Category: Discount Brokerage News

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Discount Brokerage Weekly Roundup – June 21, 2013

While storms were raging across stock markets this past week, it was definitely calmer waters in terms of discount brokerage news and chatter.  In this week’s roundup, we look at the actions that landed another Canadian discount broker in the IIROC penalty box, a report by TD on Canadian investors as well as a review of the chatter on stock forums about brokerages and some useful cautionary investing tales. Finally, we take a quick look at the results from the twelfth edition of  the U.S. Self-Directed Investor Satisfaction Survey results from J.D. Power released earlier this week.

Scotia Capital gets called for an offside

Over the past several weeks, it seems that that Investment Industry Regulatory Organization of Canada (IIROC) has been handing out a series of penalties to Canadian discount brokerages. Joining the likes of Questrade and Interactive Brokers, the decision against Scotia Capital Inc (the parent of Scotia iTrade) was based on activity between 2009 and 2011, shortly after it had acquired E*Trade in 2008.

Scotia Capital was hit with a $150,000 fine for failing to have policies and procedures in place that could detect potential wash trades and high closing prices.  To read more about the settlement, check out the IIROC press release or a great write-up about it in the Globe and Mail.

The Investor Survey Says…

TD Bank Group released results from a recently commissioned a survey of Canadian investors. The survey asked just over 1000 Canadian investors about their thoughts and perspectives on the investing climate in the next 12 months.  Of those surveyed, 41% felt that their personal portfolios would improve even in the face of mild Canadian and US economic recoveries and a poor global economic outlook.    This suggests that investors surveyed might be more interested in looking closer to home for investing ideas rather than looking abroad.

Another interesting finding from the survey is a classic illustration of behavioural finance in action.  Given the run up in the markets experienced for the first half of this year, the rising prices seemed to have also lifted the outlook of investors. Paradoxically, investors are constantly told or reminded that past performance doesn’t guarantee future results, yet it is interesting to see how the past does, in fact, shape investor perceptions.   As described in their press release, those investors surveyed who experienced a loss were more prone to being pessimistic about the future than those investors who experienced a gain.

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Discount Brokerage Weekly Roundup – June 14th 2013

This past week was a fairly quiet one for Canadian discount brokerages, so this roundup will focus on some of the interesting events that took place in the discount brokerage space more generally.

The most popular story in the discount brokerage space continues to be the supposed return of retail investors to equity markets.  Digging a little deeper into exchange activity, however, it seems investors don’t seem to be participating in all markets equally.

In last week’s roundup we reported the metrics from Questrade as well as Interactive Brokers that suggest trading activity is increasing.  Based on the recent performance of the US discount brokerages TD Ameritrade, Interactive Brokers, E-Trade and Charles Schwab, it seems that traders have been well aware of this trend already. According to a recent report by Bloomberg, these US discount brokerages have seen an increase of 38% since January 2013.

In the Canadian marketplace, the TMX group (which represents over 80% of trading activity in Canada) recently reported their trading statistics for May 2013.  The picture the trading volume numbers paint is definitely not as rosy as it is in the US.

For the Toronto Stock Exchange, the year-to-date number of transactions was 17.4% lower compared to the same point last year.  Even grimmer, however, is the number of transactions for the TSX Venture Exchange which saw a drop of almost 44% in transactions compared to the same time in 2012. Interestingly, the Montreal Exchange, where most of the Canadian options trading takes place, increased by almost 4% compared to this point last year.  This data point certainly suggests that the interest in options trading has remained much stronger among investors than participating in either the TSX or the TSX Venture listed equities.

Discount brokerages  seem to have their work cut out for them though if they wish to compete in this low trading activity environment. Interactive Brokers, in its presentation at the Global Exchange & Brokerage Conference in New York last week, disclosed how it is intending to achieve its ambitious goal of being a dominant global player in discount brokerage services.  In a nutshell, they aim to be a very low cost option for investors and as their numbers point out, it seems to be working. In terms of trading activity, customer accounts and profit growth, Interactive Brokers is posting some very interesting numbers relative to its peers.

One data point that is particularly relevant for active traders to pay attention to is the aggressive expansion Interactive Brokers has managed to achieve in margin lending.  From 2007 to 2013, Interactive Brokers has seen their market share for margin lending among discount brokerages increase from 5% to 30%. By offering ultra-low rates, especially on products that active traders access, it seems that Interactive Brokers is hitting the mark.

