Tag: Interactive Brokers

Interactive Brokers

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Discount Brokerage Weekly Roundup – November 25th, 2016

For investors, every day in the markets feels like Black Friday. From the opening bell through to the close and into the night, there’s no shortage of folks looking to capitalize on a great deal. Fortunately for DIY investors, there’s at least one place that pulls together the deals and promotions from Canadian discount brokerages to make shopping around much easier (shameless plug much?).

This week’s edition of the roundup continues the deals deep dive, looking at part two of the survey we ran on which discount brokerages Canadian DIY investors are considering when hunting around for deals online. In keeping with tradition we’ll also be serving up a healthy dish of social media chatter from Twitter and what investors had on their minds from DIY investor forums.

Let’s Make a Deal

Part two of our in-depth analysis of the deals & promotions offered by Canadian discount brokerages takes a closer look at which online brokerages DIY investors reported looking at while shopping around for an online trading account. Specifically, this post focuses on which brokerages appear high on DIY investors’ list as they peruse the deals & promotions offerings and which brokerages just don’t seem to be hitting the mark.

Pick a number

Starting first with how many brokerages DIY investors have in mind while shopping. The graph below shows that a large segment of respondents indicated that, by the time they’d made it to the deals & promotions section on SparxTrading.com, they had already short-listed a couple of brokerages.

Recall from our previous report that among those visiting the deals and promotions section, there was a significant likelihood that a deal or incentive offer was a part of choosing who to sign up with. Of those who completed the survey, 85% or so were actively in the market for at least one brokerage whereas 15% indicated they were ‘just browsing’ to see what was out there.

For respondents coming through the deals and promotions section, close to 89% of individuals had narrowed the choice down to at least 3 brokerages. Specifically, a large segment of individuals (39%) had one particular brokerage in mind, followed by those who were trying to decide between two brokerages (32%) and three brokerages (18%) respectively.  Although some individuals were really undecided (between four and six choices) this group was relatively small.

Who’s on first

With so much data to explore, there were all kinds of interesting insights to be derived. One of those interesting points was that of the 14 Canadian discount brokerages respondents could have chosen from, there were 12 that were mentioned, albeit to varying degrees.

The two brokerages, interestingly, that were not mentioned as being on the minds of respondents while searching through the deals section were HSBC InvestDirect and Jitneytrade. While the latter may only appeal to specialized or professional traders, HSBC InvestDirect’s absence from the response set was curious since they are bank-owned, conduct some marketing and are currently running a promotion. Traffic data through SparxTrading.com also validates this observation that there is an absence of curiousity about HSBC InvestDirect or Jitneytrade to the same degree that exists with other online brokerages.

At the other end of the spectrum, TD Direct Investing appeared to be on the minds of many DIY investors. Whether it is a function of marketing their DIY investor offering more effectively, their size, pricing or total offering, TD’s self-direct investor services appeared to resonate with respondents of the survey. Ironically, those individuals in the deals and promotions section looking for an incentive from TD weren’t going to find anything beyond the standard transfer fee coverage. There are occasional whispers that in-person visits with an eager rep can land clients with a couple (10) of free trades however this incentive is not widely broadcasted.

Interestingly, of the firms that respondents indicated was their only choice while browsing for an online trading account (i.e. their top choice), TD Direct Investing, CIBC Investor’s Edge and Credential Direct do not have advertised offers that most investors would find appealing (e.g. cash back or commission-free trading).

Another interesting angle on the responses provided was in how respondents were shopping for online brokerages. In particular, how many alternatives (if any) are shoppers considering alongside any given online brokerage. Overall, it appears that on average shoppers are considering between one and two options when browsing through the deals section.

The heat map shown below shows the distribution of alternative choices being considered for each online brokerage.

While sample size suggests some caution with the data, there are nonetheless interesting findings where data appeared to cluster.

For example, shoppers considering Virtual Brokers appear to be consistently considering one other firm. That is to say that 83% of the those who indicated considering Virtual Brokers were doing so with only one other choice in mind.

Another interesting pattern was that Questrade appears to be a strong challenger to bank-owned brokerages. Based on correlation data, Questrade was considered alongside bank-owned brokerages moreso than Interactive Brokers, Qtrade Investor or Virtual Brokers. Another read on that data, however, could be that bank-owned brokerages have successfully managed to change the value perception and have now started to encroach on what has traditionally been the territory of ‘low cost’ brokerages such as Questrade.

Finally, while there are still lots of great data points to explore (let us know if you’re interested in learning more) one of the most interesting competitions appears to be between Scotia iTRADE, who at the time of the survey had several promotions running and TD Direct Investing who at the time of the survey only ran the transfer fee promotion.

Despite their differing profiles, it appears that deal hunters gave particular consideration to either TD Direct Investing or Scotia iTRADE. Curiously, the former does not run as many promotions as the latter while iTRADE has the highest standard commission fee. After Scotia iTRADE, both CIBC Investor’s Edge and, perhaps surprisingly, Desjardins Online Brokerage, also emerged as challengers to TD Direct Investing.

Key Takeaways

While it may not be surprising to hear that those in the market for an online trading account would likely have a favourite, the data from the survey suggests that certain brokerages are being considered more often than others.

The presence of a deal, in and of itself, doesn’t guarantee that DIY investors will pay attention. Conversely, it doesn’t always take a promotion to get the attention of investors online. That said, given the large portion of those in the market for online brokerage services who narrow down their options to about two providers, an onboarding bonus can certainly give a DIY investor a little more incentive and an online brokerage the edge it needs to win at the margins.

Discount Brokerage Tweets of the Week

Every so often a little blip on the radar pops up to signal something interesting.

This past week (and month), social media for BMO InvestorLine appears to have sprang to life with a small but growing reference to #BMOInvestorLine from a couple of BMO InvestorLine employees on social media. The move to take a more hands on approach to social media by employees is similar to what TD Direct Investing has done, although BMO InvestorLine has yet to start tweeting from a dedicated InvestorLine account.

Currently, it appears that the push on social media has to do with their “SmartFolio” robo-advisor service. With BMO InvestorLine now showing signs of life on social media, it’s likely going to touch off another race with other bank-owned brokerages (and the non-bank-owned brokerages not on social media) to get their social media strategies up to speed.

And, speaking of other Canadian discount brokerages mentioned on Twitter, it was a week filled with interesting questions, occasional gripes and the rare shout out for good service. Mentioned in this week’s tweets were BMO InvestorLine, CIBC Investor’s Edge, Questrade, RBC Direct Investing, Scotia iTRADE, TD Direct Investing and Virtual Brokers.

