As part of its 30th anniversary, Disnat has put together a fun promotional infographic that celebrates 180 years of stock trading in Canada as well as its own history as a pioneer in the Canadian discount brokerage industry. To learn more about the deal they’re offering as a part of this promotion, click here.
Interactive Brokers made the news this week as it released its trading metrics for the month of November. While not a perfect proxy for the rest of the investment market, Interactive Brokers’ transaction volumes, known as Daily Average Revenue Trades (DARTs) help to provide an indirect measure of the ‘health’ of the stock market participants including discount brokerages. November’s data from Interactive Brokers show a substantial month over month increase (14%)in DARTs from October to November. Even more interesting is the rise in trading volumes since the lows in August. DARTs are now up over 23% from the August lows signaling an increased level of participation in the financial markets. DARTs cover several types of trading including futures contracts, options contracts and trading in shares. Another metric that seems to validate that observation is the increasing number of new account openings. As this is the picture for US investors, this data could be a signal that investors are jumping into the market ahead of the fiscal cliff or are they tactically preparing themselves to be able to respond. A recent report by Investor Economics has mentioned that Canadian investors have sat on the sidelines for quite some time presenting some challenges to the Canadian discount brokerage industry for commission revenues.
A Canadian discount broker that we do not hear about very much, CIBC Investor’s Edge, is getting a makeover. The new interface is appears to be an improvement from its prior layout, with some clearer and more intuitive sections. For a peek at the site and its new features, click here.
Event Horizon
As we round out the year, webinars and seminars are giving way to Christmas/holiday cheer and holiday parties. The next event of interest is the seminar, hosted by Disnat and presented by iShares on using ETFs in an equity portfolio on December 19th. For more details, click here.
Best Discount Brokerage Tweet of the Week
It was slim pickings from the discount brokerages this past week in tweets. One interesting tweet that linked to a great moneyville article on ETFs came from Scotia iTrade. To read the tweet and article, click here.
The People Have Spoken
This week, a discussion focused on the two discount brokerages that offer very low commission charges on trading, Interactive Brokers and Virtual Brokers. Read what users had to say in the RedFlagDeals investment forum about Interactive Brokers vs Virtual Brokers.
On the heels of the results from the annual Globe and Mail Canadian Discount Brokerage rankings, the 2012 Morningstar Canadian Investment Awards were handed out on November 28th and included a “Best Discount Brokerage” category. While not nearly as well known as the J.D. Power and Associates award for Investor Satisfaction, the Morningstar Awards offer discount brokerages the chance to submit themselves (for a fee) for consideration by a panel of judges for the title of “Best Discount Broker.” This year, Qtrade took top spot and maintained their three year reign as the title holder of this award. Certainly it’s a bright spot for them after recently having been displaced from the top of the Globe and Mail rankings by Virtual Brokers. To learn more about the Morningstar methodology for “Best Discount Broker” click here. BMO Investorline’s “Advice Direct” also earned recognition for “Best Use of Technology” (another category for which entrants had to submit a fee to be considered). Unfortunately, neither the list of candidates nor the scores were published so we are not sure how many discount brokerages participated in this year’s submission.
Another big piece of news for self-directed investors came in the form of an increased contribution limit to tax-free savings accounts (TFSAs). Most Canadian discount brokerages offer TFSAs so for those who choose to invest via their TFSAs, the news is definitely welcomed. Starting in January 2013 Canadians will be allowed to contribute a maximum of $5500 dollars (instead of the previous limit of $5000 per year). To learn more about which discount brokerages offer TFSAs, click here.
If you want to learn more about TFSAs themselves, check our special “The Mighty TFSA.”
Event Horizon
As we turn the corner into December, an interesting opportunity for individuals to sit and discuss some investing related topics is being held at the TD Waterhouse Discount Brokerage centre in downtown Vancouver. The event, entitled “stock chatter” will take place on December 5th from 1:30 PM to 3:00 PM.