This past week, margin lending was also the focal point of the latest promotion being offered by National Bank Direct Brokerage. While only for a limited period of time, it is a unique offering compared to what other promotions are currently being run, and this deal will most likely be watched very carefully to see if it will be run again at some point.

While it is still too early to draw any conclusions, Canadian discount brokerages are likely to increase taking aim at users of margin trading and active traders as these are often higher value clients to bring on board.

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Discount Brokerage Weekly Roundup – June 7th 2013

This week’s discount brokerage update features the newly announced deal by BMO InvestorLine, a couple of great forum post on the Financial Webring Forum on Qtrade vs. RBC Direct Investing  as well as another article from The Globe and Mail about Canada’s best discount broker.

Deals Getting Some Air

Unlike a lot of deals that tend to start right at the beginning of the month, BMO InvestorLine has tended to announce their new deals a few days into the start of a new month.  In keeping with their routine, this past week they BMO InvestorLine announced their latest promotion where new account openings can choose between receiving 2000 Air Miles or $250 cash back. The minimum deposit to qualify for this offer is $100,000 so it is one of the higher priced promotions currently being offered by a discount brokerage. For more details on this and other deals for June 2013, click here.

Traders Coming Back?

It looks like investor activity is starting to climb in the US which is likely the result of major indices hitting new all-time highs last month.  Overall markets appear to be shrugging off bad news and rallying on good news.  Interactive Brokers reported their daily average revenue trades (DARTs) improved from this time last year (13%) as well a slight month over month improvement (6%).

Canadian discount broker Questrade also reported improved options trading activity since they introduced multi-leg options trading.  The following screenshot of the news release hints at trading activity with Questrade having picked up. To read Questrade’s full press release regarding options trading activity, click here.

Close is Good Enough

Looking through the Financial Webring forum, this post was spotted where the user (“Amira”) was trying to decide between Qtrade and RBC Direct Investing.

One of the most interesting answers came from the user “Ockham” who basically suggested not worrying too much about picking the best discount brokerage as they are all very similar to one another:

FWF_Qtrade_RBCDI_2013-06-07_1658

 Another “Best Discount Brokerage”

An article in the Globe and Mail (by Gail Bebee) was published earlier this week entitled “For the DIY investor, which discount broker is best?”   This article is another in the growing list of those identifying who they think is Canada’s best discount brokerage. Ultimately Gail Bebee narrowed her top three choices down to BMO InvestorLine, RBC Direct Investing and Qtrade with her top choice being BMO InvestorLine.

Whether the results from Rob Carrick’s annual discount brokerage review will concur could make for interesting times at the champion’s podium.

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Discount Brokerage Weekly Roundup – May 31st 2013

Discount Brokerage News

This roundup features deal spotting from Disnat and TD Direct Investing at the Cambridge House World Resource Investment Conference, a new review of Qtrade and news about a costly mistake made by a  Questrade trader. In addition we take a quick peek at the latest ranking of Canadian discount brokerages.

Deal Me In

TD Direct Investing is quietly launching the new free trades deals. This is an interesting move on TD’s part given that they’ve largely stayed away from offering free trade promotions and because of the timing/roll-out of the deal.  The “50 free trades” promotion was launched towards the end of May and expires mid-July.  Check out our deals section for more info.

Also in the deals section is an updated promotion from Disnat that was being offered at their SCATE tour and at the last World Resource Investment Conference in Vancouver this past week.

Positive Feedback

Money Smarts blog posted an interesting review of Canadian discount brokerage Qtrade earlier this week.  The review contains some feedback from account holders, and it appears that customer service was a point most (including the article’s author) agreed was a strong point of the Qtrade experience. Interestingly, Qtrade did not perform nearly as strongly on the Dalbar Direct Brokerage Service Experience evaluation as other Canadian discount brokerages did.  The Dalbar study directly measures customer service and so the difference between what many consumer posts suggest and what some other studies also show

False Start on the Offense

Earlier this month, Questrade was in the penalty box with the Investment Industry Regulatory Organization of Canada (IIROC) for trading actions one of its employees took between August of 2009 and February 2010.  According to the decision document, the trader was found to have “entered orders on the Toronto Stock Exchange that he ought reasonably to have known could reasonably be expected to create an artificial bid price for Quebecor Inc. Class A securities”  while Questrade was penalized for not having adequate controls in place to prevent such practices from occurring. Both the trader and Questrade were fined for these infractions.