From the Forums

Sizzle or Fizzle

With any product or service hype or marketing comes along with the territory. For one DIY investor, however, this post from reddit’s Personal Finance Canada section shows how they’re trying to get a different side of the story for the BMO InvestorLine experience.

ET No Phone

Here’s a question for our time: what happens if you don’t have a phone number? Interestingly, one reddit user from the Personal Finance Canada section created this post since s/he didn’t have a phone number because there’s facebook and google voice apps now. Read on to see how signing up for a Questrade account was a challenge. Nice to see that Questrade also chimed in too!

Into the Close

That’s a wrap on yet another record breaking week in the markets and another head shaking week in politics. Fortunately, there are lots of deals to be found (which some could argue is a sport) as well as actual sports to be enjoyed. Whatever your competition this weekend, best of luck!

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Discount Brokerage Weekly Roundup – November 11, 2016

If the world were to go to hell in a handbasket, the market would respond by going bullish on basket makers and transportation. Such is the lens of a trader. Despite the volatility and uncertainty attached to a Trump presidency, the sell-off in the moments following the Trump election quickly corrected by the time markets opened.  For observers of the market, it was a unique lesson in how quickly the great voting machine that is the stock market can recalibrate to figure out where the opportunities lie and where they don’t. What does a ‘Trump’ world look like for Canadian online brokerages and DIY investors? There may not be a simple answer, but the simple lesson seems to be: be prepared for the unexpected.

In this week’s roundup we take a closer look at the latest Canadian discount brokerage to bring a referral program to back online and how it stacks up to offers currently in play. From there we’ll take a look at one non-bank owned brokerage and how its latest set of features are making it more competitive. To round out this week, we’ll take a look at the latest tweets from investors and what forum users were chatting about.

Virtual Brokers Casts a Vote for Friendship

After a break of several months, the refer-a-friend promotion from Virtual Brokers is back on the list of active deals being offered. With the relaunch of this referral program, Virtual Brokers joins three other online brokerages (Questrade, Scotia iTRADE and BMO InvestorLine) that offer some kind of referral program bonus for both the new enrollee as well as the individual who made the referral. Interactive Brokers, another popular online brokerage, does offer a referral bonus but only to the individuals making the referral, not to the individual enrolling for a new account.

Of the group of referral offers, Virtual Brokers’ minimum requirement of a $5,000 deposit is second behind that of Questrade’s and significantly lower than that of either Scotia iTRADE (minimum requirement of $10,000) and BMO InvestorLine (minimum deposit of $50,000). Like offers from Questrade and Scotia iTRADE, Virtual Brokers’ referral plan offers an increase in cash-back reward for higher deposit levels.

Key differences in the refreshed version of their cash back promotion include offering up more money and an additional deposit tier. While the previous promotion offered two tiers, the new referral structure offers 3. The tiers of Virtual Brokers’ new referral plan range from between $5,000 to $24,999 ($25 bonus given), $25,000 to $49,000 ($50 bonus given) and $50,000+ ($75 bonus given). For the individual doing the referring, the amount they receive for each referral ($25) remains unchanged as does the additional amount for every third referral ($50).

Of course, like any offer, it’s important to look closely at the details to see exactly what’s on the table. For the Virtual Brokers referral offer, there are some important caveats.

First, the referral can only happen between friends or family which are defined as follows:

“A friend, for the purposes of this offer, is someone with whom you have a personal relationship. A “personal relationship” is defined as a relationship between two people who have had direct, voluntary two-way communications where it would be reasonable to conclude that the relationship is personal.”

“Family relationship” for the purposes of this offer sharing is a relationship between two people related through a marriage, a common law partnership, or any legal parent-child relationship, who have had direct, voluntary two-way communications (sic)

Of the different referral programs offered by Canadian discount brokerages, only Virtual Brokers and Scotia iTRADE explicitly define the terms “Friend” and “Family relationship” and both use the same definition as part of the terms and conditions. By comparison, neither Questrade nor BMO InvestorLine make this distinction a part of qualifying for their referral programs.

Another important detail for this offer is that referral amounts will be deposited into the referring parties’ margin accounts by March 31, 2017. Between now and that time, the individuals receiving the referral have to keep their account in good standing (i.e. no margin calls) and the referee also has to ensure a minimum qualifying balance is maintained.

Third, similar to the conditions stipulated by Scotia iTRADE, this referral offer is not open to residents of Manitoba or Quebec. Curiously, neither Questrade nor BMO InvestorLine have these geographic restrictions in place.

So how do the referral offers stack up with one another?

From the graphic shown below, what DIY investors receive as part of their participation in a referral program depends on what they deposit.

Refer-a-friend incentives at Canadian discount brokerages (all amounts shown in dollars).

Of the four Canadian discount brokerages offering referral programs, Questrade is offering the most to DIY investors and their friends, across all deposit tiers up to the $50,000 mark, where they are tied with Scotia iTRADE.

In the $1000 to $4,999 deposit range, Questrade’s referral bonus stands uncontested.

For Virtual Brokers, the table above shows that they appear to be competing more closely with bank-owned brokerages rather than going toe-to-toe with Questrade’s amounts, even though the payout structure to referrers is identical to the Questrade model.

Finally, what this chart also shows is that BMO InvestorLine, regardless of the deposit tier, is not really interested in attracting deposits underneath $50,000 and is not prepared to offer up what other brokerages are in terms of a referral bonus offer. The one caveat to that is that unlike other brokerages, BMO InvestorLine allows their referral bonus to be combined with another promotion – which at this time only includes an offer that requires a minimum deposit of $100,000 to qualify.

The addition of a new deal into their list of offerings puts Virtual Brokers back on the board for referral offers and gives DIY investors looking for an online trading account one more potential reason to consider starting out with Virtual Brokers, an advantage over the 8 or so other brokerages not offering a referral-based sign up bonus.

From a business perspective, offering a referral bonus makes quite a bit of sense in that referral plans help Virtual Brokers fix their cost of acquiring a new client. In a marketplace that is so competitive, every new client matters and how much it costs to get that new client is increasingly becoming more expensive. Added to that, the fact that the offer is a cash-back promotion rather than a commission-free offer makes it significantly more appealing to DIY investors hunting for a deal.

Ultimately, whether someone wants to recommend a brokerage to a friend or family member comes down to how well a brokerage is doing its job. While enticing, the referral amounts are not set nearly high enough to have someone put their own reputation on the line for a substandard experience. So, while setting up a referral program is a good first step to growing a client base, the success of that program will depend on how great an online brokerage makes its existing customers feel.