Best Discount Brokerage Tweet of the Week
This past week saw the finale of Financial Literacy Month but also it was the conclusion of the now infamous “Mo-vember”. @Jitneytrade deserves a tip of the hat for getting their team on board and actively participating in this great event. Check out their tweet here which has the link to their movember ‘stache pics.
The People Have Spoken
Questrade is one of the most active discount brokerages when it comes to offering discounts and promotions. Recently they’ve offered individuals either an iPad mini if they transfer in $100K or a chance to win one of 10 ipad minis for a smaller deposit. The retail value of an ipad mini is $329. In our discount broker deals section, we’ve seen deal “value” far higher for smaller deposit sizes, and so it piqued our curiosity – what do others think of this Questrade promotion? Is an iPad mini enough value to deposit $100,000? Sure enough, the Questrade promotion caught the attention of some folks on the following Red Flag Deals forum.
This week the biggest news for discount brokerages came in the form of the 2012 Globe and Mail Canadian discount brokerage rankings. Rob Carrick’s annual survey of the Canadian discount brokerage industry looked at 12 firms this year. The top spot went to Virtual Brokers which narrowly edged out the six year champ, Qtrade while the bottom ranking company was HSBC InvestDirect. The average score (out of 100) was 61.2% (with a standard deviation of 10.0 for those who mind the stats). What was interesting about looking at the stats was how most of the companies performed about the same (statistically speaking) except for Virtual Brokers and Qtrade. What this means for self-directed investors is that the difference between 3rd and 12th is not that significant and that even 1st and 2nd are only slightly more distinguishable than the rest. To read more about the rankings and our analysis, click here. Also, we put together a sortable version of the table of this year’s results to help make it easier to compare.
Another very big piece of news from discount brokerage deals section was the announcement by Questrade of the unlimited trading promotion. Scotia iTrade was the first to offer unlimited trading for 100 days, however like all innovations in this very competitive market, there’s a good chance that others will try to do the same. What sets this deal apart from the one offered by Scotia iTrade is that Questrade is offering unlimited trading for account deposits as low as $1,000 and $25,000 whereas Scotia iTrade’s deal requires a minimum deposit of $50,000. Not all self-directed investors really need or want unlimited trades, especially if it is only for one or two months, but for some it is one more reason to lean towards Questrade.
Event Horizon
The upcoming week in events is a bit light as we come to the close of November and financial literacy month. One interesting looking seminar that is coming up this week is geared towards options trading. The TMX group will be presenting via Scotia iTrade, Understanding the Collar Strategy.
Best Canadian Discount Brokerage Tweet of the Week
This week’s best discount brokerage tweet again comes from the affiliate of Disnat Direct, @DesjardinsGroup. We saw this week’s tweet as a way to spread a little goodness for a worthy cause. Desjardins will be donating $50,000 to cancer research across three organizations that gets the most votes here.
The People Have Spoken
It was a very big week for the Canadian discount brokerage space with the release of the 2012 Globe and Mail brokerage rankings. A lot of buzz was created around whether these were actually seen as valuable or not. This thread in the Red Flag Deals personal finance forum was a particularly heated conversation.
The 2012 Globe and Mail Canadian discount brokerage rankings are out as of today with Virtual Brokers claiming the top spot and displacing the 6 year “reigning champ” of this survey, Qtrade (which came in second), by a razor thin margin.
Becoming Globe and Mail’s top ranked brokerage, albeit barely, was a pretty lofty achievement for Virtual Brokers for a number of reasons, not the least of which is because they were sitting at the bottom of the ranking back in 2010. This year (2012) marks only the third year in which Virtual Brokers has been included in the ranking, so for such a recent entrant into the ranking pool to move up so quickly is certainly noteworthy.
So what took Virtual Brokers from the bottom of the pack in 2010 to being crowned the best Canadian discount broker for 2012? Certainly credit is deserved where credit is due. Virtual Brokers has aggressively priced their services far lower than many of their peers and started to match the types of services found at their competitors. Of course, it also helps to understand how the types of categories that went into this ranking could impact the outcome. In order to understand what being the “best discount brokerage” really means, we took a closer look at the rating system used by the Globe and Mail’s Rob Carrick.