Joining the Ranks

The June 2013 edition of MoneySense magazine is on newsstands and features a review of Canada’s Best Discount Brokerages.  This is yet another in the growing list of discount brokerage rankings.  The rankings themselves are actually compiled by Surviscor, so the data is also available for free on Surviscor’s site too.  Check out our article regarding the numerous Canadian discount brokerage rankings in which we try to make sense of those who claim to be “Canada’s best discount brokerage.”

Interestingly, JD Power’s Investor Satisfaction Award survey is also currently being deployed to Canadian investors.  The survey is generally conducted in the late spring/early summer time frame and  results should be released in the fall.

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Discount Brokerage Weekly Roundup – May 17th 2013

We are back with the Discount Brokerage Weekly Roundup! Here’s the latest news from Canadian discount brokerages this past week:

JitneyTrade and Credential Direct have stepped into the investor education game offering learning webinars to their clients. A look at JitneyTrade’s Twitter feed gave us the low-down on a series of webinars about market analysis and breakout patterns they have been offering over the last week.

Credential Direct has also launched into providing educational webinars with their first one being on technical analysis. The description of the event sounded familiar, and so a quick check of the Recognia website showed that it is, in fact, a Recognia focused educational seminar.

CredentialDirectWebinar_TechnicalAnalysis

As they launch into providing these webinars, it appears that both JitneyTrade and Credential Direct still have a bit of work to do in order to make this information easier to find. In JitneyTrade’s case, this information was only available on their Twitter feed and is not listed as a dedicated section on their website.  For Credential Direct, they do have a big advertisement for the seminar on their homepage, but they haven’t posted the webinar in their education section.  Whether or not they continue to offer webinars in the future remains to be seen however, in the meantime you can check up on educational event information on our calendar.

In other JitneyTrade news, the discount brokerage has launched support for a new platform called RealTick Express. According to their website, the RealTick Express was “conceived for the active trader … who maintains 75-200 trades per month”.  For more information, visit the RealTick website.

Several major financial institutions (including discount brokerage JitneyTrade) were spotted as sponsors to the first ever  FinTech Conference 2013 which took place yesterday in Montréal. According to the website’s description of the event, the event is “intended to promote financial application development to attendees from the finance, information technology and risk management sectors, both domestically and abroad. The conference also seeks to help discover new talents, create networking opportunities, raise interest in the combined fields of finance and information technology, as well as contribute to the visibility of Montréal’s financial technology expertise.”  For an overview of the Twitter analytics of the FinTech conference, click here.

Finally, BMO InvestorLine has come out with a study that reports 81% of Canadians between the ages of 18 and 34 see themselves investing online in the next five years with the percentage of online investors tripling in the next decade. This seems to be great news for online discount brokerages in Canada. It remains to be seen how they will capitalize on this opportunity and which discount brokerage will score the most points with new and experienced investors alike.

That’s all for now! If you come across any juicy discount brokerage news, contact us via email, Twitter or Facebook.

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National Bank Direct Brokerage to offer commission-free ETFs

Commission-Free ETFs: Peer Pressure?

Letting self-directed investors trade exchange traded funds (ETFs) commission-free appears to be all the rage amongst Canadian discount brokerages these days.

National Bank Direct Brokerage has now become the latest Canadian discount brokerage to offer free trading of Canadian ETFs (click here to read their press release) joining the likes of Questrade, Qtrade, Scotia iTrade and Virtual Brokers in offering some kind of free ETF trading.  Specifically, National Bank Direct Brokerage is offering three months of commission-free trading of Canadian ETFs for new and existing clients.

Commission-free ETF trading offers, while great for self-directed investors, require individuals to really understand the terms and conditions that come attached to these types of offers.

The Fine Print

While they’ve done a good job of keeping the terms and conditions easy to read (there are only 17 conditions), there are a couple of important conditions attached to this ETF offer by National Bank Direct Brokerage that self-directed investors need to pay attention to.

First, the promotion applies only to Canadian ETFs (unlike other discount brokerages which do not restrict the ETFs to Canadian only).  What exactly is a “Canadian” ETF? According to National Bank Direct Brokerage, the “Canadian” refers to any ETF that comes from a Canadian provider (e.g. Barclays, BMO, First Asset, Horizons, Invesco Powershares, iShares Canada, RBC and Vanguard Canada).

Second, the ETFs must be held for at least one trading day otherwise regular trading fees apply. This means that at an ETF could be purchased before closing on one trading day and then traded the following trading day without a fee. Thus, hold period is measured in trading days.

Third, trades must be at least $5000 in value in order to qualify for the commission rebate.