Back the Feature with Qtrade

Over the past several weeks, Qtrade Investor has been rolling out new features and pricing changes that signal they’re committed to evolving their offering to DIY investors. In last week’s roundup, several of their feature ‘enhancements’ were referenced, notably their expansion of the list of commission-free ETFs as well as improvements to the online user experience.

A few more features that warrant a mention include their dividend reinvestment tool that simplifies setting up dividend reinvestment strategies as well as additional Morningstar ratings categories for ETFs and mutual funds based on sustainability, which were launched in March of this year.

Another interesting development at Qtrade Investor is the lowering of the threshold to qualify for a transfer fee credit (up to $150) from $25,000 down to $10,000. Although not stated on the website, representatives from Qtrade have indicated this offer is open until the end of December. This update to their transfer fee promotion positions them atop the transfer fee offer group, ahead of second place RBC Direct Investing who requires a minimum transfer amount of at least $15,000 to be eligible for their transfer fee credit and well ahead of the standard amount of $25,000.

Looking at the big picture for Qtrade, with this long list of features, they are working to remove the ‘friction’ involved in becoming a client.

The combination of lowering pricing, expanded product selection (ETFs), improving accessibility to their platform, both in terms of technology (via mobile trading), as well as by implementing steps such as the transfer-in credit referenced above, mean that over the past year, Qtrade Investor has managed to make big strides in staying competitive with the larger bank-owned brokerages as well as their non-bank owned peers.  While not calling out a winner in the upcoming online brokerage rankings, these elements certainly make Qtrade Investor seem like they’re going to finish 2016 much stronger than when they started.

Discount Brokerage Tweets of the Week

As this week’s election has proven, Twitter can spell the difference between election glory or defeat. For Canadian discount brokerages, this past week spoke volumes in terms of what prompted users to speak up and speak out about. Mentioned this week, CIBC Investor’s Edge, Questrade, Scotia iTRADE, TD Direct Investing and Virtual Brokers.

From the Forums

TFSA trading

When is a trade not a trade? It’s a fine line to walk for those actively trading their TFSA accounts – something that is the source of a great deal of controversy. In this post from reddit’s Personal Finance Canada section, more than a few users chimed in to help provide their perspective and learning on when trading in a TFSA might not be so tax-free after all.

Into the Close

That’s a wrap for this week. If ever there was a TGIF card to play, it is definitely going to get played here. Of course, while it would be easy to recoil into sports, Netflix or some other well-deserved distraction, today more than any other it is important to remember and honour the sacrifice and service of the many men and women who helped fight for the freedom, democracy and way of life we enjoy in Canada. Thank you to our veterans and to those unsung heroes working to keep Canada safe and welcoming.

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Discount Brokerage Weekly Roundup – November 4, 2016

Patience is a virtue. Or for some, it’s a way of life. Cubs fans can finally celebrate winning the world series, somewhat ironically on a week when market bears were also cheering their recent victories.  For Canadian discount brokers, more than a handful have decided that they’re done playing the waiting game and are going to be chasing the prize of getting new clients as we head into the final stretch of 2016.

In this week’s roundup, we start with a look at what’s happening in the deals and promotions space as we head into a new month and whether Canadian discount brokerages are starting to pick up signals from what investors are asking for in the market. Next we take a look at a few brokerages that we spotted rolling out some upgrades and changes. From there, we’ll take a look at the latest feedback from investors on Twitter (hint: US presidential candidates aren’t the only ones catching heat). Finally we close out with a few choice threads from the Canadian investor forums.

Market Clearing Price

Now that a new month is here, it’s time for a deals & promotions refresh. Heading into November there wasn’t a lot of turnover forecasted to take place with only three promotions set to expire at the end of October.

A pair of promotions from BMO InvestorLine as well as an offer for commission-free ETF buying at Qtrade Investor were on the chopping block however two of the three offers, both from BMO InvestorLine actually managed to get extensions into 2017.

The commission-free ETF buying offer from Qtrade Investor did expire at the end of October however as the sun was setting on that offer, Qtrade Investor announced that they are adding 40 more ETFs to their commission-free list, bringing the total number of commission-free ETFs that can be bought and sold with them to 100.

On a month over month basis, then, the deals and promotions section shrank by one compared to October, bringing the total number of active advertised offers to respectable 23.

Transfer offers edged ahead of the cash back/free trade offers as the most popular category of deal offered, and, Scotia iTrade pulled ahead of competitor firms as the discount brokerage offering the highest number of deals getting ahead of Desjardins Online Brokerage and Questrade. Interactive Brokers is still not on the list of Canadian discount brokerages pushing a sign up promotion however their ongoing growth and success at client acquisition suggests they’re doing well in this department all things considered.

Even though the start of November has been quiet, there still might be a few interesting promotions launched before the month and year are out.

Several brokerages have expressed interest in launching something noteworthy to DIY investors in November, and data from our own internal sources show that bargain hunters were out in droves this past October signaling DIY investors are actively looking for incentives and providers.

Early data from the survey we ran last month also indicated that not only does having an offer make a huge difference to the overwhelming majority of DIY investors shopping for a discount brokerage but there is a significant mismatch between the brokerages offering deals and the brokerages DIY investors are seeking deals from.

For certain Canadian online brokerages, the data paints an interesting picture in that offers alone, while clearly important, aren’t enough to get on DIY investors’ radars. There also has to be a significant degree of marketing and awareness building that precedes the moment where a DIY investor decides to kick the tires.

On the flip side, for DIY investors, lesser known brokerages are going to have to be able to compete much more aggressively and creatively to get attention.

This has already started to take place with Desjardins Online Brokerages’ latest offer of a flat 1% of deposit size being put towards commission credits. This offer positions them as one of the most competitive offers out there for this kind of promotion within the last four years and has already moved the needle on who’s paying attention to them.

Looking ahead to the next several weeks, it will be interesting to see just how many brokerages sit up and start to pay attention to what the marketplace seems to be asking for and who will be content sitting on the sidelines.

Qtrade Banks on Change

As we had reported in a previous roundup, Qtrade Investor quietly rolled out their removal of the ECN fees for standard trading commissions. This past week, Qtrade also rolled out a few more enhancements to their offering, adding 40 commission-free ETFs to the existing list of 60 and bringing the total number of commission-free ETFs to 100. Along with Qtrade Investor, Questrade, Virtual Brokers, National Bank Direct Brokerage and Scotia iTRADE each offer some kind of commission-free element to buying (or buying and selling) ETFs.

