Tag: Interactive Brokers

Interactive Brokers

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Discount Brokerage Weekly Roundup – June 1, 2018

Even though it was a tough week for hacking scandals, pipeline purchases and provincial politics, none of it mattered because Kim Kardashian visited the US President, J.R. Smith royally messed up game 1 for the Cavs, the US touched off a trade war with Canada and other trading partners. Even for traders who relish in volatility, this summer is going to be one heck of a ride.

In this edition of the roundup we take a look at the latest crop of discount brokerage deals, including a new trend for the summer season. From there we’ll review another emerging trend in the area of investor education topics that online brokerages seem to be more active in. As always, we’ll cue up the latest tweets from DIY investors and review the forum conversations on DIY investing.

Summer Deals

Even though summer is just around the corner, the fact that it is still spring means that the latest online brokerage deals are considered part of the spring crop – at least if you look at the promotional codes of some of the deals.

The latest update to the Canadian discount brokerage deals and promotions section is now live and the good news is there is a strong selection of offers for DIY investors to choose from, especially until the middle of June.

There are a couple of interesting observations to take note of in the deals and promotions section this month. The big news specifically is that National Bank Direct Brokerage has come to market with an offer of commission free trades which are good for up to one year. The other bank-owned brokerage with a similar time frame on their commission-free trade offer is RBC Direct Investing.

This is likely no coincidence. The move by National Bank Direct Brokerage has some similarities to RBC’s offer, notably that time to use the commissions is one year and the minimum deposit is the same ($5,000). That said, there are some differences such as the fact that NBDB is offering five more trades than the RBC Direct Investing offer and NBDB is throwing in a discounted commission rate in the first year for anyone who uses up the 25 commission-free trades.

Another interesting observation is that both BMO InvestorLine and Desjardins Online Brokerage elected to extend their current offers; the latter being exclusively a commission-free trading offer while BMO InvestorLine’s is a combination of cash back and commission-free trades. Unlike the offers from National Bank Direct Brokerage and RBC Direct Investing, however, the time to use the free trades from BMO or Desjardins is significantly shorter.

Two key bank-owned online brokerages coming to market in the summer with similar promotional offers might not signal a trend, but it does point to the market shifting tactics – especially on the length of time for the commission-free trading.

We’re curious as to what will happen at mid-month, as National Bank Direct Brokerage has now clearly upped the ante with a more competitive offering than RBC’s in terms of free trades and incentives after the trades are used up. It begs the question, will RBC call, raise or fold?

From a strategy point of view, the popularity of commission-free offers has opened up an opportunity. Cash-back offers are not as crowded, and as a result, it may be a compelling spot for an aggressive offer to come to market. We know from internal data that there is definitely an appetite for cash-back offers among DIY investors. So, the combination of a lack of competition with those offers coupled with high demand from DIY investors means a cash-back offer can command the spotlight. Currently, BMO InvestorLine and Questrade (through the referral offer) are the only widely available cash-back offers. And, because of the nature of the Questrade offer, it’s only BMO InvestorLine that is widely advertising for theirs, which means they’ve got the digital field to themselves – at least for the time being.

Optional Credit

Even though school has wrapped up (or will very soon) there seems to be an uptick in the investor education activities heading into summer. In particular, it looks like options trading is coming back into focus at several online brokerages.

Last week, the Options Education Day took place in Montreal and there were five online brokerages that sponsored the event.

Three of the five brokerages (National Bank Direct Brokerage, Desjardins Online Brokerage and Interactive Brokers) are all headquartered in Montreal so there was a home field advantage there, but for TD Direct Investing and CIBC Investor’s Edge, it was an interesting event to participate in.

According to the tweet posted on the Montreal Exchange’s Twitter account, there were over 200 attendees that participated which is a great draw for a Saturday session.

In addition to Options Education Day, National Bank Direct Brokerage has been broadcasting their options education video playlist, put together in conjunction with the Montreal Exchange, on their homepage for the past few months. And, coming up at the end of June, CIBC Investor’s Edge is holding a couple of options education webinars in English and French.

Even though we’re not quite over the line to summer, there is already a signal that online brokerages are ramping up their options education partnerships and content. With improved market volatility and some exciting stories coming to the stock markets through the second half of the year, it looks like options education might be a hot spot for new and interesting content.

Discount Brokerage Tweets of the Week

From the Forums

Interesting problem

Even though trading platforms have made it easy to buy and sell US-listed stocks, actually ensuring that the trade is being structured the way it is intended can sometimes be less intuitive. In this post from reddit’s Personal Finance Canada thread, one user learned the hard way about ensuring that cross border trades get executed and settled with the right currency conversions in place.

Simpler times

DIY investing is supposed to be less expensive but it hasn’t necessarily been a ‘set it and forget it’ experience until very recently. This post, also from reddit, is an interesting look at the alternatives now available for DIY investors who, like the author of the post, are looking to take a simple, low cost approach to investing on their own.

Into the Close

That’s a wrap on yet another wacky week. Fortunately the start of the new month falls on National Donut Day which means everyone wanting to emotionally eat their way into the weekend can feel a little less guilty for doing so. Of course, if you’re thinking to distract your way through the weekend with an Avengers movie, you might want to have some more donuts handy. Have a great weekend!

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Discount Brokerage Weekly Roundup – May 18, 2018

Being online can sometimes be an occupational hazard. Case in point: Laurel or Yanny. Despite having captured the imagination of the internet and having squandered so many people’s valuable time there’s a lesson in here for online brokerages, which is to get attention online, you have to be interesting.

In this edition of the roundup we take a look at some interesting developments that crossed our radar this week. The first was a fleeting promotion from one bank-owned brokerage that tried to snag some new clients with the lure of snacks. From there, we look at how one US-based online brokerage is attracting massive amounts of capital and DIY investor love and how it will undoubtedly become a challenger to existing brokerages. As per our usual fare, we’ve got a great selection of tweets and forum posts for DIY investors to check out.

Scotia iTRADE wants to be SCENE

In what is becoming a bit of an annual tradition, Scotia iTRADE was spotted on Twitter offering up an interesting in-person promotion at their investor centre in downtown Toronto.

Specifically, a tweet caught our attention that was offering up 2,000 SCENE points for anyone who opened a new account with Scotia iTRADE with a minimum of $5,000.

For those keeping score at home, that’s the equivalent of a VIP admission for one, or if you’re into sharing, two general adult admissions.

The ultra-limited time offer from Scotia iTRADE could be a trial run at a broader promotion that enables them to leverage their partnership with the SCENE movie points program. In addition, it may also be an interesting response to the recent move by RBC Direct Investing who launched a commission-free trade campaign and also set the minimum requirement to qualify for a promotion at $5,000.

It will be interesting to see whether the ‘free movies’ are enough of an incentive to tip an individual in favour of opening an account with Scotia iTRADE versus free trades or cash back with one of their competitors. Since this was basically an ‘in person’ offer and relied on individuals coming into the Scotia iTRADE in downtown Toronto, it may be a very limited sample with which to test on, but nevertheless, early data is still data.

As delicious as the allure of free popcorn is, it may not be enough to entice people to put $5,000 into an investment account with Scotia iTRADE – especially considering that the standard commission rates of $24.99 per trade (and up) as well as account maintenance fees of about $25 per quarter for balances under $10K mean that those are some very expensive kernels for low balance, passive investors.

Still there are insights to this offer that are worthy of being mentioned.

First, it looks like RBC Direct Investing has stirred the pot by lowering the threshold for qualifying for a promotional offer at a major bank-owned online brokerage. There are currently no offers from RBC DI’s peers that would rival the value of their commission-free trade deal for the amount that has to be deposited in order to qualify. Scotia iTRADE’s latest move is a bullish sign that other online brokerages are watching and are likely to step forward with something compelling while the RBC DI offer is live.

A second important takeaway is that, in addition to free trades or cash back, there are also rewards points that bank-owned brokerages can rely on as part of their tactical mix.

The fact they chose movie points over commission-free trades or cash enables Scotia iTRADE to keep their own costs low while providing something of potential value to prospective clients. Ultimately, however, the market will decide if the promotion is valuable enough.

Another observation we found interesting is that, for a national brand, restricting access to this deal means there are lots of folks across the country that are left wondering whether they can access the same offer. At a time and in a market that is this competitive, leaving potential clients on the sidelines will definitely cause them to wonder about the price of admission.

Robinhood makes investors merry

Is it possible to let investors trade for free and still make money? Apparently, yes.

Last week in their company blog post, online brokerage Robinhood secured $363 million in Series D funding led by DST Global. The deal, which valued Robinhood Financial at USD $5.6 billion, means that it is now starting to encroach on the traditional players in the US online brokerage market. Though it is still far behind the market cap of Interactive Brokers (~$32B), TD Ameritrade (~$34B), and Schwab (~$80B), it is materially competitive with E*Trade ($17B) and with 4 million users, has actually surpassed E*Trade (3.7 million accounts) on that metric.

Some more interesting nuggets in the press release announcing the capital raise is that a number of new features have been released in a short span of time including commission-free options trading, commission-free cryptocurrency trading in CA, MA, MO, MT, CO, MS, WI, NM, FL, MI and, as of yesterday, to PA. In addition, they have also rolled out a web-based version of their highly popular mobile app all the while maintaining a solid excitement level for their product.

The new capital infusion will no doubt help to accelerate Robinhood’s ability to widen their user base in the US and even around the world. They are certainly not shy about wanting to challenge Coinbase as the leading cryptocurrency trading platform in the US also and are targeting being a significant competitor (if not leader) by the end of the year.

A quick scan of their recent announcements online also shows that the snowball effect is taking hold, with talent.

In another recent post about Robinhood an influential engineer, Lee Byron, joined Robinhood after a 10-year stint with Facebook.