The following five sections (and the percent they play in the scoring) are used in the Globe and Mail discount brokerage ranking to assess each Canadian discount brokerage:
For this ranking, the two factors that heavily influence the overall ranking are costs and account information (combined they form 50% of the score). The last three categories of trading, tools and innovation combine to form the other 50% of the ranking. Interestingly, when looking at the definition of innovation: “Which firms are leaders in terms of cutting prices and introducing new services, and which are followers?” price comes in again.
Thus, the prices that a brokerage charges for its services end up having a bigger influence in the overall score relative to any other single component. Virtual Brokers had the strongest showing on fees and innovation and tied for first in the “trading” category which likely gave it the edge it needed to squeak out ahead of Qtrade. Qtrade shone brightest in the “account info” category. Sometimes the overall ranking can mask some particularly noteworthy performances. On the good side, buried in the results is an impressive perfect 20 out of 20 that TD Waterhouse managed to achieve in the Tools category (even though they were ranked 6th overall). Conversely, the lowest ranking was given to HSBC InvestDirect which ‘earned’ a particularly biting comment: “They win in one respect – most annoying log-in process.”
We spotted the latest deal offered by Questrade – and it is a big one. On the heels of Scotia iTrade’s offer of 100 days of unlimited trading, Questrade has responded by offering up to 3 months with unlimited trades. While a slightly less amount of time than Scotia iTrade’s deal (100 davs vs ~90 days), the Questrade deal offers the potential for unlimited trading with much lower funding requirements for two of the three promotion levels. Here’s how the deal breaks down:
The $1,000 deposit level is among the best deals we’ve seen going and the $25,000 is also pretty competitive. For more info, check out Questrade’s Infinite Deal page here.
To compare this deal to other discount brokerage promotions, check out our current deals page here.
Canadian discount brokerages seem to be busy in their workshops planning what to unveil for next year. Many of the major financial institutions have their financial year end at October 31st which means they’re setting budgets and planning marketing campaigns for 2013. Because of the upcoming Globe and Mail discount brokerage rankings due out next week (see below), marketing teams are holding their breath as to how to respond.
In the meantime, a couple of Canadian discount brokerages are jumping the gun with some new promotions. Scotia iTrade just launched a new “refer a friend” promotion, in which referring business to them can get you either a) $50 or $100 dollars or b) 10 or 50 trades free. If the most recent J.D. Power & Associates Investor Satisfaction rankings prove to be correct, however, Scotia iTrade may find getting referral business from their clients a bit of a challenge. The number of Canadian discount brokerages currently offering “refer a friend” deals is now three (Questrade and BMO Investorline are the other two). For updated details on discount brokerage promotions, see our deals page here.
Questrade appears to be heavily promoting their new Ring the Bell with Questrade campaign (with spots on StockTwits and BNN) in which the grand prize winner will get to ring the opening bell at the NASDAQ Marketsite in New York City. In addition to airfare, hotel and $500 in spending money, you will get broadcast on the famous NASDAQ MarketSite screen (which you can see a live webcam of here). For more information on the “Ring the Bell with Questrade” contest, click here.
Also, as mentioned in this article in the Globe and Mail, this week Rob Carrick will release his annual Canadian discount brokerage ranking. We know that discount brokerages are eagerly awaiting this year’s results as this comparison, along with the J.D. Power and Associates ranking are great publicity for the discount brokerages. If you’re interested in Canadian discount brokerage rankings, look out for our upcoming special “comparison of comparisons” series where we compare the different comparisons of discount brokerages.
Event Horizon
This week will be a busy one for HSBC as they are taking their series, “Global economic forecast – the world in 2013 and beyond” across the country. This seminar will take place in Toronto (Nov. 19th), Saskatoon (Nov. 20th), Edmonton (Nov. 21st), Calgary (Nov. 22rd) and Vancouver (Nov. 23rd). To register for the event you have to be a member of the site Business Without Borders. Membership to the website is free as is entrance to the talks. For more information click here.