In addition to improvements in the number of ETFs available for commission-free trading, Qtrade Investor also announced upgrades to their mobile offering by adding an Android app as well as telegraphing an upcoming improvement to their dashboard – presumably making it easier and more intuitive for investors to get important information and navigate the site.

Qtrade wasn’t alone this week with launching upgrades and enhancements – National Bank Direct Brokerage also fine-tuned its homepage layout and CIBC Investor’s Edge also upgraded their investor newsletter with a much more modern look and feel.

Changing layouts and online technologies is not without its inherent risks, however.

One very interesting case study happening in real time is the roll out of WebBroker “improvements” and generally mixed reactions it has received from DIY investors. Given the large number of users and the popularity of TD Direct Investing, there were more than a few investors who became entrenched in the “old” layout and interface who were less than pleased at having to change. Add to that stability issues with the platform and an already impatient and vocal DIY investor crowd has not taken kindly to this transition (a quick review of Twitter comments and forum chatter makes this clear).

Clearly the paradox with online brokerages is balancing what existing clients have come to learn about a platform and product with what new clients (especially younger clients) are looking for in terms of user experience and design features.

For Qtrade Investor, it will be interesting to monitor the reactions to their latest changes to see whether they were able to keep things similar enough to have users feel comfortable with the change but also to upgrade the user experience in a way that makes Qtrade look and feel modern and forward thinking.

Whatever the outcome for Qtrade Investor, the move to update their look and feel is a sign of the times.

In such a competitive space, it is evident that Canadian online brokerages who can get the balance between fresh and familiar right are going to get significantly more points with investors and therefore not end up being complained about online.

Discount Brokerage Tweets of the Week

While Twitter users are trying to sift through the many tweets from US presidential candidates, they still managed to find some time to pipe up about what’s happening with Canadian discount brokerages.

From the Forums

Investor’s Edge keeping current

In this post from the reddit Personal Finance Canada thread, one user shared the latest update to the service agreement for clients, specifically with regards to multiple currencies. It’s an interesting move that seems to be setting the stage for trading in foreign currencies.

Broker vs Broker

It’s been a while, but that favourite comparison between Virtual Brokers and Questrade is back – but with a twist. This post from reddit’s Personal Finance Canada reveals that the choice between the two is no longer really about just these two, a signal that big banks have gained significant ground on the “value” front.

Into the Close

With the finish line in the world’s sights, there has been all kinds of wackiness in the markets heading into this weekend and undoubtedly heading into next week. If you can find a way to avoid the election speak, either a walk in the crisp fall weather or a Netflix binge watch or all the sports action might be in order. For traders, however, this would be a great weekend to double check your trade setups heading into what is likely going to be a wild week ahead. Have a great weekend!

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Discount Brokerage Weekly Roundup – October 28th, 2016

Heading into the unofficial ‘Halloweekend’, just one small piece of news from the US was enough to spook the markets. Investors were left trying to figure out if the latest news on the US presidential race was more trick or treat. Of course, not everything coming out of the US this past week was doom and gloom, especially for a pair of online brokerages.

In this week’s roundup, we take a look at a major shift in the US online brokerage landscape that could offer some clues as to what might be in the cards for Canadian discount brokerages in the not-too-distant future. From there, we’ll take a look at one major Canadian online brokerage that just rolled out a feature that is sure to make some of their closest competitors have to step up their game. As usual, we’ll cap off the roundup with soundbites from Twitter and the investor forums.

Kind of a Big Deal

How does $4 billion sound? If you’re US online brokerage Scottrade, apparently it sounds pretty good. This past week, US-based TD Ameritrade pulled off a major purchase of another online brokerage, Scottrade, and provided an interesting window into the world and marketplace of online trading, perhaps offering some idea of the state of the industry as a whole and where things are headed.

As many value investors are aware of, it’s only when a buyer makes an offer that the ‘real’ value of an asset (in this case, an online brokerage) is known. So, with TD Ameritrade putting up an offer for 3 million accounts, it now offers some insight into what those accounts are actually worth. Like any big investment, however, it pays to look at the details.

In the case of TD Ameritrade and Scottrade, there are actually two parts to the transaction, one for the online brokerage segment ($2.7b) and one for the bank segment ($1.3b). The breakdown of what TD Ameritrade is paying is spelled out in their investor presentation but the takeaway (or at least one of them) is that TD Ameritrade is buying the 3 million or so accounts funded accounts at Scottrade along with the $170B in assets that come with them.

Source: TD Ameritrade Investor Presentation

According to the details of the transaction, some quick math puts the price per account at about $870 and the assets per account at about $57K. With various possible additional opportunities to grow “share of wallet” over time, the price per account falls even further. That said, the figure is in the ball park range of what it costs to acquire a new client, at least in the US. All told, TD Ameritrade is paying 3x revenue for the deal and is looking for the deal to be accretive (12% to 20%) within 3 years, assuming all goes to plan.

For a deal of this magnitude, the numbers have to make sense. That said, there is also the human factor that potentially drove this deal forward. According to some sources, the timing seemed right for Scottrade founder Rodger Riney to cash out. Whether it was age, health or a desire to exit on a high note, the human element likely played a factor.

Within the Canadian context, there has often been chatter and speculation about whether the Canadian marketplace can sustain the number of online brokerage providers that it does. Could a similar deal happen here? The odds would suggest probably not.

Currently, there are only a couple of choices for non-bank owned brokerages for players to purchase – JitneyTrade, Questrade or Virtual Brokers. The other online brokerages have some kind of larger financial institution, such as a bank or credit union as a parent – or in the case of Interactive Brokers Canada, a larger US online brokerage as the parent. So, for a larger player to take out one of the independent brokerages would really be an aggressive move. None of the available ‘independent’ brokerages are particularly large in terms of accounts. On the other hand, for one of the bigger financial firms to try and exit the DIY investing segment might mean ceding market share.

As the Scottrade deal shows, the banking side of the business is always looking for ways to deepen their ‘share of wallet’ not reduce it. Neither buying nor folding seem palatable for the bigger players. Nonetheless, if the asking price is right or there is a catalyst to drive an exit, then business people can usually find a way to make a deal.

For DIY investors, the elimination of some competition may not be a bad thing. In a recent investor conference call published on SeekingAlpha.com, President and founder of Interactive Brokers Thomas Peterffy had the following take on Scottrade ahead of the announced TD Ameritrade acquisition:

“…we are excited about the Scottrade news. Just like the LPL news, the fewer brokers, the easier the comparison and the starker the differences between us and them, and the easier it is to compete for the customers. Also, whenever a broker is taken over, we usually get a bunch of accounts from people who were considering coming over to us, but were reluctant to change. Now that they will have to change anyway, they think they may as well come to us and move on to a better and less expensive platform.”