What jumped out about the post was the appeal that the brand, mission and platform had with Byron.

Specifically, he states:

“They’re driven by a mission I believe in: to democratize access to America’s financial system. Despite having a popular service and established mobile apps, their web app is a newer effort and has only just scratched the surface of its full potential. There is so much of the mission the current product doesn’t reach.”

He goes on to state:

“One of the reasons Robinhood is unique is that it brings a much-needed focus on user experience and high-quality consumer products to the financial industry.”

And, based on the user comments and reactions to this article, he’s not the only one who seems to be putting a premium on the design appeal. The following comment by a reader (Ernesto Rodriduez) is particularly telling:

I’m an avid user of Robinhood these days, but prior to it I knew very little about investing and the stock market in general. Having such a beautiful, intuitive and well thought-out UX was and still is the main reason why I felt so attracted to it initially and inspired to want to learn more about trading in general.

Why is this important? For starters, the level of passion and enthusiasm for UX-driven trading/investing experiences in the Canadian online brokerage space doesn’t rival what Robinhood has managed to accomplish in the US. Improvements in online brokerages in Canada have been iterative not necessarily transformational.

Another, much more important, reason why this is a telling comment is because user experience/ease of use is one very important driver of whether or not someone feels confident enough to try out (and keep) investing on their own. Simply put, whether they view investing online as “too hard” “too complicated” or “too inconvenient” has a lot to do with how the experience is perceived.

With Robinhood now venturing into the web application space, they will be competing against more established players, however if they can maintain the same enthusiasm for their web app that they have for their mobile one, their next valuation can and will be cause for concern for their competitors.

As for Canadian online brokerages, the evidence is pretty clear. They can either wait for the no-cost commission train to arrive at full speed or they can get ahead of it – especially with a highly-prized market of younger professionals looking for a better experience – by investing in better UX and more compelling pricing.

Discount Brokerage Tweets of the Week

From the Forums

Daytrader Taxes

Although it’s not nearly as popular as it once was, there are still a few brave souls who want to take a stab at beating the market – and other daytraders. But, being a daytrader also means taking care of more complicated matters, especially taxes. In this post from RedFlagDeals.com’s Investing forum, one user was looking for a little input on how others have approached getting started as a daytrader.

Planning Ahead

While the bulk of what we focus on is directly related to online brokerages, for DIY investors it’s important to also think about the big picture when it comes to personal financial planning. While the internet is full of stories of individual experiences, this particular story (from reddit) is one that will likely be more common as the general population ages.

Into the Close

That does it for this week. While it was a bit of a slow week on the trading front, there’s no shortage of entertainment on screens of all shapes and sizes. Whether you’re watching a royal wedding or just looking to kick back and enjoy some long overdue good weather this Victoria Day weekend, on behalf of everyone here at Sparx have a safe and enjoyable long weekend!

 

 

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Discount Brokerage Weekly Roundup – April 20, 2018

For many sports fans, playoffs are the time of year when things get really exciting. Fortunately, sports fans aren’t the only ones being treated to contests as DIY investors and online brokerages have contests of their own making headlines. Of course some games take longer than others to win and require some creativity to get ahead (amirite Westworld fans?).

In this edition of the weekly roundup, we look at the return of a popular online trading competition that one Canadian online brokerage is putting up big prize money for. Next, we take a look at some recent earnings from a popular online brokerage and what an earnings call revealed about DIY investor sentiment in Q1 as well as some hints to how the online brokerage space is poised to change this year. As usual we’ll be taking the pulse of DIY investors on Twitter and in the investor forums, so be sure to check out what folks were talking about this week.

Biggest Winner Competition is Back

Just in time for the playoff season (and perhaps the end of season), the Biggest Winner competition from Horizons ETFs and National Bank Direct Brokerage is back. Fun fact, Horizons ETFs also is the exclusive ETF sponsor of the Toronto Raptors.

Officially kicking off on May 7th, this popular contest features healthy cash prizes for top performing participants. The grand prize is $7,500 while the runner up prize is $2,500. There are also six weekly prizes of $500 each which will keep things exciting from week to week over the course of the challenge.

Contestants will have a fantasy balance of $100,000 to start off with and can only trade Canadian ETFs trading on the TSX. The contest runs between May 7th and June 15th so the ‘buy and hold’ strategies may not fare as well as those who take a more active approach.

Of course, with market volatility levels being as high as they are, this could make for a very interesting competition – especially given the performance of leveraged ETFs in these conditions.

To keep things interesting, the competition does have some important limits. For example, the maximum allocation of a portfolio in any one ETF is 25% and investors will be charged fantasy commissions at the rate of $9.95 per trade. Also, the maximum limit of trades over the competition is 5,000 which is still a pretty high bar for scalp traders. Of course, it’s fairly onerous to generate that many orders manually but trader types are known to be competitive, so someone just might be able to max out.

Another fun fact, the sponsor of the competition, National Bank Direct Brokerage, actually allows for totally commission free trading (with some conditions) of Canadian and American ETFs, so in this case, reality has an edge over the fantasy world.

For DIY investors looking to have a little fun and learn about investing, this is a great way to do both. And, who knows, it might be possible to win big with a volatile market and lots of ways to play it.

Volatility Rules for Interactive Brokers in Q1

There’s an old farmer’s saying that goes ‘make hay while the sun shines.’ For many investors, the stock market volatility over the start of 2018 has been anything but sunny, however like anything in the markets, there’s always another side to the story. In this case that other side is that with all of this volatility, traders in the US have come back into the market in a big way.

This past week, US online brokerage Interactive Brokers held their quarterly conference call to review and discuss the results from Q1 of 2018. As with most conference calls, there were certainly more than a few nuggets of information that showed how the online brokerage business in faring for Interactive Brokers, but more importantly, where they are looking to next for opportunities and what this means for both investors and Interactive Brokers’ competition.

First things first, the numbers. Compared to the same quarter last year, Interactive Brokers crushed it when it came to revenue, earnings and trading metrics. Suffice it to say that with year over year growth in accounts of 27% (to 517,000), growth in customer equity of 33% (to $129B) and pretax income for brokerage this quarter was 291 million, up 57%. Importantly, both trading commissions and net interest revenue were significant contributors to earnings and the rise in interest rates helped to bolster earnings.

In addition to the strong numbers, there were two other noteworthy observations from the conference call.

First, there appears to be an interesting marketing strategy that looks to be directed to shareholders or stock watchers to become clients of Interactive Brokers. It is something we noted in previous roundup, but the direct nature of pointing out the benefits to being a shareholder as well as a client mean that Interactive Brokers is tapping into an already attentive audience to mobilize more clients.

A second, and perhaps most interesting observation is that Interactive Brokers continues to move towards offering traditional banking services in an effort to encourage clients to bring more assets into Interactive Brokers. Not only did they launch a trading-account-linked Mastercard, they also offer interest on cash balances (over $100,000) of 1.19% which is huge for people who like to keep their powder dry. The biggest reveal in the conference call, however, was when CEO and founder, Thomas Peterffy mentioned that Interactive Brokers would soon be rolling out a direct deposit (through payroll) feature and the ability to pay bills from a client’s trading account. This last feature is significant because it is a direct play on the convenience of having access to trading funds to do everyday financial management without having to transfer money to another institution.

Based on their latest numbers, the combination of Interactive Brokers’ efforts to chase profits but also to mitigate risks has helped them skate through an exceptionally volatile quarter with lots of profits to show for it.

In a world moving quickly towards technologies that are seeking to disintermediate, being an online brokerage is a tricky proposition. To succeed in the online brokerage market of the future, firms will require scale and critical mass – otherwise as Peterffy astutely remarked – other brokerages will turn to Interactive Brokers to handle the order execution and technology while those firms focus on client service and acquisition.

The latest financial results for Interactive Brokers show that the writing is on the wall for all online brokerages – and for the broader financial services sector – that pulling ahead of the pack requires technology and a trading experience that gets clients excited. Interactive Brokers has demonstrated that it can do that while passing on savings to clients, which in turn results in their pockets getting pretty full in the process.

Discount Brokerage Tweets of the Week

An interesting mix of tweets this week. There were the regular client service and technical difficulty tweets, but there were also some interesting hints dropped by Questrade on future features and some great coverage of a financial literacy event (also featuring Questrade). Mentioned this week were BMO InvestorLine, CIBC Investor’s Edge, Questrade, RBC Direct Investing, Scotia iTRADE, and TD Direct Investing.

From the Forums

Feed Up

Before opening an online brokerage, it’s important to understand how much it will cost to trade there. Unfortunately, for one eager beaver, the FOMO of getting into a hot sector won out over reading through the details of trading costs. This post from reddit’s Personal Finance Canada thread shows how one Scotia iTRADE user is looking for a way to minimize fees on the way out.

The drop on DRIPs

Maintaining healthy skepticism is important to surviving the investing world long term. So, one thoughtful forum user in this post from the RedFlagDeals Investing thread posed a question about the downside to using DRIP investing at Questrade. The responses offered a variety of interesting perspectives.

Into the Close

Seeing that it’s 4/20, it only seems appropriate to end the week on a high note (ba-dum-tsh). Yes there were many green puns today but with recreational marijuana legalization just around the corner here in Canada, investors were also weighing in on prospects for this sector. Of course, once all the smoke finally clears on Friday, there’s a whole weekend of hoping and cheering to get to. Good luck Raptors (and even the Leafs) – it’s a great weekend to get on a roll. Ok I’ll stop. Have a great weekend!!

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Discount Brokerage Weekly Roundup – April 13, 2018

Friday the 13th seems like an unlucky date for those in the path of a spring-time ice storm (sorry Toronto!) and for others, well, the search for ice is really just to keep drinks cold.  Yes, this edition of the roundup is coming to you from the sunny and warm beaches of Huatulco, Mexico where the struggle to stay cool is real.