Best Canadian Discount Brokerage Tweet of the Week
This week’s best discount brokerage tweet comes from the affiliate of Disnat Direct, @DesjardinsGroup. Typically the tweets from @DesjardinsGroup point to interesting articles in the news elsewhere, but a link to original economics research caught our eye. Specifically, the report on what might happen to the U.S. dollar going into the much talked about fiscal cliff. To read the tweet, and the article, click here.
The People Have Spoken
This week, a post by J Watts in the Canadian Money Forum, started an interesting discussion on the “Best Bank for Mutual Funds and Direct Investing”. If, like J Watts, you’re a long-time holder of mutual funds, you might want to have a peek at what others had to say.
The big news from the Canadian discount brokerage industry this week was the huge announcement that OptionsXpress will no longer be available in Canada. Virtual Brokers will be acquiring all of the OptionsXpress Canada accounts as of December 1st pending regulatory approval. This now narrows the number of Canadian discount brokerages that provide a powerful and easy to use options trading platform along with great stock market education resources down by one. According to an apparent notice sent to clients (which we found posted here but cannot confirm its authenticity) from OptionsXpress Canada, individuals who wish to transfer to another discount brokerage must let OptionsXpress Canada know in writing before November 23rd otherwise the account will be passed along to Virtual Brokers. Be sure to contact OptionsXpress Canada directly for any questions.
Questrade announced this week that they are serving as market maker on behalf of Foran Mining Corporation (FOM on the TSX Venture Exchange). The one year agreement will take effect November 12th and Questrade will receive $5,500/month for these services. Questrade has been somewhat active in adding companies to its market making segment adding American Vanadium, Red Tiger Mining and Destiny Media earlier this year. To see the TSX market makers list, click here.
When National Bank Direct Brokerage announced via twitter that they have a LinkedIn page we got a little excited as they’re currently not really around on the social media scene except via their parent National Bank’s twitter feed (to see who which discount brokerages are active on social media, click here). Unfortunately, when we stopped by to have a look around there wasn’t a lot of content on there yet.
Don’t forget, November is Financial Literacy Month. We’ll be posting all sorts of interesting gems for self-directed investors to help them enhance their knowledge of investing and finance. For more information on Financial Literacy Month activities, check out this page here.
Best Canadian Discount Brokerage Tweet of the Week
Even though the LinkedIn tweet left us scratching our heads a little, National Bank managed to score another tweet of the week for their Clearfacts newsletter on the difference between investing and trading. You can read the article via their tweet here.
Event Horizon
This upcoming week has a couple of presentations for self-directed investors that are likely to be interesting. Tyler Bollhorn’s new book, The Mindless Investor, is launching so he’s running a couple of free sessions to explain some of the principles from his book and how do-it-yourself investors can use these to help them with their trading. Sessions will be held in Calgary (Nov. 12th) and Vancouver (Nov. 13th).
The People Have Spoken
Sometimes matching stock orders between buyers and sellers takes time. It’s usually why discount brokerages give themselves a few days to get things settled behind the scenes. Usually it’s a three day (known as T+3 as in Time + 3 days) window between the transaction date and the settlement date (for a great explanation, see this link). This week, redflagdeals.com forum poster raxdax10 wanted to know why the money didn’t appear on their TD Waterhouse discount brokerage account after selling a stock. Read what some helpful folks had to say here.
The Canadian discount brokerage market this week saw one of the players officially exit by selling their Canadian operations. Virtual Brokers announced today that they will be buying out OptionsXpress Canada effectively signaling the end of OptionsXpress in Canada and shrinking the number of big discount brokerages by one. The business agreement is set to take effect on December 1st pending regulatory approval.