While trying to put a positive spin on losing 2000 or so accounts to a competitor (Interactive Brokers previously had an agreement to service some of Scottrade’s clients’ trade executions) is basically damage control, there is a valid point that the differentiation between brands will be brought into focus and consumers could stand to benefit by seeing some very compelling offers being made.

Whatever the case, there is a lot of change on the horizon for the Canadian financial services sector. This past week National Bank (parent to National Bank Direct Brokerage) also announced that it is going to be shifting its focus to ‘going digital’, joining its peers in spending massive amounts on meeting the banking and investing needs of consumers in an increasingly online world. Thus, one of the biggest drivers of who is left standing in the online brokerage space here in Canada might very well come down to who can afford to keep innovating. With that in mind, cashing out might not seem so bad after all.

Conditions are Improving

TD Direct Investing seemed to be in the spotlight again this past week with a news release announcing the official rollout of conditional orders to their flagship platform WebBroker (even though clients started to see this feature show up last week).

Ever the savvy marketers, they also announced that they are the first ‘bank-owned’ brokerage to deploy a platform with conditional order types. While that is technically accurate, conditional orders (aka bracket orders) are already available at a number of other Canadian online brokerages, such as Questrade, Interactive Brokers and Desjardins Online Brokerage and on the thinkorswim (aka US trading platform).

Nevertheless, this latest edition to the TD Direct Investing trading platform feature set is a fairly powerful one.

Conditional orders enable traders and investors to set criteria for entering or exiting a trade and then have a trade execute if that criteria is met. Criteria could include when a price goes above or below two different levels or when a condition – such as the value of an index, goes above or below a target. Some traders refer to this as the “set it and forget it” approach, however, with all things online trading, it’s never wise to fully trust that the technology will work as promised.

While there are numerous types of bracket/conditional order types out there, TD Direct Investing has enabled the following order types:

  • One Triggers Another (OTA)
  • One Cancels Other (OCO) and
  • 1st Triggers OCO (FTO)

An example of when this might be useful is if an investor owned a stock at $15 and put in a condition to sell the stock if it hit $20 or if it dropped below $10. If one of those conditions were met, the corresponding order (in this case a sell order) would execute. This enables investors to create rules for how a particular investment or trade should be handled that go beyond the traditional limit order.

Interestingly, at the time of publication, the documentation for conditional orders on WebBroker platform was not available on the TD Direct Investing website. Fortunately, there is a webinar available that walks users through each of the order types and how they work on WebBroker.

Clever marketing aside, TD Direct Investing has continued to distance itself from its bank-owned brokerage competitors in terms of platform offering and now trading experience. And, while they may not be the first or only online brokerage to offer conditional orders, the reality is that as one of the largest and most popular online brokerages in Canada, TDDI has just given DIY investors one less reason to consider looking at competitors who also offer these order types.

Discount Brokerage Tweets of the Week

It was a fairly tame week on Twitter this week. Interestingly, technology was on the minds of investors chiming in on Twitter. Mentioned in the DIY investing conversation was BMO InvestorLine, Questrade, RBC Direct Investing, Scotia iTRADE, TD Direct Investing and Virtual Brokers.

From the Forums

Dash for Cash

One of the platforms TD Direct Investing markets to advanced traders is their advanced dashboard. In this post on RedFlagDeals.com’s investing thread, a user looking for feedback on the experience with advanced dashboard received a few interesting suggestions for data platforms.

Low Cost Education

The stock market can be an expensive place to learn how to trade. Still the fear of not knowing how things work is something that prevents many people from even trying. In this post, also from RedFlagDeals.com, one beginner investor is contemplating using either Questrade or Virtual Brokers for the commission-free ETFs as a way to get their feet wet with investing. Worth a read to see what other forum members had to say.

Into the Close

Just when things seemed like they were on track for a smooth finish to the US Presidential election there was a monkey wrench thrown into the works. It would be a great time to get some rest this weekend because there’s every indication that next week is going to get a little wild. In the meanwhile, with hockey, baseball, basketball and football, not to mention Halloween all on deck, there are plenty of reasons to take a break. Have a spooktacular weekend!!

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Discount Brokerage Weekly Roundup – October 21st, 2016

Well it has certainly been a week to remember. Not so much for what happened in the markets but rather for what happened around them and what this weeks events may do to markets everywhere. While the presidential debate or the loss of championship run were big news, perhaps the biggest news is the major outage of some of the world’s biggest websites because of exploits in technology. Heading into the weekend, it is a stark reminder that with more of the world moving to online, technology is not without its risks.

This past week, technology is the theme for the lead story at one Canadian bank-owned online brokerage. Specifically, how one online brokerage is using video technology to try and pull ahead of its competitors in the digital landscape. From there we’ll take a quick look at the latest figures from US-based online brokerages as many of them reported their earnings this past week and also provided a snapshot of what’s happening behind the scenes at some of the world’s biggest online brokerages. Finally, we’ll check out what DIY investors were talking about in the tweets of the week and in the investor forums.

Scotia iTRADE Keeping it Reel

While it’s been somewhat quiet at several of Canada’s biggest bank-owned brokerages, Scotia iTRADE has definitely been busy working to capture the attention of DIY investors online. Specifically, over the last few weeks, we’ve noted a definite uptick in the amount and diversity of video content coming out of iTRADE’s various social media channels. During this time, they’ve launched a video-based advertising campaign, several new ‘explainer’ videos on investing (in French) on YouTube and recently held a livestream “fireside chat” with personal finance expert Evelyn Jacks.

There’s definitely lots to unpack but let’s start with video advertising. For any regular consumer scrolling through content on just about any social media channel, videos are everywhere. Knowing that video posts are almost certainly going to be more engaging than regular ol’ images, Scotia iTRADE’s latest batch of video ads have started to show up in social media feeds, such as Twitter, and people are noticing. Interestingly, there aren’t that many bank-owned online brokerages with their own Twitter handle and with the exception of Questrade, the non-bank-owned brokerages aren’t nearly as active on social media feeds as they need to be to gain a significant presence. So, for Scotia iTRADE, the fact that they’ve doubled down on Twitter by not only having an account of their own but also buying ads means they’re getting an interesting share of the spotlight with millennial users.

