it is technically possible but the degree to which it is permissible is unclear. They state that “trading the same security in the same day can be flagged as inappropriate trading activity – as such Wealthsimple reserves the right to block transactions and accounts at our discretion.”

If there is one thing that spooks traders and markets it is uncertainty. With respect to traders, not knowing whether or not they will be able to execute certain trades makes it less likely that they will trust the platform as a ‘go-to’ for primary trading needs.

Yes, commission-free trades are nice but not being able to move on volatile stories – which are typically the most exciting for active investors – is a serious drawback. So, from a risk-management perspective, Wealthsimple Trade might not appeal to the active investor nor the day trader at this point until further clarification is delivered on exactly when the threshold of “inappropriate” is reached. Of course, there are some traders that just might try it out to see what happens but for many others, it will need to be clarified in writing first.

To truly appreciate the conundrum here it is important to understand that the most vocal advocates for Wealthsimple Trade would come from the active trading community online. After all, they are the ones who would stand to benefit the most from commission savings.

Active traders are typically on social media and reddit, and are the folks who would be influencing the demographic of interest that Wealthsimple Trade would be targeting. They (like most investors) would be interested in knowing where the ‘exciting’ trades are (e.g. in cannabis) and like most savvy traders or investors, they would be looking to minimize transaction costs in order to get the most bang for their buck. This hypothesis is supported, at least in part, by a recent post on Benzinga that revealed that during the beta testing phase, the three most traded securities on Wealthsimple Trade were all cannabis stocks (Aurora Cannabis, Canopy Growth, and Aphria).

As an aside, another feature which would make it challenging (perhaps even inadvisable) for active investors to trade using Wealthsimple Trade at this time would be that data for quotes is supplied on a delayed basis.

This means investors looking to make quick moves are receiving outdated pricing information when looking at a particular security. Again, if the stock is having a volatile day – such as Boeing did last week – then the price difference for a market order could be very different from the time a quote was viewed to the time the purchase was made.

Selection: Your Mileage May Vary

Another important category for DIY investors to have to consider when trading with Wealthsimple Trade is the selection of securities available. This is perhaps the most challenging area of the user experience that DIY investors will encounter in contemplating this platform because of the different conditions attached to which markets investors have access to, as well as the eligibility requirements for securities to meet in order to be traded.

Specifically, here are the conditions that Wealthsimple Trade currently has to be able to purchase a security:

  1. That is listed on the Toronto Stock Exchange (TSX); TSX Venture Exchange (TSXV); New York Stock Exchange (NYSE) or NASDAQ
  2. It can only be a stock or ETF – so options, preferred shares, mutual funds and other products are not available to be traded through this platform
  3. Must be CDS eligible
  4. Have a 52-week high that exceeds $0.50 (stocks only)
  5. Have an average daily volume that exceeds 50,000 shares (stocks only)
  6. Be the Canadian-listed security if dual-listed

Unlike at most of Canada’s other online brokerages, there generally aren’t stipulations on whether or not you can purchase a particular security because of its trading price or its liquidity.

Ironically, the notion of ‘buy low’ is somewhat challenged by the watermark on price having to meet that minimum threshold. For example, on the TSX Venture Exchange, there were almost 500 securities out of 1649 that would not be eligible to be traded based on this price threshold requirement.

Another ambiguous requirement is the average daily volume – it is not stated clearly on the help section as to what time frame that daily volume is calculated over (e.g. 10d, 30d, 60d, 90d are all possible choices). We have reached out to Wealthsimple Trade for clarification and they have stated 30 days is the time frame over which the average is calculated. Nevertheless, that window of time means that it would be possible that a security someone would be watching could be eligible to be traded and then lose eligibility based on a lack of activity – something that Canadian securities are prone to doing based on the size of our market.

Finally, based on the interest and popularity of cannabis-related stocks, it is interesting that the Canadian Securities Exchange is not on the list of markets that users can trade. With almost 500 securities listed on the exchange, if individuals wish to trade this market directly, they are currently not able to do it using Wealthsimple Trade.