In this edition of the roundup, we thought we’d do something a little different. With so much happening in the online brokerage space already in 2018 (and because I am in Mexico while writing this roundup) this was a great opportunity to pause and reflect on some of the biggest stories and emerging trends that shaped the first quarter of 2018. Below are four of the biggest and most interesting things that have happened so far in Canada’s online brokerage space.

Outages & outrage kick off the new year

Many Canadian online brokerages faced a perfect storm at the outset of 2018. Caught up in the groundswell of interest in cryptocurrencies and marijuana stocks, DIY investors were definitely in a risk-on mood to kick off the year.

As a result, trading activity surged beyond the capacity of many of Canada’s (and some of the US’s) largest online brokerages’ systems to handle the order flow.

On an “ordinary” trading day, outages to DIY investors are annoying and occasionally tempers flare, but, when the bulls were stampeding, sidelined DIY investors were left seeing red when their platforms weren’t able to connect or trade on their online brokerage’s network.

For the better part of January, outages at Canadian online brokerages made headlines with major news outlets, including BNN, with Canada’s large bank-owned online brokerages such as TD Direct Investing and RBC Direct Investing in the crosshairs.

A consequence of trading platform outages was that DIY investors had to turn to customer service  phone lines and Twitter channels to either execute trades or to find out what was going on. The result: wait times on the phone surged – stretching to hours in some cases before calls were being answered.

The tough lesson for DIY investors caught in the mix was that regardless of online brokerage size, online trading is not without risks, including the risk of being disconnected.

While a few online brokerages managed to NOT make headlines by maintaining business as usual, this scenario was a wake-up call for Canadian online brokerages on the business case for properly resourcing both online trading capacity and failover systems on phone channels.

Here’s a list of editions of the weekly roundup that outages & wait times made headlines in:

January 5th, 2018

January 12th, 2018

January 19th, 2018

February 2nd, 2018

February 9th, 2018

Online brokerages battle it out with promotions during RSP season

If you think RSP season is a myth, think again. Just like flu season, interest in RSP-related information, and accounts, starts to climb in November and peaks in the first 60 days of the new year.

Google search trends for RRSP’s in Canada over the past five years

While chicken soup offers paired with RRSP deals are likely not coming anytime soon, this year, DIY investors were being wooed by an incredibly high volume of offers, ranging from cash back to commission-free trading. Specifically, this year’s crop of cash back offers stood out as bank-owned brokerages stepped up their use of this promotional offer and smaller non-bank owned players also were prepared to ante up.

Highly savvy investors who typically look to open accounts across providers to access features unique to each and to diversify where their money is parked, were provided with an especially unique scenario this year. Specifically, by splitting up where deposits were made, DIY investors could enjoy substantially higher cash back bonuses than putting all of their assets with one brokerage.

Canadian discount brokerages reviewing the deals & promotions landscape will likely also see that incentive offers are yet another ‘battleground’ that’s opened up and that smaller players looking to win market share will make strides by raising the stakes with cash bonus offers.

At the very least, DIY investors will be willing to look at what’s being offered, especially if the headline numbers are big.

Discount brokerage deals and promotions were another big story last quarter so here is a list of weekly roundups in which deals and promos were referenced and analyzed:

January 5th, 2018

January 12th, 2018

January 19th, 2018

January 26th, 2018

February 2nd, 2018

February 23rd, 2018

March 2nd, 2018

March 23, 2018

Rankings and Ratings Roundup

After much anticipation, the Globe and Mail’s annual online brokerage rankings were published in mid-February.

As the most popular and highly sought out rankings of Canada’s online brokerages, the 19th edition of the assessment did not disappoint with some new comparison features and inclusion of Interactive Brokers Canada. Qtrade Investor walked away with top honours in the Globe’s rankings and of the top five, three were non-bank owned brokerages.

Of course, once these rankings were published, and perhaps even in anticipation of them, the marketing departments at Canada’s online brokerages were busy listing off the various ratings, rankings or accolades that position each respective brokerage as ‘the best’ at one feature or another.

In our roundup on March 9th we featured 8 online brokerages who had listed off awards or recognition that claimed each brokerage was the best at something if not the best online brokerage outright.

Not too long afterwards, our roundup on March 30th featured a deep dive on Interactive Brokers’ win of the Barron’s annual online brokerage rankings in the US. Despite the victory taking place in the US, Canadian online brokerages should pay attention to since interactive brokers Canada offers most of the trading technology and analysis tools as the US version does.

In fact, the high ranking in the Globe and Mail’s assessment, the top finish in the Barron’s ratings and the much more visible advertising presence here in Canada (which we noted here on February 23rd) suggests that Interactive Brokers is going to be getting and generating more attention in 2018.

For DIY investor’s the tip here is to read the fine print on the date of the award because we noted several instances where awards from previous years were being used to justify being characterized as ‘the best.’

BMO breaking through on social media & digital

When it comes to social media and investing online, only one of Canada’s bank-owned wealth management arms successfully managed to execute on an effective social media-based influencer campaign in Q1 of 2018. BMO Wealth Management (parent to BMO InvestorLine) and BMO SmartFolio were able to generate a highly engaged, interactive online Twitter chats on investing online.

The Q&A format did well as did the session thanks in part to the fact that the host of the Twitter chat was Lena Almeida. In January, BMO SmartFolio’s session on investing online helped spark a lively conversation on topics related to investing online. Fast forward a few weeks to March 5th, and BMO Wealth Management was on Twitter with an #InvestSmart session in support of International Women’s Day.

Just prior to the end of Q1, BMO InvestorLine also rolled out a new homepage which was a significant iteration to its previous design.

Screenshots of previous BMO InvestorLine website homepage (left) and new BMO InvestorLine website homepage (right).

Although we covered this new site in more detail in last week’s roundup (here), the latest moves by BMO InvestorLine online showcase that they are not standing still when it comes to embracing digital channels to better connect with DIY investors.

*full disclosure: Sparx Publishing Group Inc. the parent company to SparxTrading.com, may receive affiliate or referral bonuses for individuals signing up to BMO InvestorLine or BMO SmartFolio services via SparxTrading.com, however no compensation from BMO InvestorLine or BMO SmartFolio was received for writing this article.

Discount Brokerage Tweets of the Week

Interesting chatter as usual, with technical issues and client service challenges prompting the majority of Twitter comments. Mentioned this week were BMO InvestorLine, CIBC Investor’s Edge, Questrade, RBC Direct Investing, Scotia iTRADE, and TD Direct Investing.

From the Forums

Making moves

How easy is it to switch online brokerages? This post, from reddit’s personal finance Canada thread, highlights one user’s question about transferring from TD Direct Investing to Questrade and offers insights into timing and costs.

Tips on RESPs

DIY investing usually means a lot of research to figure out how to maximize the return on investment. When it comes to savings vehicles, like the RESP, however, there’s lots to consider. In this post, also from reddit’s personal finance Canada thread, users weigh in to help one expecting parent navigate the tricky world of investing for their child’s education.

Into the Close

As we head into another weekend, we wanted to take a moment to extend our deepest condolences and heartfelt sympathies to the teammates, families, friends and communities who tragically lost loved ones in the heartbreaking Humboldt Broncos bus accident.

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Discount Brokerage Weekly Roundup – March 30, 2018

What better way to cap off March and segue into Easter than with the talk of goodies and mythical bunnies bearing gifts? For Canadian DIY investors hunting for new and exciting features it seems like the best place to look at the moment is further south where all kinds of interesting trader treats are already being released.

In this Good Friday edition of the roundup, we kick things off with a closer look at the latest US online brokerage rankings, specifically with an eye towards interesting findings and cool feature trends. From there we’ll buzz over to a rebrand at one online brokerage that is preparing itself for the next chapter in its storied history. As usual, we’ll cap off the roundup with chatter from Twitter as well as in the investor forums.

Interactive Brokers crowned best online brokerage in the US

Although the recent news cycle south of the border makes Canadians less envious of living in America, trading in America continues to evoke a sense of envy with Canadian DIY investors – and for good reason.

Just over a week ago, Barron’s published their latest rankings of 19 online brokers in the US and found that Interactive Brokers provided online investors with the best overall online experience.

As with all rankings, it’s important to understand what the criteria mean and how the assessment is conducted, and thankfully Barron’s does a great job of providing the details of the online brokerage ranking in a way that none of the Canadian broker rankings do. Specifically, Barron’s actually enables readers to download an excel spreadsheet that contains the details of how the scores were derived.

Before getting too far into the weeds, it’s useful to point out that Barrons’ latest online brokerage rankings assessed brokerages based on the following categories:

  1. Trading Experience & Tech
  2. Usability
  3. Mobile
  4. Range of Offerings
  5. Research Amenities
  6. Portfolio Analysis and Reports
  7. Customer Service, Education, Security
  8. Costs

That Interactive Brokers topped the field of US online brokerages when it comes to costs is perhaps not that surprising. In fact, in looking at the spreadsheet drill down for the margin rates and commission cost per trade, Interactive Brokers stands out as a considerably cheaper option than many of its peers.

What was potentially more surprising was the degree to which Interactive Brokers was able to score highly on the other categories that comprised the online brokerage rankings. Over the past two years or so, it has become increasingly more noticeable that Interactive Brokers has been making additional efforts to go beyond their active trader roots and expand the support, services, products and educational content for online investors. The latest rankings from Barron’s, however, demonstrate just how well Interactive Brokers has managed to do so in the US.