Another place that Scotia iTRADE appears to be moving into is the French speaking market. Case in point is the recent publishing of their market education videos on YouTube en Français. For many of the big Canadian bank-owned brokerages, building an audience within the Quebec DIY investor marketplace has been a challenge. Data from our educational event tracking showed that TD Direct Investing, for example, had a difficult time pulling in people to their in-person seminar topics in Quebec much more so than in other parts of the country. Now it appears that Scotia iTRADE is widening its net to try and provide investor education oriented content to French speaking audience. Again, this is an area in which other brokerages big and small just simply aren’t doing enough of. Add to the fact that this is being done online, and other brokerages are going have their work cut out for them to produce and deploy that kind of information. Interestingly, it is difficult to imagine either Desjardins Online Brokerage or National Bank Direct Brokerage, both of whom are fiercely competitive brands within the Quebec market, making room for Scotia iTRADE to come in and capture mindshare.

Finally, this past week, Scotia iTRADE held a ‘fireside chat’ with personal finance expert Eveyln Jacks on the topic of risk management. This interactive webinar enabled Scotia iTRADE to gather information from attendees (i.e. gather marketing leads) but also demonstrate that they are taking their seminar/webinar formats to the next level. While there are still kinks to be ironed out with the format, unlike several of their peers, Scotia iTRADE is definitely pushing forward faster and more broadly online. And, in a world where DIY investors have so many choices to consider, Scotia iTRADE is making it much harder for them to be overlooked.

Is This Thing On?

A lot of traders know the saying: the trend is your friend (until it ends). For online brokerage Interactive Brokers, there are a couple of trends that are emerging surrounding their online brokerage business, some of which are more friendly than others.

On the positive side, the latest results from Interactive Brokers shows that they continue to crush it with regards to account growth, specifically with attracting more new customers to the platform than having customers leave. It’s actually rather uncanny how long their account growth streak has continued.

On the negative side, when the founder and CEO of the company wonders out loud if the platform is broken because there was no trading activity in the market, there’s definitely something strange in the trading neighbourhood. The impact of a lapse in volatility in the marketplace had a significant negative outcome for market makers (which again continued to lose money) which just goes to show that even the pros have had a tough time trying to time and trade the market when their strategy doesn’t line up with market conditions.

For many brokerages, it will be just a few more weeks until the election is finally over and markets can once again reprice assets without having to hedge against the possibility that Trump may actually win. Until then, however, brokerages and their clients are clearly watching and waiting (except for the brave/impatient few who are already betting into the election).

Qtrade Investor Quietly Drops Fees

Late last week Qtrade Investor sent an announcement to clients stating that ECN charges, the annoying fees that chew into trading profits because of market orders, were being dropped…sort of.

Technically Qtrade Investor reserves the right to charge ECN fees however they have described the situation of when those fees would be incurred as when an individual’s trading pattern makes “repeated, high volume trades on the active side of the market.” In other words, for most low to moderately active investors, this is definitely welcomed news from Qtrade.

While the technical definitions/limits were not spelled out (e.g. how many trades within a specific time frame is too many), Qtrade Investor did go on to mention that in the event of “excessive” trading that generates ECN fees, a Qtrade client service representative will attempt to contact the client.

Undoubtedly, the recent introduction of youth-focused pricing, some commission-free ETF trading and now removal of ECN fees will bode well for Qtrade in Rob Carrick’s online brokerage rankings. With the landscape for DIY investing clients being so competitive, however, there’s a fairly decent chance this news gets broadcast much more loudly before and after those rankings.

Discount Brokerage Tweets of the Week

It was a relatively tame week across Twitter for Canadian discount brokerages. Nonetheless there are some interesting client service moments that highlight why Twitter is a must-have for DIY investing clients looking to get traction on customer service issues with certain online brokerages. Mentioned this week were BMO InvestorLine, Questrade, Scotia iTrade & TD Direct Investing.

From the Forums

How Smart is Your Folio?

Seems like there aren’t many places investors can go online these days without bumping into a BMO Smartfolio advertisement.  In this post from RedFlagDeals.com’s investing thread, one curious investor took the marketing to the market to find out what others had to say about BMO’s robo-investor service.

Snug as a Bug

This was an interesting post from a Questrade user also posted on RedFlagDeals.com that highlights the importance of actually keeping tabs on a portfolio. Yes, even technology can fail, however as the author of the post suggests, staying on top of the details helped prevent a potentially bad trade.

Into the Close

TGIF. It’s been a bumpy ride to land the work week. If you still aren’t sick of the debate coverage yet and you want a great chuckle courtesy of the fine folks on Twitter, enjoy the hashtag #trumpbookreport.

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Discount Brokerage Weekly Roundup – October 14, 2016

Like the Toronto Blue Jays’ bats, fall colours are also in full swing.  As we head into the halfway point in October this edition of the roundup has an equally interesting feature – something that all Canadian online brokerages are going to want to tune into.

In this week’s roundup, we lead off with a spotlight piece on deals and promotions – specifically we present the findings from our reader survey from September that shows that DIY investors and Canadian online brokerages are out of sync and a suggestion on how to make it better. As with our usual menu, we’ll also be covering reactions from DIY investors this week on Twitter and what investors are chatting about on investor forums. For good measure, we’ve also included some of the interesting upcoming investor education events DIY investors might want to check out as the weather gets colder.

Let’s make a deal

Even though RRSP deadline season is months away, it’s already clear that Canadian discount brokerages are collectively ramping up efforts to attract new clientele. And while it’s one thing to work hard, it’s certainly also important to work smart.

As part of our coverage of the Canadian online brokerage landscape, one of the areas we analyze are the deals and promotions offered by discount brokerages to incentivize DIY investors to open a new online trading account.

Last month, we ran an informal one-question poll of visitors to SparxTrading.com that asked: “what is your preferred deal or promo?” and found some fascinating results about what Canadian DIY investors actually want and what they’re being offered.

Before jumping into the results of our deals and promotions survey from last month, it is useful to take a quick look at the deals & promotions that are currently in play.

As of the first week in October, we’ve uncovered 27 live advertised promotions with transfer offers representing and cash back/commission-free trades tied for the largest portion (31% or 8 offers), followed by (contest/other (7 offers) with referrals rounding out the group (three offers). Currently, Desjardins Online Brokerage, Questrade and Scotia iTRADE are tied with the most number of offers (four apiece) while Interactive Brokers Canada is the only brokerage not currently advertising a promotional offer of some sort (note their referral program is not counted because it only offers the individual making the referral a bonus, not the new account holder). Transfer fee coverage offers may be underreported in this count because certain firms may offer it but have not advertised this on their website.