Lastly, according to the terms and conditions, clients must pay for the commissions on any ETF transaction at the time of purchase and they will then be reimbursed “six months after the promotion ends” (FYI: the promotion ends on July 31, 2013).  The terms go on to clarify the actual refund date by stating that trades placed between April 15th and June 14th will be reimbursed on October 18th whereas trades placed between June 15th and July 31st 2013 will be refunded on December 20th.   For a list of their commission rates, check our profile of National Bank Direct Brokerage here.

On the plus side, the offer allows for unlimited commission-free ETF trading (buys and sells) for three months after signing up for this account. For occasional investors or those who rebalance, this may not be a tempting offer, however for swing traders or those who have hold times for trades that are days or weeks (rather than hours or months), this offering could be attractive, especially since there are no caps to the numbers of trades that could be made.

While the timeframe to get reimbursed is lengthy, it is in line with many ‘cash back’ offerings currently available at other discount brokerages.  Some tips for self-directed investors considering this offer are to make sure they keep good records of their trading activity and to have a conversation with an accountant or tax advisor to ensure proper tracking of the commission costs and rebates.

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Desjardins Group buying a piece of Qtrade

Desjardins Group invests in Qtrade for the long-term

Desjardins Group, parent to discount brokerage Disnat, announced earlier this week that they are taking a significant ownership stake in Qtrade Financial Group.  Desjardins has committed to purchasing between 25 to 40% of Qtrade’s outstanding shares initially with the option to acquire the remaining shares within six years.

According to the arrangement between the two companies, Qtrade will continue to operate independently retaining its brand name and current leadership.  With regards to the discount brokerage component specifically, both Desjardins and Qtrade state that for the foreseeable future it will be business as usual.

Ron Cann, Qtrade’s VP of Marketing and Communications, says that the focus will continue to be on delivering a quality experience, something that Qtrade’s discount brokerage has earned top honours for from the Globe and Mail and Morningstar in recent years.  From Desjardins perspective, director of media relations André Chapleau says that the near term will be a time of learning – one in which the opportunities to build synergies will be explored.

Even though these two companies are going to operate independently, and they both seem committed to continuously improving their offerings for Canadian investors, there are still some wrinkles to iron out. Specifically, will Disnat, the discount brokerage side of Desjardins and Qtrade’s discount brokerage business compete directly with one another?  While there might be some overlap, each side seems to feel that their respective target client base is diverse enough in terms of trading style (active trader vs long term investor) and geography (Quebec vs Western Canada) that competition is not really a focal point.  The alignment of Qtrade and Disnat as alternatives to the big-bank owned discount brokerages is what both parties see as a value add for their respective clients and partners.

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Questrade Launches Commission Free Exchange Traded Fund (ETF) Buying

Questrade Commission Free ETF

Commission Free ETFs – The New Normal?

Earlier this month, Questrade made a major announcement that impacts the commission fees associated with trading or investing in exchange traded funds (ETFs).   Specifically, Questrade has eliminated the commission fees associated with purchasing ETFs so that now any Canadian or American listed ETF is available for purchase commission free.  Naturally with a deal this compelling, there has to be a catch and in fact there are several important ones to take note of.

First, when purchasing an ETF, customers will get charged the commission fee, which will then be rebated within two business days. Second, customers can only buy ETFs for free by using one of the IQ platforms. Third, when selling the ETF, regular commission charges apply.  Lastly, some ECN (electronic communications network) fees may still apply for certain order types.  Even so, purchasing ETFs through Questrade just got way cheaper.

Given the popularity of ETFs with investors and traders alike, this announcement is sure to make waves with do-it-yourself investors as well as with other discount brokerages.  Message boards, forums and blogs have been buzzing with this latest offering from a company already well known for offering low commission fees.

Lowering Prices and Lowering the Boom

While some other discount brokerages such as Scotia iTrade, Qtrade and Virtual Brokers offer totally commission free ETFs (i.e. buying and selling) there are a number of conditions attached to how long one has to hold them and which ETFs are eligible for “commission free” status.   In addition, there are also restrictions on which ETFs are available with iTrade offering 50 commission-free ETFs and Virtual Brokers offering 100.  In Canada, data from last year puts the number of ETFs at about 250, trading across a wide variety of sectors, commodities and currencies.  In the US, there are over 1400 ETFs totaling over US$1 trillion in assets.