Following Interactive Brokers in first place, the brokerages in second (Fidelity), third (TD Ameritrade) and fourth (Charles Schwab) were all separated by 0.8 points, a sign that it is a very close race between the top four online brokerages in the US.  That said, the graph shows that it isn’t really until after 10th place (Lightspeed Trading) that rankings scores drop off substantially. Firms at the bottom end of the rankings certainly have their work cut out for them, however, as it is clear that this is a very dynamic space.

From a Canadian perspective, it is also interesting to note how small the DIY investor market is here in Canada relative to the US and whether there are too many brokerages in Canada fighting for too small a market share. Barrons’ latest ranking covers 19 online brokerages in the US (with some notable omissions like Robinhood) however that is only slightly more than the 14 online brokerages currently here in Canada, soon to be 13 (or 12) once the Qtrade Financial and Credential Direct merger takes place. Ironically, despite the conditions favouring far more competition here in Canada between discount brokerages, it appears we’re innovating far slower than in the US.

In digging into the actual spreadsheets of the brokerage rankings, there were a few interesting trends noted that might be on the horizon (or just wishful thinking) for Canadian investors. For example, one of the categories that showed up in this year’s detailed ranking breakdown was whether an online brokerage offered cryptocurrency trading.

Already there were 8 online brokerages in the US that had come connectivity to cryptocurrency trading data or trading enabled. Interestingly, Charles Schwab was the only brokerage in the top five ranked online brokers that didn’t offer some kind of connectivity to trade cryptocurrency (e.g. Bitcoin futures).

Other features that we noted that were far ahead of what’s available to Canadian DIY investors included integration with smart home devices, such as Amazon’s Echo. Five online brokerage firms already have this integration deployed or are actively working to do so. Similarly, chatbots on social media are another feature that appears to be growing in popularity with online brokerage providers.

Another interesting observation of the results was the position that Tastyworks ranked in (8th), an amazing feat considering that it was just shy of edging long-time brokerage E*Trade and that Tastyworks has not been around nearly as long. Whether Tastyworks can sustain its growth and challenge better-funded incumbents remains to be seen, but the fact that they’re already scoring as highly as they are means whatever is resonating with investors.

Finally, another feature that casts a very unfavourable light on Canadian online brokerages is the speed with which online brokerages in the US are able to onboard and enable clients to begin trading. Wait times range from almost zero to four days in the US, with the many firms enabling same day trading and account opening.

The US is certainly a faster moving market when it comes to feature development and deployment than Canada is. Nonetheless, it is interesting to note that the Canadian online brokerages looking to make a splash here would be wise to pay attention to some of the abovementioned features.

For the moment, Canadian DIY investors have to content themselves with peering over the fence to see how the other side trades.

To Bee or not to Bee: Desjardins Online Brokerage gets a logo refresh

On the marketing front, Desjardins Online Brokerage updated its corporate logo to bring it in alignment with the parent Desjardins who also updated their storied logo.

This modern incarnation of the logo retains elements of the previous iteration, such as the green colour and the honeycomb hexagon however this logo does not have the stylized bee drawing in the centre of the logo. Also updated was the typeface, with sans serif font replacing the previous version which had serifs.

While it certainly isn’t market moving news, the story behind the logo change reflects that Desjardins is moving in response to the market and readying itself for the next, digital chapter in its story.

Discount Brokerage Tweets of the Week

Overall a bit of a quiet week on Twitter aside from the usual mixture of sneers and jeers. Mentioned this week were Questrade, RBC Direct Investing, Scotia iTRADE, TD Direct Investing and Virtual Brokers.

From the Forums

Tax Talk

At this time of year DIY investors are diligently working to compile trading statements and calculate the tax implications for their trades. Ironically, managing the required paperwork is itself taxing.

In this post (on TD Direct Investing) and this post (about BMO InvestorLine) it is interesting to see how some DIY investors are managing the business of keeping their transactions in order.

Short and not sweet

Playing in the investor forum sandbox can sometimes be a place for some tough love. This post, from reddit’s Personal Finance Canada thread highlights one investor’s curiousity about selling puts and a response received to proceed with caution.

Into the Close

Whether you were short the week or long the weekend, on behalf of everyone here at SparxTrading.com, we wanted to wish you a safe and ‘hoppy’ Easter! Remember be on the lookout for pranksters this weekend!

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Discount Brokerage Weekly Roundup – March 23, 2018

Now that spring has sprung, it’s time to dive right into the next season head first. For online brokerages, after RRSP season comes tax return season. Judging by the response so far to the next busiest time of the year after RSPs, it seems like most Canadian discount brokerages are now shifting gears to figure out their next moves.

We kick off this edition of the roundup with a review of the deals and promotions scheduled to expire at the end of the month. From there we highlight some interesting email newsletters from a pair of online brokerages that prove that e-mail can still hold its own in a social media world. Next, we profile an important strategy document released by one of Canada’s regulators that maps out how to better protect senior investors. Finally, we close out the roundup with a review of the buzz on Twitter and in the DIY investor forums.

Deals Melting Away

The end of March is just around the corner. And, while it signals a positive sign for warmer weather, it won’t only be snow that’s melting away. At the end of March, there are three discount brokerage promotions that are set to expire as well as one from BMO InvestorLine at the beginning of April. Desjardins Online Brokerage did have their commission-free trade credit offer set to expire at the end of March however it has been extended out to May 31st.

That will take the total number of advertised offers down to 19 if there are no replacement offers planned.

Here’s a list of deals that are set to expire at the end of March:

  • HSBC InvestDirect Cash Bonus & Transfer Fee Coverage (expires March 30)
  • Virtual Brokers Discounted Commissions (expires March 31)
  • BMO InvestorLine Cash Bonus & Transfer Fee Coverage (offer expires April 1)

Interestingly, our internal data reveal that online investors are very interested in offers from Canada’s bank-owned online brokerages.  The two bank-owned online brokerages with current offers that are attracting attention from visitors are BMO InvestorLine and National Bank Direct Brokerage.

We’ll be watching to see what, if any, offers are replaced or extended heading into April.

It’s a good sign for DIY investors that Desjardins Online Brokerage has already extended their signature commission-free trade offer through to the end of May and, based on the data from early 2018, there’s a good chance that more extensions and new offers will not be far behind next month.

Trade the News-letter

Interactive Brokers Mines Shareholders for Clients

This week there were two interesting email newsletters from online brokerages that proved email marketing is still a viable method of reaching out to online investors, even in a world cluttered by social media feeds and fragmented sources of information.

The first interesting development was observed in a shareholder letter/newsletter from Interactive Brokers in which a letter from founder and CEO, Thomas Peterffy, provided some unique insight into why Interactive Brokers sought to go public.

According to the letter, Peterffy stated “We went public to raise our profile and as an adjunct to our marketing efforts, in the hope of gaining more customers who would help us become better at servicing them.” It does take quite a bit of effort and consumes resources to go public as well as maintain a listing – reasons perhaps why some of Canada’s non-bank-owned brokerages never saw the need to follow suit. What was particularly noteworthy about this e-mail, however is the direct appeal to become a client before considering to be a shareholder – which is a particularly bold move and perhaps very savvy marketing move.

Source: Excerpt from Interactive Brokers shareholder letter

For all sorts of reasons, the ability to reach out to shareholders is a clever marketing tactic that appeals, likely, to individuals who invest, who know the brand, who are willing to read the notice and who stand to benefit themselves if they also become clients. In terms of marketing and sales, this is a huge coup since the cost of trying to reach, let alone convert, online investors in the US market is quite high. So, not only did Interactive Brokers benefit from being able to raise their profile by being in public markets as a publicly traded firm, this also enabled them the opportunity to market directly to shareholders – many of whom would be ideal target clients and users of their service.

And, whatever Interactive Brokers is doing, seems to be paying off as they were also just crowned the best online brokerage in the US by Barron’s annual ranking of US online brokers.

As with all developments in the US online brokerage space, we often wonder whether something similar could happen with an online brokerage here in Canada.

Could an independent online brokerage like Questrade, for example, simultaneously tap the public markets by going public themselves and open up an entirely new and low-cost marketing channel by advertising directly to shareholders?

Whether or not they need or could efficiently deploy any capital raised from public markets is a separate question altogether, but the benefit of the capital would certainly help fund the scale required to compete against larger peers. And, if Interactive Brokers is any indicator, being public has enabled them to transparently showcase their success quarter after quarter which is the kind of marketing that investors of all stripes can get behind.

Scotia iTRADE Pushes Education

Also spotted in our inboxes this week was a newsletter from Scotia iTRADE which highlighted their shift to focusing more attention on their help/support and educational resources. In the world of DIY investor education, we typically break things down into two major categories of investor education, so it has been interesting to observe Scotia iTRADE build resource and capacity in the ‘education’ space.

The first type of ‘education’ is product orientation, which, simply put, helps clients understand how to use the tools, platforms and features of a particular online brokerage’s service offering. The second category is information about investing itself. So, this latter category refers to topics such as technical analysis, how ETFs or options trading might work etc.

In last week’s roundup, we mentioned that there has been a shift in the way DIY investor education has been delivered by Canada’s online brokerages. In many respects, there’s been a pullback in the resources online brokerages are allocating to orientation and education, and the kind of resources now available are typically video recordings or documents rather than live help sessions or in-person seminars.

As such, it was interesting to see Scotia iTRADE’s latest newsletter on investor education as it is a clear signal that unlike many of their peers, they are continuing to invest in marketing their educational offering as a cornerstone feature to their brand.

In both instances with Interactive Brokers and Scotia iTRADE, it’s clear that email communication with clients is still very much alive and well as a channel to choose from however (and this applies to social media too) being consistent and reliable with producing this content isn’t easy. Scotia iTRADE is making strides in the right direction when it comes to marketing itself and highlighting some of their key differentiators. For their existing clients, this is an important thing to do to keep clients from peering over the fence at what other brokerages are doing. More interesting for Scotia iTRADE, however, is for those clients who do have additional accounts elsewhere to see how competent and interesting Scotia iTRADE might be at delivering updates and talking about feature enhancements.