Another part of the selection conversation that is important to consider is the account types that DIY investors would have access to in Wealthsimple Trade.

Currently there are only non-registered, cash trading accounts available. Individual investors who aren’t active traders would be more interested in accounts such as a TFSA or RSP accounts – vehicles that seem like they’d be better aligned with the structure of Wealthsimple Trade. Conversely, for active traders (and possibly one way to generate more revenue that comparable services like Robinhood have explored) margin trading isn’t available yet and as such, the scale of trading activity is limited.

Innovations: Wealthsimple Trade Doing Things Differently

Up to this point it does seem that there are a lot of gaps in the Wealthsimple platform as currently offered. While it is likely that they will work to iterate and close these user experience gaps over time, there are also features about Wealthsimple Trade worth highlighting out of the gate that will undoubtedly influence the market as a whole beyond just forcing a review on commission price.

One of the biggest and most obvious features is that DIY investing has been ‘reimagined’ in a mobile-first and aesthetically pleasing manner. With Wealthsimple Trade, the interface looks and feels modern, and while its worth will ultimately depend on its reliability and ease of use, the design features alone set them apart from anything currently on the market. It is fast to set up, there are no account minimums, and it looks and feels nimble.

Another less obvious but very interesting feature is their system status reporting. Wealthsimple Trade is the first online brokerage to report the real time status of their trading and supporting systems, bringing to the DIY market a level of transparency that up until now hasn’t existed.

If for no other reason than cutting down on the confusion of a technical outage that in turn leads to lots of unnecessary Twitter posts (ahem Facebook and Instagram), there is actually a system status page that publicly details multiple moving parts of the Wealthsimple Trade experience such as trading or market data or login capability. If you’re at all concerned about technical stability of the platform, this would be an important touchpoint to verify what’s gone off the rails because they also report historical data too.

Finally, it is worth noting that with the roll-out of Wealthsimple Trade, there is a genuine buzz and excitement about online trading and investing that hasn’t really been generated by a Canadian online broker in quite some time. It seems that there are users who, for now, are genuinely interested in seeing the ‘zero commission’ model take flight and are willing to provide constructively critical feedback to help improve user experience.

In addition to grabbing the spotlight on commission-free trading, Wealthsimple Trade has also captured the imagination of DIY investors. The prospect of being interesting and innovative (even shiny and new) is now something that other online brokerages have to contend with. People are genuinely excited about what this platform will do next. Will it be registered accounts? Will it be connecting to new markets? Will it be margin trading?

Regardless of the development pathway, as long as Wealthsimple Trade continues to move forward and roll out improvements, they have an audience that online brokerages are fighting hard to connect with. For investors and online brokerages alike, it appears that right now everyone is watching to see where things go from here and for that reason, it seems like we’re on the cusp of a truly exciting chapter in the online trading story in Canada.

Discount Brokerage Tweets of the Week

From the Forums

Buzz on the launch of Wealthsimple Trade

We couldn’t do a spotlight edition the launch of Wealthsimple Trade without a snapshot of the forum chatter about them. Here are links to the various forum threads celebrating the launch of zero-commission trading in Canada:

  1. RedFlagDeals.com: Wealthsimple Trade – Free stock/ETF trades – Now available to all
  2. Personal Finance Canada on reddit: Wealthsimple Trade is Now Available to Everyone
  3. Canadian Investor on reddit: Wealthsimple Trade is live for everyone

Taking Stock

One investor has questions about holding US stocks in a TFSA. Other forum users on RedFlagDeals chime in with answers, advice, and some hard numbers. Read more here.

Strong Start

A newcomer to the investing world turns to reddit for advice on the best place to start. Fellow redditors deliver and provide a crash course in DIY investing. See more here.

Into the Close

Last week was an utterly tragic one for the people of New Zealand compounded by the perverse nature in which this tragedy was perpetrated and shared with the world. That it happened there, and here in Canada, are signs that the decisions we make, the words we choose and the people we elect matter. Being a fiercely proud Kiwi and Canadian, I am certain that collectively the people of New Zealand will move forward stronger as Canada and Quebec have. Learning to live together, peacefully, is something we often take for granted but in tragedies like the one that struck New Zealand, it is a stark reminder that the price we pay for indifference towards bigotry, discrimination and hatred is far too high.