For a bit of background on the poll itself, respondents could choose between the following options:

  • Cash back deals (for just the individual)
  • Commission-free trades (for just the individual)
  • Referral bonuses (me & a friend)
  • Transfer fee coverage
  • Technology items
  • Contest entry/prizes

These choices were selected as they represented the most popular or prevalent promotional offers typically put forward by Canadian discount brokerages. A total of 59 respondents from across Canada participated.

Results

Our poll showed that the overwhelming majority of DIY investors (68%) surveyed stated that they were interested in cash back promotions while commission-free trades came in a distant second at 27%. Transfer fee deals (3%) and technology items (2%) rounded out which offers DIY investors preferred.

What is fascinating to see is just how far off many online brokerage offers are from what investors are actually interested in. Of the 27 deals currently offered by Canadian discount brokerages, only two (which translates into 7%) offer cash back promotions: HSBC InvestDirect and BMO InvestorLine. That is certainly a major disconnect in the marketplace, one that, upon further reflection, just doesn’t quite make sense.

Considering that at least 9 brokerages are prepared to cover transfer fees from accounts from other institutions, it stands to reason that they would offer up as much (perhaps more) for a new client that didn’t put them through the hassle of having to transfer an account. A simple look at some forum comments or on Twitter would show that there are all kinds of issues that can arise that delay a transfer of accounts.

Another interesting finding was that referral or affiliate programs aren’t popular as a first choice. Ironically, all of the referral offers in the market right now actually offer cash back for the person referring and the individual signing up for the account, so it really is a win-win option.

One interpretation of this data suggests that individuals who are looking for a cash back offer don’t necessarily want to go through the effort of finding a referral source. Fortunately for Questrade, for example, they not only have the most competitive offer for referral based deposits, but they also have the easiest system in place for these referrals to be generated. Conversely, Scotia iTRADE and BMO InvestorLine require a bit more effort for each referral.

Finally, it was made abundantly clear that DIY investors were just not that into contests among those who are looking to open an online trading account. It is probably understandable that getting a “chance” at something is akin to playing the lottery except in this case, the payout is far lower and the price of participation astronomically higher. Nonetheless, looking back over the past year, there are numerous examples of Canadian discount brokerages offering up contest entries as a way in which to encourage users to deposit more.

For Canadian discount brokerages, the lesson here seems to be that the market is clearly communicating one thing while most providers are doing another. Like all businesses, online brokerages need to make sensible decisions around adding to their client base, however the results of our survey certainly suggest that a very sensible decision to get attention of new clients is to offer cash back promotions. For those that do offer cash back promotions, even in the affiliate or referral program, that is something that more DIY investors should probably be better aware of.

And, just to show that we’re also into the giving spirit, any Canadian discount brokerage that wants to advertise its cash back offer to visitors of SparxTrading.com may receive up to $250 cash back* for doing so (*conditions apply). Contact us for full terms and conditions.

Discount Brokerage Tweets of the Week

Whether you blame it on the rain, or some other stranger things, this past week there was plenty of blame being tossed around on Twitter, mainly due to outages on trading platforms. It’s a great example that shows, whatever the size of the brokerage, online trading can get interrupted. Mentioned this week were BMO InvestorLine, Questrade, Scotia iTRADE, TD Direct Investing and Virtual Brokers.

Event Horizon

Fall’s in full swing, and it’s a colourful week ahead for discount brokerage-sponsored investor education events. Here are some upcoming sessions that may be of interest to those curious about technical analysis and trading strategies. A pair of special events for options enthusiasts rounds out this week’s selection.

October 15

Options Education Day Vancouver – Autumn 2016

October 16

Options Education Day Calgary – Autumn 2016

October 18

Scotia iTRADE – Understanding Price Action To Make More Informed Trading Decisions

From the Forums

The price of advice

Everyday there are Canadians who are faced with decisions about where and how they should invest their money. With a crowded landscape, it is interesting to see how first time investors have to navigate the choices given to them by financial services firms. In this post from reddit’s Personal Finance Canada thread, there are lots of interesting suggestions for a novice investor looking for a little help in figuring out how/where to park some capital.

Into the Close

Even though it was a short week, there was certainly no shortage of excitement. While folks in Vancouver and Calgary will be able to learn about options, some other options include hunkering down for a serious weekend of sports watching. For those in Vancouver and other parts of BC – stay safe and dry (as much as you can anyway)! Have a great weekend!

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Discount Brokerage Weekly Roundup – September 23, 2016

Now that fall is here, the weather may be cooling down but the competition at Canadian discount brokerages is definitely heating up. Rather than sitting back Canadian online brokers are firing on all cylinders, from deals and marketing to technological revolutions.

This edition of the roundup launches with a look at yet another new deal from an online brokerage that might shake things up for offers yet to come to market. Next we take a look at what one big bank-owned brokerage is doing to drum up interest in their online offering. From there we take a look at one brokerage’s strategy to bring the DIY investor experience of the future into reality. Lastly we wrap up with a look at the latest chatter on Twitter and around the Canadian investing forums.

HSBC InvestDirect Antes Up

September keeps on getting more lucrative for DIY investors looking to open an online trading account. Already this month, there has been an uptick in deals and promotions being offered from Canadian online brokerages and this past week yet another brokerage jumped onto the promotion bandwagon.  HSBC InvestDirect has once again stepped off the sidelines and launched a cash back promotion ranging from $88 to $988 depending on the amount individuals deposit.

The latest promotion by HSBC InvestDirect now brings the number of active advertised offers up to 24 but more importantly, it puts a very competitive cash-back offer on the table for investors to consider.

Source: HSBC InvestDirect website screenshot

Recently, there have been a number of offers being put forward by Canadian discount brokerages however they have tended to be commission-free trade promotions or contest-type offers. The field for cash-back offers was certainly thin (compared to points last year) so the $88 for a $25,000 deposit is the highest cash-back offer at this deposit level. In fact, the HSBC InvestDirect offer even surpasses the cash back amount being put forward by BMO InvestorLine at the $100,000 mark and, from a total value perspective, eclipses BMO InvestorLine for deposits of $500,000 or more.

It should be noted that BMO InvestorLine’s offer is a combination of $200 cash back and 20 commission-free trades, so the total face value of the commission free trades (approximately $200) makes this offer a very competitive one all around.

Another interesting observation about HSBC Invest Direct’s latest promotion is that it runs through to the end of 2016. This duration is somewhat longer than competitor firms that have put offers into the market until the end of October or November.