Strategy for Senior Investors

This past week, the Ontario Securities Commission published its Seniors Strategy (OSC Staff Notice 11-779) that outlines the securities regulator’s vision for evolving the regulatory landscape to better service a growing segment of the Ontario (and Canadian) population – older adults.

The strategy document is fairly comprehensive in its approach, drawing on extensive research of literature and best practices from countries around the world, as well as from research conducted in Canada on the financial profile of older and aging Canadians and by consulting with many experts and seniors advocacy groups. The result of this work is a lengthy but important document that will help to inform the approach of securities regulators and the financial services sector in Canada in doing more to provide important safeguards for older investors.

Some of the concrete steps recommended in this report include:

  1. Requiring that registered firms and their representatives make reasonable efforts to obtain the name and contact information for a client’s trusted contact person if there’s a concern about a client’s behaviour or transactions in a client’s account;
  2. Enabling registered firms and their representatives to place a temporary hold on disbursements from a client’s account.
  3. Enhancing outreach activities to provide tools and resources for older investors, their families and caregivers who support them.

Importantly the report recognized that labels such as ‘seniors’ aren’t reflective of a homogeneous set of attributes and there is a lot of complexity that accompanies the intersection of aging and financial well-being.

It was an interesting week for this report to get published as this week also saw the publication of a somewhat scathing report from the Financial Consumer Agency of Canada (FCAC) regarding the lack of sufficient controls at Canada’s biggest banks to ensure clients are getting their best interests served ahead of the banks that the front line employees represent.

This is especially important given some of the data published in the report, in particular that:

“Low financial knowledge makes the roles of registered firms and their representatives even more important to helping older Canadians meet their financial goals. Investing As We Age found that a majority of investors aged 65 and older work with at least one registered firm; research has also found that registered firms and their representatives have a significant influence on their clients’ investment choices, and that investors working with a registered firm place significant trust and confidence in that firm and its representatives.” P17

For Canada’s online brokerages, it is an interesting prospect to consider how they can more effectively and appropriately consider serving older adult clients.

For starters, understanding that clients have differing needs means that the attributes of a clients will factor more prominently into how services are delivered and potentially what kinds of products or services individuals may have sent to them (e.g. via marketing emails).  Additionally, how materials are prepared, the user experience in the online platforms, the statements and account performance summaries and potentially even the stock screeners, picks and trades that individuals can execute (or allow to be executed on their behalf) could see changes made based, in part, on the findings and recommendations from this study. Could ‘safety’ settings, for example, be in place on stock screeners or cautionary labels be put in place that would apply specifically to older investors?

For DIY investors, the strongest recommendation still continues to be caveat emptor when it comes to choosing an online brokerage. While some folks take the position that there isn’t that big of a difference between online brokerages to entail worrying over which one is the best, the data show that the ‘right’ brokerage is one that meets an investor’s needs rather than one that tries to sell a client on features they do not.

As such, an important step in the DIY investor journey is to determine what those needs are prior to signing up for an account. The forum post below provides an interesting example of this for one DIY investor looking to switch online brokers. For observers, the difference between online brokerages might not be important today, however as this report outlines, as needs change, it is important to be with a service provider that can keep up and keep the client in mind.

Discount Brokerage Tweets of the Week

With tax season now upon us, there was an uptick in tweets about getting accounts and documentation in order. Mentioned this week by Canadian DIY investors were BMO InvestorLine, CIBC Investor’s Edge, Questrade, RBC Direct Investing, Scotia iTRADE, TD Direct Investing and Virtual Brokers.

From the Forums

Market Order

Many investors firmly believe that buying the basket of stocks listed on major indices, such the S&P 500, is an easier approach than trying to pick individual stocks. Of course, picking individual brokerages might not be as easy. One way to figure out which one discount brokerage to choose when attempting this strategy is to crowdsource. This post, from reddit’s Personal Finance Canada thread, highlights several discount brokerages online investors use to keep fees low when buying the market.

Investor Scorned

There are threads about choosing an online brokerage, and then there are threads about choosing an online brokerage. This post, from the Financial Wisdom Forum, offers a fascinating look at how experienced and knowledgeable DIY investors undertake the process of moving brokerages. There’s actually so much information in this post that it is well worth the time to read. It’s especially informative to see that even long-time service providers can fumble the ball to the point that a client wants to try something different.

Into the Close

So, with all that’s going on in the news and markets now trying to price in a number of different, challenging scenarios, Friday really couldn’t come fast enough. That said, there’s really no rhyme or reason for the Trump media train to stop or slow down. It is already turning into another incendiary weekend so don’t forget to ignore the doom and gloom and try to enjoy the weekend. Spring is here after all.

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Discount Brokerage Weekly Roundup – March 2, 2018

Whether or not we like it, we can’t seem to avoid politics drifting into markets. One thing there is no shortage of, however, is controversy. This week is no exception. With uncertainty creeping into markets, how online brokerages are navigating their way through a very dynamic situation is both exciting and, at times, nerve wracking.

With the start of a new month, we kick off this week’s roundup with a look at the latest action on the deals front and what one Canadian online brokerage appears to be doing to stand out from the crowd. Next we take a look at the return of volatility to the trading markets as well as the return, in a big way, of DIY investors. Also on the docket, a very interesting article that once again raises the specter or hope of a world in which DIY investors don’t pay any trading commissions. We’ll cap off the roundup with a look at what DIY investors were saying on Twitter and in the investor forums.

Deals March On

With the rush of the RSP contribution deadline now behind everyone, Canadian online brokerages are taking a bit of a pause to crunch the numbers on their efforts to attract new clients and deposits into RRSP accounts.

While we wait for the dust to settle on February, early action from the deals and promotions side heading into March point to a pullback in the number of cash back offers as well as an interesting maneuver by Qtrade Investor to incentivize DIY investors to consider making a switch.

Starting first with a quick overview, in this month’s deals & promotions, we noted that with the expiry of cash back offers from Qtrade Investor, TD Direct Investing, CIBC Investor’s Edge and Scotia iTRADE, the field of providers who currently offer the most cash back bonus at a given deposit tier is very diverse.

As the chart above shows, Questrade’s referral cash bonus offer stands out in the <$10K range and surfaces again in the $100K to $200K deposit level. BMO InvestorLine, whose offer does not apply to TFSA accounts, dominates between $200K and $999K. Perhaps a bit of a surprise name on this list is Credential Direct whose offer at the $1M+ level is currently the highest, but also at the $15K to $25K level and between $50K and $100K. Another surprising name is HSBC InvestDirect which happens to have the top offer in the $25K to $50K deposit range however to qualify for that offer, investors need to execute at least three commissionable trades.

Fortunately, there are still many commission-free trade offers which aren’t scheduled to expire just yet, so for some investors, there’s still some value to be had on the way into a new brokerage account.

Of course, making the switch to Qtrade Investor just became a little easier this week. Their new transfer fee reimbursement threshold has been moved down from $25,000 to $15,000. Historically this has been a limited time option and part of a special promotional offer however the website offer details (see below) don’t attach a timeframe to the offer. They do state that the offer can be revoked at any time, however this seems like it might be the new normal. If it is, then Qtrade Investor’s transfer fee coverage becomes one of the most competitive currently in the market.

It’s remarkable how consistent the transfer fee reimbursement is across brokerages. The minimum deposit of $25,000 is pretty much par for the course and for the handful of brokerages (National Bank Direct Brokerage, RBC Direct Investing, HSBC InvestDirect) whose deposit requirements are under $25,000, it is very interesting to observe that Qtrade Investor is the only non-bank-owned brokerage of that bunch.  Strategically, this helps Qtrade Investor stand out quite prominently – they stand out against almost everyone else, and they stand out against bank-owned online brokerages. In addition, the recent Globe and Mail online brokerage rankings will also help amplify their position in the market place.

The good news for DIY investors, in spite of the cash back retracement, is that there are still a number of competitive offers out there. The next big push will be for the tax refund pool before things potentially either taper off for the summer or ratchet up significantly as marijuana legalization comes back into the spotlight, and with it, attention on the cannabis stocks. Of course, volatility in either direction is usually a boon for online brokerages, which just so happens to be a great segue  into the trading stats reported by Interactive Brokers for February.

Guess Who’s Back?

The big V in February this year was not Valentine’s but rather Volatility. After all but disappearing for the better part of five years, uncertainty has crept back into the markets. What the catalyst was is itself the cause of speculation however the bet against volatility seems to be on its way out.

An interesting interview that Chairman and CEO of Interactive Brokers, Thomas Peterffy, had with CNBC pointed to a storm brewing as traders look to unwind bets and are largely at the mercy of the market to do so. Why this matters for investors is because it represents a shift in trading strategies – certainly for options traders – that will no doubt take time to adjust to. Secondarily however, volatility is great for traders and even more beneficial for online brokerages.

The stats from Interactive Brokers’ February 2018 trading metrics also clearly point to volatility pushing up trading activity. The number of Daily Average Revenue Trades (DARTs) is a whopping 50% higher on a year over year basis and 13% higher than already volatile January.

Another stat that stands out at Interactive Brokers is their continued account growth. It’s genuinely hard to argue with their growth in accounts however as good as they were in February, we’re keen to see what rival E*Trade comes out with. In January, they reported an incredible year over year increase of 149% in net new brokerage accounts (factoring in those who joined and those who left). Whether that momentum, largely driven by a frenzy in cryptocurrency, can serve as a catalyst or if it is just a blip that will revert over the next few months, there is clearly a case for volatility to stick around with many more investors jumping into the markets.