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Discount Brokerage Weekly Roundup – March 11, 2019

There’s a Bob Dylan song about times changing, which seems fitting for the post-daylight savings edition of a roundup and also following the celebration of International Women’s Day last week. Fortunately, even if it is still taking time, more than just clocks are changing when it comes to the world of DIY investing and finance.

In this edition of the roundup we highlight an interesting new financial planning tool for DIY investors that one big online brokerage hopes will enable users to trade more confidently. Shifting gears, we also put a spotlight on PDAC 2019 and recap some of the interesting things seen (and not seen) at this year’s show. Finally, International Women’s Day is also in focus as one online brokerage went the extra mile to put together some inspiring content related to the day. As always, we’ve pulled together chatter from DIY investors on Twitter and in the forums so be sure to scroll all the way through to get caught up.

TD Direct Investing Rolls Out GoalAssist to Help Investors Make Better Plans

Last week, we spotted an interesting development coming from TD Direct Investing in the form of a rollout of a new financial planning tool called GoalAssist. This new feature is a part of the WebBroker platform and is intended to provide investors with a personalized financial road map to reach important financial goals such as retirement or purchasing a new vehicle.

There is little debate about the importance of financial planning. However in 2019, it is remarkably challenging for investors to find an easy to use (and reliable) set of tools with which to manage their personal financial picture. Interestingly, many DIY investors use a patchwork of spreadsheets, software, and often financial forums to get a handle on what they should be doing in order to prepare for a big financial milestone like retirement or purchasing a home.

So, it is against this backdrop that TD Direct Investing’s release of their financial tool GoalAssist within the trading platform is particularly interesting.

Sure, there are calculators that exist to forecast how much money an individual may need during retirement or what someone would need to save in order to reach a financial goal (like taking a big trip). However, pulling together an integrated financial picture within the ecosystem of where you bank/invest is a powerful combination. The ability to view in real-time the distance between your financial goals and your current financial picture means users can shift gears more quickly if needed, or map out a path to close big financial gaps.

The tool itself uses a familiar approach of establishing a risk profile as well as an investor profile to determine what kind of financial plan would match the person using the platform. As a part of this approach, the tool makes a number of assumptions that are based on data analysis of market performance (including simulations of performance).

Specifically, the tool sets a threshold of 70% “statistical confidence” of your goal being met by the plan parameters and user inputs. If the combination of parameters results in a less than 70% statistical confidence that the goal will be achieved, then the plan will be considered to “need attention,” whereas if it is above 70% then the goal status is considered “good.”

To their credit, TD has provided detailed documentation of the assumptions and parameters that power the GoalAssist platform. It is written clearly and even though it is quite long, it does provide a user with a clear set of guidelines as to what the plan can and cannot account for. Factors such as taxes or the impact of fees are not fully accounted for by the simulations so there is still some degree of planning for these factors that users have to do to get a fuller picture of their financial outcomes.

What is particularly valuable about the details is that each “investor profile” details the performance range of each approach and reports the average return, best return, worst return, and standard deviation. They also provide a snapshot over time of the return picture (as a plotted graph) and report the geometric average (very important!) that more accurately depicts the return over time, factoring in compounding and volatility.

As a follow up on TD’s announcement in September 2018 about their partnership with fintech provider Hydrogen, the launch of GoalAssist reflects a move towards tools and features that take a bigger-picture view of a person’s wealth. Even though there are still shortcomings or gaps that users will need to consider (e.g. taxes) this new platform offers its users a convenient way to do a lot of financial planning in a single interface that is also tied to their accounts.

Ultimately, how much of a selling point this feature becomes will be tied to what people are saying about it. Already in forums there is chatter, however it will be worth watching over time to see what benefit clients ultimately derive from managing their wealth using a tool like GoalAssist.