So, as a result of this announcement, Questrade’s reduction in pricing across all ETFs addresses one of the major pain points for self-directed investors – selection.  Getting affordable access to the most liquid or popular ETFs, or those with low management fees is no longer a problem for Questrade’s clients under this new pricing structure.

How Low Can You Go?

Of course, the other providers of commission free ETFs may be expected to follow suit with some improved ETF offerings of their own, but when combined with some of the lowest commission fees in the Canadian discount brokerage market, competing on pricing and selection will be difficult.

We’ll be watching to see how the other discount brokerages respond, but for now it is clear that the race for Canadian investors’ business has touched off a race to the bottom on fees.

Reference Links:

Questrade Community post announcing free ETF buying – Jan 30, 2013

David Francis – The ETF Boom. Exchange-traded funds are increasingly popular but severe risks exist. June 18, 2012

Megan Harman. Global ETF Assets Hit an All Time High. September 7, 2012

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TD Waterhouse Discount Brokerage is now TD Direct Investing

It looks like TD Waterhouse Discount Brokerage has recently rolled out its new name: TD Direct Investing. With the new name TD Direct Investing comes a much more user-friendly layout to their website, and many more pictures of smiley happy people.

After waves of reports and surveys about investors requiring added support and educational resources, it seems like TD’s response is to simplify access to the large amount of material they have developed for self-directed investors.

Screenshot of TD Direct Investing’s website – Dec. 20/2012

Gone are the overpoweringly excessive green and orange tabs and pages.  Instead cleaner shades of green and grey, mixed in with crisp fonts and ample use of white space have made the site far easier to navigate and read. The front end of their website now provides easy login access to WebBroker, three choices for individuals to access information depending on whether one is “new to online investing”, “an experienced investor” or “an advanced trader”.  Simplified website – check.

Scrolling further down the page, there are four simple categories mixed in with ample adjectives.  Your choices are investor education, knowledgeable support, powerful trading platforms and tools, and competitive fees. Despite sounding a bit super-hero like, rather than having to be a super-hero to find the information, the new layout makes finding things incredibly intuitive.

While filled with great promise at the investor education section and the investment seminars, the excitement quickly fizzled after clicking on the links to “find seminars near you” which took us back to the duo-tone green layout and semi-functional .pdf listing of seminars. Undeterred, we doubled back to check out more of the education section.

The “investor education” is a very well presented section. There are four interesting videos that made it to the landing page. On closer inspection, however, only four of the many videos are accessible directly from this page, and when clicking on any one of the videos, the user is taken back to the “green version” of the website.  While not terrible, I’m sure there’s work to be done to make that experience simpler than it is now.  The guides on options trading, mutual funds and fixed income looked promising however, they pointed back to some of the existing content that was less than engaging to read in the old-layout.

The re-branding exercise to go from TD Waterhouse Discount Brokerage to the shorter TD Direct Investing will take some time to catch on.  Credit should be given where it is due, and so while there is still some work that needs to be done on their website, the new look and feel of the TD Direct Investing website are certainly far easier to navigate and find information on than the previous version. To visit the new site, click here.

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Discount Brokerage Weekly Roundup – Dec 16th 2012

As 2012 draws to a close, it looks like the discount brokerage industry is going into autopilot.  This past week saw the expiry of a couple of promotions. First, Scotia iTrade’s 100 days of unlimited trading offer expired this week.  This leaves Questrade as the only discount brokerage currently offering unlimited trades.   Speaking of Questrade, their “Ring the bell with Questrade” promotion also ended this week. The winner of this contest will be announced this upcoming week on December 20th.

Jitneytrade announced this past week that they’re “going green” by offering paperless statements and  trade confirmations.  If you choose to continue to use paper statements and confirmations, however, be prepared to shell out some major green – paper statements will cost $20 and trade confirmations $1 each starting February 28th 2013.  For more information – click here.

Best Discount Brokerage Tweet of the Week

Thinking about investing in “penny stocks?”  A lot of investors are lured into the low prices and potentially huge gains – but often overlook the bigger risks.  This week’s tweet by National Bank Direct Brokerage’s parent @nationalbank was a good overview of some reasons to think twice before turning to penny stocks.  Read the tweet here.

Event Horizon

This week (December 18th), Morningstar’s Director of Economic Analysis, Bob Johnson, will be presenting a forecast for the economy and investing in 2013.  For more details, click here.

The People Have Spoken

A really interesting discussion was sparked by a Red Flag Deals forum member asking about why retiring baby boomers or ‘young guns’ appear to not be investing?  Check out what dozens of folks had to say about this here.