Another Final Countdown

Readers of the roundup will no doubt pick up on the reference to the song which capped off last week’s roundup. Admittedly it may have found its way onto my workout playlist however it deserves mention again this week because of an interesting article that surfaced on Seeking Alpha.

The article, which raised the specter of zero-commission trading, focused on whether Interactive Brokers could survive in the ‘post-apocalyptic’ online trading environment of commission-free trading. It is a great question which is even more interesting to ask of Canadian online brokerages whose primary business is order execution.

As technology becomes increasingly sophisticated, order execution should become frictionless, instant and essentially without cost. That, at least, is the business case of online brokerage Robinhood, which now boasts commission-free trading of stocks and options. Here in Canada, commission-free ETF trading already exists at National Bank Direct Brokerage and it will be an incredibly transformative moment should any of the major online brokerages decide to plumb the depths of sub-$5 per trade as a standard rate. Based on what’s happening in the US, it’s a matter of when, not if.

For DIY investors looking for a break, the catalyst to the move down in pricing may come sooner rather than later. After all, strategically all Canadian brokerages have to confront the same reality. The brokerage with the largest amount of assets under management has the best odds of financially weather the zero-commission reckoning. Whoever does it first in Canada will get the biggest headlines, will likely see a flood of assets and will get a very big head start on firms planning for this (and a very big head start on those who deny it could happen here).

Perhaps that catalyst may come from an unlikely place. The Canadian Securities Exchange is rolling out a blockchain platform for instant clearing and settlement of securities, something that the newest and most ‘buzzworthy’ stocks would conceivably want to take advantage of.

By reducing the time it takes to clear and settle a trade to zero, there’s a lot of friction (and cost) to the transaction of trading a stock that can be eliminated, which again makes the case for commission prices to go lower and for the monetization strategy for online brokerages to shift away from charging such high fees per trade.

So, while patience has definitely been a virtue to investors, it seems like the days of trading commissions are finally numbered, and that is definitely worth waiting for.

Discount Brokerage Tweets of the Week

We’ve hit a technical hiccup in grabbing the tweets this week. Stay tuned as we investigate this further. In the meantime, here’s a selection of what we’ve gathered so far.

From the Forums

Connections and Transfers

Getting an effortless investing strategy up and running can sometimes take quite a bit of effort. This post from reddit’s Personal Finance Canada section highlights some account funding issues that cropped up for one investor trying to fund a TFSA.

Art of the Deal

With deals on everyone’s mind, it doesn’t hurt to wonder what kind of pricing improvement could be obtained by bargaining with an online brokerage. Find out the experience of one investor who was interested in bargaining down an online brokerage on commission fees in this reddit post here.

Into the Close

That’s a wrap on a week that featured hypersonic nuclear weapons, trade wars and markets still hanging in there. I guess if there is no market to wake up to then the world has bigger problems. On that rosy note, for Toronto investors interested in the rebounding mining sector, be sure to check out the PDAC convention to get an ‘on the ground’ sense of companies who deal ‘underground’. Yours truly will be there so be sure to tune into the SparxTrading Twitter feed for highlights. #HaveAGreatWeekend

 

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Discount Brokerage Weekly Roundup – February 23, 2018

It’s hard to believe but time flies when you’re winning medals. Team Canada has had a great run at these Olympic games and not too long after the games are over so too will some online brokerage deals and promos as well as the chance to contribute to RSPs for the 2017 tax year.

With the RSP contribution deadline looming, this week’s roundup is a blend of news centred around the RSP deadline and what that means for Canadian discount brokerages and DIY investors. First, we take a look at how the clear winner in the rankings race this past year has made some championship moves in promoting their win. Next break down the math on some online brokerage offers to show how savvy investors can get creative with deals and save/receive even more. As usual, we’ll also check in on Twitter to recap the latest chatter from investors and showcase a pair of posts highlighting what folks were talking about in the forums.

Making A Splash

The ripple effect of the online brokerage rankings continued to permeate the news with online investors this week. For those who missed last week’s roundup, Qtrade Investor took top spot in the Globe and Mail online brokerage rankings and in doing so ranked at the top of or near the top of all the major online brokerage rankings for 2017.

This week, Qtrade Investor officially published a news release announcing their win but, in an even more interesting maneuver, also published the full online brokerage rankings article on a cleverly crafted page with the url: join.qtrade.ca. This year’s online brokerage rankings were made available only to subscribers of the Globe and Mail, so on a number of levels, Qtrade Investor publishing the article in its entirety (with permission from the Globe and Mail) means that curious readers can find the full text of the rankings without having to pay for a Globe and Mail subscription. Well played Qtrade.

With just a week to go until the RRSP contribution deadline, there will likely be many last-minute DIY investors who will be looking to get their contributions in for the 2017 tax year. So, it’s game on for Canada’s online brokerages to do their best to land new assets before the RSP buzzer hits.

As we noted last week and yet again, online brokerages like Interactive Brokers and Scotia iTRADE are pushing the advertising button with some unmissable campaigns on BNN.

And, speaking of BNN, this week there was also a segment on choosing an online brokerage in which Glenn LaCoste of Surviscor offered up some perspective on Canadian online brokers as well as provided some tips on choosing an online brokerage.

Tips from Surviscor’s Glenn LaCoste on Choosing an Online Brokerage.

This interview provided an interesting perspective about how online investors could approach shopping for a new online brokerage provider, namely that rather than just stick to one online brokerage, that DIY investors try going to several brokerages to see what might work. Ultimately, LaCoste recommends the ‘try before you buy’ approach with the value proposition for each particular online brokerage really coming down to the convenience and relevance of features that investors use.

Clearly, choosing an online brokerage is on the minds of many investors heading into the RSP deadline. And, as luck would have it, this year there is also a bumper crop of deals and promotions to choose from for either switching online brokerages or for choosing an online brokerage for the first time.  Keep reading for highlights of the offers set to expire at the RSP contribution deadline.

An I-deal Combination

This year’s RSP contribution deadline offers more than just stress to some procrastinators – it also offers the prospect of a deal or promotion for opening up an online investing account. There are lots of great deals and promotions to choose from however time is running out on a few promotions timed to expire at or just ahead of the March 1st deadline. When we reviewed the offers that were set to expire by March 1st, an interesting pattern jumped out – namely that they were all cash back bonuses and that most of these were being offered by big bank-owned brokerages. So, in typical fashion, we thought it might be interesting to compare these offers and to also see how DIY investors can get the best return on their business with some creative shopping.

First, a quick recap of all the open cash-back offers at Canadian discount brokerages shows that there are numerous offers for investors to choose from. To help make shopping a little easier, we’ve colour coded the highest cash back offer in each deposit range with green being the highest and red being the lowest.

Now, as with all things, the details are important to pay attention to when looking at these offers. Specifically, for two online brokerages, HSBC InvestDirect and TD Direct Investing, in order to qualify for the offers, a certain number of trades must be placed. Also, the offer by BMO InvestorLine does not include TFSA accounts while the offer by CIBC Investor’s Edge is only for registered accounts (TFSA and RRSP accounts). Still, for anyone shopping for an RRSP online investing account, there is a lot of choice.

Of the offers mentioned above, the following four offers are set to expire at or just before the contribution deadline of March 1st.

 Online Brokerage Expiry Date Cash Back Range Deposit Range Special Conditions
CIBC Investor’s Edge 3/1/18 $100 – $400 $25,000 – $100K+ TFSA, RRSP only
Qtrade Investor 2/28/18 $50 – $1,000 $50,000 – $1M+ None
TD Direct Investing 3/1/18 $100 – $1000 $10,000 – $500K+ Need to make 5 trades to receive bonus
Scotia iTRADE 3/1/18 $50 – $1200 $25,000 – $1M+ Pre-paid Visa gift card

For some investors, the decision about which online brokerage to choose won’t necessarily be dictated by what promotions are being offered, however savvy and experienced investors do pay attention to, and occasionally are swayed by, the offers being advertised.

Of course, for DIY investors that are looking to maximize the return on the opening of a new account, they may use the deal amount to be the deciding factor when trying to pick between two closely related online brokerages.  For example, an investor with $100K to invest in an RRSP could land $400 from CIBC Investor’s Edge instead of $188 for going with HSBC InvestDirect.

In most instances, DIY investors will only want to open one account and doing so would net the best offer anyway, however in a handful of instances, investors with higher portfolio amounts and a real desire to maximize their returns could also consider opening up multiple accounts.

Consider the following. With a $400K portfolio the best offer at a single institution is $750 (at BMO InvestorLine). If, however, that same $400K is divided up across four offers at the $100K deposit level at four different brokerages, the reward jumps to $1,150 (and it goes to $1200 if taking advantage of stackable refer-a-friend offers).

This is really interesting when one considers that the maximum cash bonus being offered for deposits is $1200 which requires $1M+ at Scotia iTRADE. In fact, it “only” takes $400K to get more cash back than with a deposit of $1M+ at all of the other brokerages (except iTRADE).

Yes, it is more work (some might argue more work than it’s worth) however for higher portfolio amounts, this strategy can yield some intriguing results. The savvy investor with a $1M portfolio can actually land $2050 in cash bonus back rather than $1200 by opening up five online brokerage accounts instead of just one.

Aside from just trying to chase bonuses, there are other advantages to diversifying between brokerage accounts, namely that investors can get access to features that are unique to each (e.g. research).

This year there are a lot of offers and choices for DIY investors to consider and ultimately benefit from when opening an online trading account. For the extreme deal seekers, this also creates some interesting opportunities to sample several brokerages and get paid a little more for the effort of doing so.