Beneficially, anything that gets people thinking about planning for their financial future is a way in which investors can better identify what kind of investor they are, what kind of assumptions they have about their own wealth, and what kind of behaviours they may (or may not) need to modify in order to achieve their financial goals. Those are powerful conversations to have and to spark with investors, so where TD Direct Investing takes things from here will be of keen interest to both investors and industry.

PDAC 2019 Roundup

The global mining community descended on Toronto last week for what is arguably the most prominent mining convention in the world, PDAC (which stands for Prospectors & Developers Association of Canada). With just under 500 companies exhibiting in the Investors Exchange, many of which are publicly traded mining & exploration companies, this event provides a unique cross section of what is taking place in the mining sector here in Canada as well as in countries all across the world.

As with most years, it was cold outside during the conference, but inside there was a lot of activity. This year, however, as we had mentioned in a previous roundup, conference organizers elected to charge attendees of the Investors Exchange $25 per day – which as we noted previously, is a bold decision when it comes to the structure of a conference.

While the official numbers state that the attendance at this year’s show, which landed at 25,843, topped last year by 240 more people, the anecdotal response from companies hoping to connect with investors was less than enthusiastic. Granted, this year anyone purchasing access to the Investors Exchange also received access to the trade show section of the convention, which was a section of PDAC geared towards service providers of the mining industry.

Nonetheless, even though mining has been out of the spotlight for DIY investors because of stories such as cannabis and cryptocurrency, there are interesting conversations brewing about what it would take to get retail (aka DIY) investors engaged in the mining sector.

Around the show floor, it was apparent that battery metals and the “electric car” story are one important theme that appears to resonate with investors – and younger investors in particular – as evidenced by the presence of a number of firms in this space.

Another interesting theme on the show floor was the emergence of technology – such as augmented & virtual reality – to help communicate in a much more immersive fashion the projects that companies are working on.

Finally, the Canadian Securities Exchange also organized an interesting panel discussion focusing on millennials in mining. This panel discussion highlighted what challenges and opportunities exist for getting a new generation of investors engaged (and invested) in mining stories. There were a few themes within that discussion worth noting, however one that stood out was the notion that millennials are more aware of the impact of mining on the environment and the communities in which projects take place.

As a result, indicators such as the ESG score may become something millennial investors would want to turn to when making a decision on the corporate practices of the companies they may choose to invest with (in addition to the economic fundamentals of the project).

One thing that was not spotted on the show floor was an online brokerage. Unlike the Moneyshow or even, historically, at the Vancouver Resource Investment Conference, there were no online brokerages present this year (or last year for that matter) – highlighting an interesting gap in the outreach efforts of Canadian online brokerages to connect with DIY investors.

With so many investors and industry professionals who understand the value of investing in mining stocks, it’s likely not going to be too long before Canadian online brokerages also venture onto the show floor.

RBC Direct Investing Celebrates International Women’s Day with Investing Portraits

Last week, International Women’s Day was celebrated in a big way by many financial services providers, including several online brokerages. Among the more visible efforts was a piece from RBC Direct Investing from their new-ish content section known as Inspired Investor.

This piece offered a collection of three stories of women investors at different life stages and from different backgrounds who shared their experience with investing. Although two of the videos are slightly older, the context in this article highlights the change in perceptions about investing being a ‘boys only’ activity – something which will hopefully encourage and inspire other women (and men) to take a different view on what a DIY investor looks like.

Importantly, RBC Direct Investing has disclosed that the stories feature individuals who either work for RBC or were compensated for sharing their stories. Suffice to say the stories themselves don’t paint DIY investing in a negative light, but they aren’t overly promotional either. When it comes to encouraging people to consider DIY investing, subtlety is important because it isn’t necessarily a good fit for everyone.

Although a few other online brokerages also recognized International Women’s Day, it would be great to see more participation and support for highlighting stories of women investors on a more regular basis. There are lots of great stories out there that can hopefully demonstrate that when it comes to capital markets or DIY investing, barriers to participation don’t make good business sense.