OptionsXpress Canada, which is owned by American discount brokerage Charles Schwab, had put their Canadian business under review in September and halted accepting new Canadian clients. The fact that Canada’s discount brokerage industry is shrinking in not entirely a surprise given the size of the Canadian market and the number of competitors battling for their share of the investor pie. With investor sentiment keeping many out of the markets as well, discount brokerages have faced some major headwinds in trying to gain new business.
For Virtual Brokers, the additional accounts will provide a lift to their business, assuming they can hold on to the new accounts. Those used to the OptionsXpress platform and suite of services may be on the hunt for something similar. Also, Virtual Brokers is already working through the recently announced decision to move the back office functions of trade clearing away from Penson and bring it in-house. While they may be busier than usual, the official statement from Virtual Brokers (which can be found in the following news release) suggests this is another big stride in their race to deliver a competitive experience for consumers.
Discount Brokerage Weekly Roundup
There were a couple of really big events that took place this past week including the impact of Hurricane Sandy, TD Waterhouse Discount Brokerage’s Direct Investing Expo and Tyler Bollhorn’s soft launch of his new book, “The Mindless Investor”. Also November is Financial Literacy Month, be sure to pay extra attention to a lot of the great resources and events for self-directed investors that we’re mentioning this month.
Hurricane Sandy Shuts Down Markets
Hurricane Sand shut down US markets for 2 days this past week marking the first time the NYSE has been closed because of weather since 1888. The ripple effect for discount brokerage clients was obviously that they could not trade US markets but for some even trading on Canadian markets was impaired because datafeeds at some Canadian discount brokerages went down. Even though on the whole market data is fairly reliable, there are times when data feeds do go down, which is something you need to factor in to your type of trading especially if you are more active. Usually the best response is to call your discount brokerage directly to properly respond – just be prepared for higher wait times when there are platform outages.
An alternative to getting answers is to go on twitter because chances are that there are other more active traders who will report on the status of their trading platforms. Luckily we’ve put together a handy twitter channel for you to monitor all the discount brokerages that are on twitter in order to monitor announcements. As a case in point, BMO took to twitter to announce an outage it had on its banking networks, tactfully managing a difficult customer service issue by keeping customers informed with progress reports.
Direct Investing Expo Review
We also reported a two part review of the TD Waterhouse Discount Brokerage Direct Investing Expo. This full day event was a great educational opportunity for self-directed investors to learn about macro-economic trends from Bob Gorman, as well as to learn about technical analysis and options trading from TD Ameritrade and Investools. Click here to read the full review.
The Mindless Investor
This week in both Calgary and Vancouver, Tyler Bollhorn released signed copies of his book to audiences of Michael Campbell’s session with Tyler. We managed to land a copy of it and will be putting up a review shortly. In the meantime, you can read a preview of it here.
Financial Literacy Month
As part of Financial Literacy Month, SparxTrading.com is happy to share some of the great materials we’ve come across that can help self-directed investors better understand investing concepts that are important to learn about. This week we put together a list of the best stock market education videos we found on the TD Ameritrade website. Click here to access these videos.
Best Canadian Discount Brokerage Tweet of the Week:
This week’s discount brokerage tweet of the week was a tie between @virtual_brokers for their In Brief newsletter piece on understanding income statements and @nationalbank where they linked out to a great article from their newsletter Clearfacts on easing into investing and using a TFSA. To read more about TFSAs check out our article here.
Event Horizon
The Small-Cap Conference happening in Vancouver on November 6th is just about here. This will be a great opportunity to learn how to approach investing in smaller companies as speakers Ryan Irvine and Brent Todd are very good at laying out how to spot good opportunities. Anyone who per-registers via SparxTrading.com, and attends this free conference will get a great bonus gift courtesy of SparxTrading! For registration details, click here.
The People Have Spoken
This week there was an interesting forum thread on the redflagdeals personal finance section. Forum member “Squadz” felt a little overwhelmed with TFSAs, Stocks & mutual funds. To read what everyone had to say to help squadz get through the maze of financial products, click here.