Discount Brokerage Tweets of the Week

Lots of chatter about registered accounts, new account openings and some garden variety technical difficulties. Mentioned by Canadian DIY investors were BMO InvestorLine, CIBC Investor’s Edge, Questrade, RBC Direct Investing, Scotia iTRADE, and TD Direct Investing.

From the Forums

Comparing Questrade and BMO InvestorLine

Fine tuning a passive investing portfolio is always interesting for DIY investors. In this post from reddit’s Personal Finance Canada section, one user is looking to get some commentary on Questrade and BMO InvestorLine for maintaining a couch potato approach.

Better Terms

One of the goals of SparxTrading.com is to provide DIY investors with better information and better value when hunting for and opening online investing accounts. It was an interesting observation on referral offers in this post from reddit’s Personal Finance Canada that calls out some important details about the way in which referral offers work. Good to read for individuals interested in the Questrade referral code offer which is widely published.

Into the Close

That’s a wrap for this week. While our closing won’t be as elaborate as the closing ceremonies for the Winter Olympics we can toss in some appropriately themed music to take DIY investors into the week before the RSP deadline. Stay warm (especially the Vancouverites!) and enjoy the festivities – team Canada has lots to celebrate this year!

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Discount Brokerage Weekly Roundup – February 16, 2018

The Olympics are here and in full swing. As the world’s attention turns to the winter games, closer to home there is a fierce competition going on between Canadian online brokerages. The big prize: winning the share of wallet of Canadian investors. Interestingly, like the Olympics, there is also a fair bit of judging and controversy this week.

This week’s roundup takes a deep dive on the widely anticipated 2018 Globe and Mail Canadian online brokerage rankings and several of the noteworthy observations about this year’s rankings and the state of the industry. Next, a quick but possibly groundbreaking move by one of Canada’s junior stock exchanges that could bring blockchain into DIY investing (legitimately). As always, we’ll take a look at what DIY investors were talking about on Twitter and in the investor forums.

2018 Globe and Mail Online Brokerage Rankings Released

It’s hard to believe but the 19th edition of the Canadian online brokerage rankings were released this week. The journey here has certainly been one of endurance as technology has evolved considerably since 1999 and pricing, for the most part, has come down dramatically.

Interestingly, the bank-owned online brokerages continue to dominate the landscape however when it comes to performance on the Globe and Mail’s online brokerage rankings, it’s the non-bank-owned online brokerages that continue to shine.

Before diving into the results, it is interesting to note a few observations about the study and presentation of the latest ranking data.

The first thing that stands out is that this year’s ratings showed up much later than they usually do. Instead of a typical publish date of November or December, the ratings showed up this year with just two weeks to go before the RSP deadline. Perhaps this is timed for those last-minute shoppers, however, given the sharp spike in interest in DIY investing that hit in December and January, these rankings would likely have grabbed considerable attention in the wake of the interest and online brokerage outages that took place to kick off the year.

As with previous editions, this year’s rankings use the letter grade system to evaluate the brokerages overall performance, with key measurements of the discount brokerage field consisting of parameters such as:

  1. Who has paperless accounting?
  2. How do stock trading commissions compare?
  3. Is commission-free ETF trading available?
  4. Foreign exchange charges
  5. Are U.S.-dollar registered accounts available?
  6. What can broker smartphone and tablet apps do?
  7. Can clients send secure e-mails to get questions answered?
  8. Is there a wide choice of places to park cash?
  9. Can clients compare their portfolio returns with benchmark stock and bond indexes?
  10. How does the client website experience rank on a scale of 1 to 5?

Another tradition of the online brokerage rankings is that they added some newer features to the way the information was presented. This year’s comparisons are a bit more dynamic than year’s past, with the ability to compare specific brokerages using the factors listed above. Gone is the large table view which provides a bird’s eye look at the field across all features and instead a more focused look is possible. Based on the design, it appears a bit easier to navigate the comparison on a mobile screen than having to scroll left or right on a table, so the mobile user was clearly considered when putting this review feature in place.

This year’s rankings are also behind a pay-wall, which means that only subscribers to the Globe and Mail can review in detail the results of this year’s study. Fortunately, we’ve summarized and reported the results below and this year’s scores will be added to each broker profile so readers can compare the historical performance of a particular online brokerage in a variety of ratings. Because the Globe and Mail has disabled commenting on articles as of December 2017, this year, it was unfortunate we were not able to review the reactions of readers to the results as the responses also offer some insight as to whether the online brokerage rankings resonated with general sentiment.

With the stage set for the results themselves, let’s dive in to see what stood out from the online brokerage field this year.

There were a number of very interesting observations about this year’s rankings however to keep things digestible, we’ve selected three of the most interesting (to us) factors to hone in on.

First, Qtrade Investor taking top spot in this year’s rankings means that they have cleaned up in 2017. Specifically, they have ranked first or almost first in all of the major Canadian online brokerage rankings in 2017. Despite the very different methodologies used to evaluate online brokerages that each of these rankings present, three very different studies found Qtrade Investor stood out from their peers. For that reason, expect to see Qtrade Investor be a part of the DIY investor dialogue in 2018 for recommendations or to be short listed as an online brokerage worth considering.

In an interesting marketing quirk, the fact that Questrade – the only other Canadian online brokerage that starts with Q and has ‘trade’ in its branding, also finished on the podium (in a three-way tie with Interactive Brokers and Scotia iTRADE) means that there is sure to be some confusion as to which brokerage is which. Given how much more advertising Questrade does than Qtrade, however, this may actually tilt in Qtrade Investor’s favour.

The second very interesting observation about this year’s results is that Interactive Brokers finally made it into the list of Canadian discount brokerages considered. For many years they were left off the list, not meeting the criteria of being a typical choice for the everyday investor. With the addition of registered accounts, notably the RSP and TFSA accounts by Interactive Brokers Canada, the full spectrum of very active and less active investors appeared to be able to access this online brokerage for more than just day trading. Even more significant than being included this year is the position that Interactive Brokers Canada ranked in. Finishing in a tie for second place alongside “mainstream” brands such as Questrade and Scotia iTRADE means that Interactive Brokers came out ahead of most of the other Canadian online brokerage service providers.

Regular readers of the weekly roundup will note that we often report the (relatively low) average commission paid by IB clients and the unbroken streak of constant quarterly growth in accounts observed for the better part of a decade. This kind of attention on a brand many Canadian investors might not have considered is likely to pose a challenge to the incumbent online brokerages. Further, it also appears that Interactive Brokers is aggressively stepping up their marketing efforts in Canada.

The image below was snapped on BNN’s homepage, a very bold move by IB Canada to be front and centre with Canadian DIY investors. Look for Interactive Brokers to continue to make their presence felt in Canada with a broader market of DIY investors than the “active trader” segment.

Finally, and somewhat related to the first two observations, was that most of the top rated online brokerages in Canada were not bank-owned online brokerages at all. It appears that despite the scale and convenience factor that bank-owned online brokerages bring, when it comes to appeal to the average DIY investor, Rob Carrick’s view is that the non-bank-owned online brokerages are simply doing a better job – for the most part. A key data point in favour of that is seen in the cost of converting to US funds which showed just how much clients of Interactive Brokers and Questrade could save relative to other online brokerages when purchasing stocks in USD by converting CAD dollars.

There was one curious ranking which seems somewhat controversial – and that is awarding Scotia iTRADE, the only bank-owned online brokerage to finish tied for second place, with a B+.

One of the biggest points of debate is the fact that Scotia iTRADE is the only Canadian online brokerage to charge a standard commission pricing of at least $24.99 for accounts with less than $50,000. By presenting the rate that Scotia iTRADE charges as 9.99 per trade alongside other Canadian brokerages that charge $9.99 or less to all clients regardless of account balance creates a perception of parity in pricing when it doesn’t exist.

To be fair, there was a footnote about the commission pricing being higher for individuals with less than $50,000 however the spirit of the Globe and Mail’s rankings have usually leaned towards features that save consumers – in particular younger or more modest portfolio holders – from paying very high fees. To be in the same rank as either Questrade or Interactive Brokers, both of whom have sharply lower pricing by comparison, doesn’t quite stack up. Pricing aside, there was also a versatility gap when it came to US dollar registered accounts that is highlighted in the table above. Specifically, Scotia iTRADE did not offer any (at the time of publication) whereas brokerages such as Virtual Brokers offered a higher number.

The justification that was provided (which acknowledged looking past both the pricing and lack of USD registered accounts) was that the user experience, in particular the website, was more than helpful enough to make up for the value difference. To be fair, for clients with more than $50,000 at Scotia iTRADE, the value equation certainly appears compelling, however that is a rather sizeable hurdle to overcome for many beginner DIY investors.

One of the important takeaways about the Globe and Mail rankings is that there is a high degree of subjectivity that goes into awarding the final grade. The ranking breakdowns were not provided at the time of publishing so it is difficult to see the weights that each factor played in determining the grades, however the apparent importance of website experience coupled with the subjective nature of that rating means that DIY investors relying on the rankings should understand that their experience may vary from the assessments put forward by Rob Carrick.

Nevertheless, this year’s online brokerage rankings do contain interesting nuggets worth reading and considering when choosing a possible online brokerage. The new dynamic features add an interesting user experience to the comparison process and with additional coverage of Interactive Brokers, this year’s results seem to reaffirm Carrick’s view that bank-owned online brokerages aren’t necessarily the gold standard, rather, the independent and non-bank-owned options are stronger competitors than they’ve ever been.

Blockchain on the Horizon

The Canadian Securities Exchange announced this week that they are seeking regulatory clearance to launch a clearing and settlement platform powered by blockchain that will enable trades to settle instantly. Moreover, this platform will also enable the CSE to allow companies to issue Security Token Offerings (STOs) that will utilize smart contracts as a mechanism to bring regulated securities to public markets.