Discount Brokerage Tweets of the Week

From the Forums

Getting Benched

This DIY investor is looking to switch from US ETFs to Canadian ETFs. As they take a closer look at the benchmarks, they found some variances. See what other investors suggested in terms of whether to make the switch on this post from RedFlagDeals.

Testing the Waters

This DIY investor wants to enter the investing game but isn’t sure if what they have in mind will play out. Their hesitation was noted by fellow forum users. See what they had to say on Financial Wisdom Forum here.

Into the Close

That’s a wrap on another interesting week for DIY investors. It was the first time in 2019 that the TSX index closed at a loss but despite that, market sentiment still remains positive.  That is, of course, if you’re Jeremy Grantham. So, on that cheery note – here’s to having a profitable week ahead!

The full interview with Jeremy Grantham from CNBC.

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Discount Brokerage Weekly Roundup – March 4, 2019

Welcome to March. With spring on the horizon (at least that’s what’s supposed to happen) and the RSP deadline now behind everyone, it’s time to start looking forward to bigger stories through the rest of the year. Fortunately for online brokerages (and DIY investors) once they recover from the mad dash that was the RSP contribution rush, there are some bullish signals that DIY investing continues to strengthen.

In this edition of the roundup, we highlight the latest activity in the deals and promotions section. With the arrival of a new month, and this month in particular, this month is going to be full of changes and surprises as the deals deck shuffles. Keeping on theme with spring, we’ve also spotted a few interesting developments sprouting up – one that mining investors may want to take note of and another that shows that IPO activity in 2019 extends even into the online brokerage segment. As always be sure to check out the latest tweets and forum posts from DIY investors.

Deals March On

Now that March has officially arrived, the mad dash to the RSP contribution deadline is finally over. Over the next few days, Canadian discount brokerages & investors alike will be tallying their respective wins.

For investors, there were definitely some big wins to celebrate. Historic high numbers of offers, participation from almost all online brokerages, as well as an increase (in certain segments) in the value of offers being put forward. The combination of these factors suggests a bullish sentiment for DIY investors through 2019.

That said, an adage of markets (and physics) applies equally to the online brokerage market and what has gone up will most certainly come down.

With a significant portion of deals timed to coincide with the RSP contribution deadline or shortly thereafter, March is scheduled to see quite a bit of turnover in the deals & promotions section. So, while market volatility may have taken a back seat for the first part of 2019, for online brokerages and DIY investors, the deals category is going to sail through choppy waters.

Case in point, the most popular categories of offers – cash back promotions and commission-free trade deals – is set to have 7 out of the 14 (50%) current offers expire in March.

Notably, the deal from TD Direct Investing expired at the RSP contribution deadline of March 1st. Offers from BMO InvestorLine (March 4th), Qtrade Investor (March 15th), CIBC Investor’s Edge (March 24th), RBC Direct Investing (March 29th) and both Virtual Brokers and Scotia iTRADE on March 31st.

Also on the chopping block in March is Questrade’s big transfer fee coverage offer (set to expire March 31st).

Of course, with so many deals set to expire, the landscape for DIY investors will be pretty interesting for those other deals still in play. Even though the big push of RSP contributions will have come and gone, income tax filing season is now here and personal finance questions will still be top of mind for many investors. In fact, what could be interesting to watch is whether there are any stumbles with regards to tax reporting across the tax-filing season as hiccups invariably lead to investors getting fed up and looking elsewhere for greener pastures. The result, for online brokerages with promotional offers still active during this time period, there will be less competition to contend with.

Interestingly, it will likely be challenger brokerages – such as National Bank Direct Brokerage, HSBC InvestDirect, Desjardins Online Brokerage and Questrade who will directly benefit from the deals action pull back. In all likelihood, however, we also expect BMO InvestorLine to post an offer to keep their long-time streak of offering a promotion intact. Additionally, given Questrade’s climbing prominence in rankings and growing awareness of this provider among online investors, it is unlikely that other, larger, online brokerages will sit by and cede market share to Questrade  – especially during this time of year.

So, even though we don’t know exactly what’s in store for DIY investors in March, the early data suggests a bullish sentiment for brokerages to introduce new deals and/or extend offers.

DIY Investing Potpourri

Despite the winter warnings, we can still look forward to March being the official start to spring. With that in mind, we’ve pulled together a few interesting developments across the DIY investor space that are worth taking note of.

PDAC 2019 Now Charging Investors to Attend

When it comes to conferences for investors, there aren’t a lot to turn to. And, when it comes to major mining conferences in Toronto that would attract the global spectrum of the mining industry, there really is only one: PDAC 2019.

Taking place between March 3rd and 6th this globally renowned show brings in mining and exploration companies at a scale that is unrivaled in Canada and so it was particularly interesting to see the PDAC roll the dice when it came to attracting investors into this convention. Specifically, this year PDAC opted to charge $24.99 for admission to the Investors Exchange – the hub of about 500 mining & exploration companies.

So, either sentiment in the mining sector is about to take a significant uptick or PDAC carries enough weight with investors to warrant charging admission. Among the many selling points for investors is that this is arguably the best opportunity to meet with mining and exploration companies’ representatives as well as to discover other ones.

There are just shy of 500 companies listed to exhibit in the Investors Exchange so for anyone to try and cover that kind of ground, it will likely require a multi-day effort. To make matters more potentially costly, 65 exhibitors (13%) are there only for one day, either March 5th or March 6th.

While the final numbers will ultimately bear out whether attendance is impacted by charging for admission, given the state of the mining markets, giving investors one more hurdle to cross seems like a bold move. So, for investors serious and committed enough to fork over $25 per day to talk to companies, you can almost bet the questions will be coming from more engaged investors and there will be fewer ‘no shows’ (although the extreme cold may also challenge attendance).

It will be interesting to see what kind of experience DIY investors can expect from this year’s show – but one thing is for certain – PDAC has raised the bar for creating an outstanding investor experience now that investors are paying to be there.

IPO for Chinese Online Brokerages

While the spotlight on IPO’s was dominated this past week by the filing from Lyft, earlier last week Chinese online brokerage Tiger Brokers also announced they would be seeking an IPO on NASDAQ (TIGR). Interestingly, they are not the only Chinese online brokerage and trading firm seeking to raise capital from and list on the US markets. Direct competitor of Tiger Brokers, Futu Holdings (FHL) also filed to go public with a target of raising up to $300 million.

Futu Holdings is backed by Tencent while Tiger Brokers is backed by Xiaomi and Interactive Brokers also reportedly has a stake in Tiger Brokers. For Interactive Brokers, their presence in the Asian markets continues to strengthen ahead of their peers in the US online brokerage space.

What also crossed our radar from the disclosure data was the reporting that 71.5% of clients were under 35 – a massive difference in the demographic profile compared to online brokerages in North America. Also noteworthy: conversion rates of 15% and retention rates of 82% through the end of 2018. In spite of attracting customers, a look at the financials show that negative earnings and operating losses which reflect a number of challenges the online brokerage segment still faces in the Chinese market.

Discount Brokerage Tweets of the Week

From the Forums

Stop & Go

When it comes to investing, things don’t always finish on the upside.  At first glance, stop loss protection might be an option to mitigate the risks, but do fellow forum users on Canadian Money Forum agree? See what they have to say.

Expanding the Horizon

One investor takes to the forums to see what ETF options are available outside the energy and resource sector. Forum users take a closer look and share their thoughts on investing in mining and resources while offering up their suggestions on the Financial Wisdom Forum.

Into the Close

That’s a wrap on another set of noteworthy developments. There’ll be lots to see this week, including content coming out of PDAC. Metals are also in going to be in the news with the NAFTA trade deals now up in the air. For the numerologists, the 10th year of the bull market is coming up marking the week in which the S&P 500 hit its low of 666. Not creepy at all. Of course other numbers in focus will be the job growth and economic performance. Wherever the numbers land, here’s hoping you have a profitable week!