On the settlement front, this is a potential game changer for investors who would no longer have to wait days for trades to settle and as such wait to access funds from the sale of a stock position. More than the time factor, this could be the next catalyst for trading commission prices to go lower as the cost for clearing and settling trades would likely also be lower with fewer intermediary steps and a lower cost for the online brokerages to plug into this clearing system.

Right now, there’s still a regulatory process that will dictate the launch of this platform however the announcement in and of itself should be enough to spur the current (and only) clearing house in Canada to explore means to innovate.

Discount Brokerage Tweets of the Week

Another week of technical difficulties and interesting client service issues aired in the public view. Mentioned by Canadian DIY investors were BMO InvestorLine, CIBC Investor’s Edge, Questrade, RBC Direct Investing, Scotia iTRADE, TD Direct Investing, and Virtual Brokers.

From the Forums

Win, Lose or Withdraw

TFSAs can be powerful vehicles for DIY investors to build wealth, but there are finer points to understanding how they work. This post, from the Canadian Money Forum, provides a valuable look at how the ins and outs of the TFSA work for DIY investors.

Digging for Info

The first time in the markets can be an intimidating moment. This post from reddit’s Canadian Investor forum thread highlights one user’s experience and also contains a very interesting (albeit brief) comparison of Interactive Brokers and Questrade – two names that made news this week.

Into the Close

That’s a wrap on another volatile week in the markets. Thankfully it’s a long weekend for Canadian investors which also happens to coincide with the lunar New Year. Have a safe, happy and relaxing long weekend and best wishes for a prosperous year of the dog!

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Discount Brokerage Weekly Roundup – February 9, 2018

What a week of extremes. The Eagles won the Super Bowl, the Dow Jones cratered, Elon Musk’s rocket took off, XIV blew up and Omarosa is on Big Brother. But those weren’t the only headlines this week. Unfortunately for many DIY investors, also in the headlines again were online brokerage outages.

In this week’s roundup, we take a deep dive into the trading outage issues plaguing the online brokerage space and analyze where the scales are tipping for bank-owned online brokerages. From there we’ll venture south of the border to see the latest developments from one online brokerage and the launch of a new breed on discount brokerages. As always we’ll wrap up with what DIY investors are chatting about on Twiter and in the DIY investor forums.

Coverage on outages

Something has got to give. Yet another week where investors at a Canadian online brokerage were shut out of the market at one of the most volatile markets in the past two years. And, once again, the outage was covered in news outlets like the Globe and Mail and on BNN. Also, let’s not forget the firestorm on Twitter.

This past week it was RBC Direct Investing who suffered an outage that was attributed to a ‘fibre optic cable’. No further details were reported by the Globe and Mail other than to say that a fix had been deployed although that came as cold comfort to the investors caught in the vortex of turbulent market selloff.

Canadian online brokerages weren’t the only brokerages to go down, however, as major US online brokerages Fidelity, TD Ameritrade and Charles Schwab also reported technical issues related to overwhelming trading volume. In the case of Fidelity clients, the last major service interruption was in November. For Canadian DIY investors, however, the long wait times on the phones or platform outages (which then trigger long wait times on the phones) seem like a much more frequent occurrence.

Suffice to say, it’s safe to assume that many DIY investors are not pleased. But has the issue reached a boiling point with investors? Should the online brokerages be concerned?

It was interesting to view the coverage of RBC Direct Investing’s outage on BNN this past week, specifically the segment featuring Dale Jackson which reported on the service interruption, the fall out with DIY investors and the response by independent online brokerages. While the first half of the segment covered the outage, it was the latter portion of the discussion which stood out, in particular because of the perspective given on investor dissatisfaction over the outages and the suggestion that DIY investors are abandoning bank-owned brokerages in favour of independent brokerages.

Jackson cited a 2017 Surviscor study on overall online brokerage experience that measures a number of different factors about an online brokerage. In that study, Qtrade Investor and Questrade performed first and second respectively. And, the inference drawn suggested that DIY investors are dissatisfied with bank-owned online brokerage service and fleeing to non-bank owned brokerages.

At issue with that inference is whether “online brokerage experience” equates to or is a reliable proxy for “investor satisfaction” especially in the context of a conversation on service levels shortcomings.

Fortunately, there is the JD Power Investor Satisfaction study which is conducted every year as well as specific reporting by Surviscor that measures the customer service responsiveness. We compared these very different measures of online brokerage experience and found that, in 2017, Qtrade Investor scored the highest in both Surviscor assessments and second highest in the J.D. Power study. From a broader perspective, in comparing bank-owned and non-bank-owned brokerages, however it was very interesting to note that non-bank-owned brokerages scored higher as a group than did bank-owned brokerages.

As the table above shows, however, there is considerable variation within the bank-owned brokerage and the non-bank-owned group, but the broader point is that just because an online brokerage is affiliated with or owned by a bank, doesn’t necessarily mean it will be “better” at service, overall online experience or investor satisfaction.

As a matter of fact, when it came to service assessment, if the world of online brokerages is divided up into only bank-owned and non-bank-owned, the average for non-bank-owned brokerages is 53% compared to bank-owned brokerages at 37%.

It’s certainly fair to infer that online investor sentiment appears to be negative as a result of recent outages, but the hard data on account migration or turnover away from bank-owned brokerages as a result of investor “dissatisfaction” is not actually cited and, as a result, cannot be verified. It might be fair to suggest that there is already a trend or shift in consumer preferences for non-bank-owned brokerages, but more data would be needed.

The fact that this data – along with incidences of outages – cannot be verified publicly raises the question of whether or not Canadian online brokerages need a regulatory requirement to report some operating metrics publicly so that DIY investors can make unbiased, data-driven decisions about who they should trust with their investments – and who will provide reliable access to those investments. In the absence of that data, consumers are left to turn to other 3rd party ratings and evaluations, each with different approaches to measuring components of the online brokerage experience.

As highlighted in several roundups already in 2018, online brokerages are under a microscope. It seems like only a matter of time before consumer sentiment starts to drive political attention, especially if outages on busy market days continue. If they’re not at a boiling point already, DIY investors are certainly on the path there.

In terms of whether there is cause for concern for the online brokerages – and especially the bank owned online brokerages, there was an interesting poll conducted by BNN which asked: “How do you react when your bank provides disappointing service?”

As of the writing of this post the results below paint a fairly grim picture for a bank that provides “disappointing service” with 54% of respondents stating that they would take their business elsewhere. And, we’ve got an inkling as to where that business may be headed.

Interactive Brokers trading metrics

If there’s one group of folks who are welcoming the volatility it’s not traders, it’s their online brokerages. The meltdown of the XIV proved that traders can get things spectacularly wrong, however with trading volumes at levels not seen in years, online brokerages must be smiling – at least those that didn’t suffer interruptions during trading hours.

With all of the other news that coincided with the regular release of trading metrics from Interactive Brokers, we thought it would be interesting to cycle back to those stats to see what traders and investors at the typically active end of the market were up to in January in the US.

By all measures, it appears that Interactive Brokers crushed their numbers right out of the gate in 2018. Not only were Daily Average Revenue Trades 40% higher than a year ago (and 29% higher than in December), client accounts grew 27% in a year, margin loan balances grew 61% in a year and client equity grew 50% higher in a year. Again, for DIY investors to take note of, the average commission per cleared client order was $2.59 for stocks and $6.03 for options.

It’s still noteworthy that commissions for trades at Interactive Brokers are substantially lower than those of their American counterparts and demonstrate the case that commission costs in Canada are almost certainly going to continue to drift lower.

While Interactive Brokers is a known competitor in the online brokerage space even here in Canada, another interesting development this week in the US could also broaden who will possibly challenge existing Canadian brokerages (and it’s not Robinhood). Earlier this week, Overstock.com launched a partnership with Siebert Financial Corp to offer a discount online trading platform via FinanceHub (owned by Overstock.com).

The online discount trading platform, Muriel Siebert & Co, offers $1.99 trades for Club O Gold Members (an Overstock membership program). This is the second big announcement by Overstock.com this year, with an earlier move to offer a robo-advisor. The reason this is such a noteworthy development is because it demonstrates that large online retailers who have an installed client base and a savviness with technology, can move into the financial services space.

For an online brokerage, such as Interactive Brokerage, the commission fees are already generally fairly low and as such, they are likely not going to have to lower prices to match or compete. Conversely, larger online brokerages will be watching to see if Overstock’s model is successful and if so, they’ll have to budget for a world in which a larger online retail brand – such as Amazon – may try to sweeten the deal on a prime membership by getting a discount on trading commissions.

Discount Brokerage Tweets of the Week

Mentioned by Canadian DIY investors were BMO InvestorLine, CIBC Investor’s Edge, Questrade, RBC Direct Investing, Scotia iTRADE, TD Direct Investing, and Virtual Brokers.

From the Forums

Let’s talk about tax

It’s that time of year again when tax talk is all the rage. Here are a couple of interesting posts of issues that DIY investors encountered in trying to get their tax documentation in order.

http://www.financialwisdomforum.org/forum/viewtopic.php?f=33&t=104539&p=609074&sid=341165a8624d094c47ee6a5554a016bc#p609074

http://forums.redflagdeals.com/interactive-brokers-activity-report-errors-2169464/

Referral code

Experience is sometimes a tough teacher. For one DIY investor, they missed out on a promo code offer because they didn’t input their code in the right place. Find out what this post offers other investors as a cautionary tale when opening an account to get the deal.

Into the Close

T.G.I.F. Late as it is, thankfully the weekend is here. The good news is there’s no shortage of screen time to get in (other than staring at charts) and likely no shortage of drama either. Especially now that volatility is blowing through the markets. Hang on to your hats, next week should be fun.