Thus, not only has HSBC InvestDirect raised the stakes for other brokerages looking to incentivize new clients into considering them, they’ve also doubled down by making this offer available through the beginning of winter. This is good news for DIY investors because any subsequent offers from other brokerages are going to have to be more appealing than the current cold, hard cash being offered by the latest HSBC InvestDirect promo. With only a week to go before the end of September, there is still time for other brokerages to launch even more at investors so we’ll be watching the space closely to see what happens next.

Cut to Commercial

It takes money to make money, or so the saying goes. It’s therefore interesting (and a tad ironic) to see the latest move from bank-owned brokerage Scotia iTRADE as they start to ramp up their marketing and advertising efforts to put their brand back on the map with DIY investors.

This past week, in addition to their Twitter feed starting to feature big, bold, and very red picture cards, Scotia iTRADE also launched a series of video commercials on their YouTube channel. Ranging from quirky commercials to the quick ‘infomercial’ primers on the market, it looks like Scotia iTRADE has been busy building a video presence after quite a long absence in that space. We’ve bundled them into the playlist below.

What is interesting is that there has been a recent push back into video commercials, with BMO’s robo-advisor service (SmartFolio) and now with video coming back at Scotia iTRADE. Why this is relevant is because these are not inexpensive marketing choices to make, so it appears Scotia iTRADE is banking on the ads moving the needle on consumer awareness and buy in of their brand.

The ads themselves are amusing and well put together so there’s likely to be a positive reaction. Nonetheless, the bigger picture is that Scotia iTRADE appears to be spending more resources (read: money) in order bring Scotia iTRADE back into the ring to be considered. With the addition of new deals/promotions and now the latest spend in advertising, the onboarding engine is getting itself in gear.

Canadian discount brokerages are all trying to figure out where to place their marketing dollars to get the best ROI. For Scotia iTRADE, they’ve continued to resist lowering their standard commission fees, choosing instead to try other tactics. As a result, while other brokerages have lowered standard commissions, Scotia iTRADE continues to have the highest standard commission fees for smaller (<50K in assets) investors.

Whether or not these ads fly or flop, it’s a sign that given the choice to go big or go home, Scotia iTRADE is definitely betting that being big and bold will keep them in the discount brokerage race.

BMO InvestorLine Looking for an Edge

When putting together the weekly roundups, there are all kinds of interesting things that pop across our radar. In the case of the Canadian online brokerage industry (and the financial service space generally), one thing is abundantly clear: technology is the big battleground.

BMO InvestorLine recently posted (yet another) job posting that caught our attention, this time for a senior technical specialist. That they were hiring more IT wasn’t so exciting, however their vision for InvestorLine (and adviceDirect) to develop “bleeding-edge technology and the next generation of Online Self Direct Investment and adviceDirect platforms.”

Screenshot from https://bmo.taleo.net/careersection/2/jobdetail.ftl?lang=en_GB&job=957988&src=JB-10207

Fortunately, if there’s one group that can spend the resources needed to take on the wave of fintech firms and massive IT budgets of their competitors, it’s bank-owned brokerages. Of course, this past year (and week) has shown DIY investors that bigger brokerages aren’t necessarily without bugs when trying to roll out new trading platforms or features.

Historically, banks have been conservative and reluctant to roll out platforms or technology that is too new because of the risks associated with them. Clearly, the risk of being left behind technologically or the risk of losing market share has spurred BMO InvestorLine (and its peers) to innovate much more quickly. It should be exciting to see where the “bleeding-edge” takes online trading next.

Discount Brokerage Tweets of the Week

It looks like a rough start to fall 2016 for brokerages this week on Twitter – Scotia iTRADE in particular as their website crawled to a halt. Bitten by the tech bugs this week were BMO InvestorLine, Questrade, RBC Direct Investing and Scotia iTRADE.

From the Forums

Yay or Nay to Interactive Brokers

An interesting thread on reddit’s Personal Finance Canada section caught our attention this week from a Qtrade Investor client looking to jump ship to Interactive Brokers. It would be a move to a very different experience online so it was interesting to read what insight Interactive Brokers users had to offer.

 

Into the Close

That’s a wrap for another edition of the roundup. If you’re lucky enough to get good weather this weekend, hope you can make the most of it. For the rest of us, guess we’ll just have to watch hockey, football and get a bit of a break from the crazy debate week next week. Of course, for those that want a bit of that crazy ahead of time, here’s the hamdog. Seriously.

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Discount Brokerage Weekly Roundup – September 9, 2016

A famous football movie said sometimes life is a game of inches. As the busy season for investors and brokerages kicks off, it looks like there are lots of interesting changes, big and small, that are taking place in and around the brokerage industry, to win over new clients. From growing a client base to new leadership to new products or services, this week has a little bit of everything thrown in.

On the docket this week, we’ll take a look at a lot of little developments across the board. Starting first with stats from one independent discount brokerage that shows they’re making strides with investors. Next we highlight one online brokerage that’s looking for a new vision and some leadership and what that reveals about their plans for the future. After that, we’ve got a new trading app launched from one Canadian brokerage who’s doubling down on mobile trading. From there we’ll take a look at the latest pitch being made to millennial investors and whether it’s a hit or a miss. And finally we’ll recap what DIY investors were chatting about on social media and in the investor forums.

Interactive Brokers’ mixed metrics

The stat sheet from Interactive Brokers’ August trading figures paints an interesting picture of the landscape for online brokerages. On the one hand, it looks like trading volume has significantly diminished compared to last year at the same time. A drop off of 22% on a year over year basis as well as a 4% decline compared to July’s figures suggests the volatility picture is very different this year than last. On the other hand, metrics such as margin loan balances, credit balances and most notably client accounts all continue to show growth compared to last year and last month.

 BMO InvestorLine looking for new president

What does it take to be the president of a Canadian online brokerage? It is an interesting question that was prompted by the recent online posting for a new president at BMO InvestorLine.

Longtime observers of the Canadian online brokerage space will note that senior leadership in the online brokerage space tends to have quite a bit of turnover. Within the past several years, however, BMO InvestorLine in particular has seen a number of individuals take the helm and so it is interesting to be able to take a look at what they’re hoping to bring in.

Aside from the expected components of being a solid leader, there appears to be a trend towards becoming increasingly technologically proficient and to a degree, prescient. To be able to craft a strategy for 3 to 5 years into the future takes a certain comfort level with seeing the big picture for the self-directed investing industry but also being able to track where and how technology will evolve for consumers who also happen to be investors, which is no easy ask.

To that end, it is telling that a core component to the strategy of BMO InvestorLine is to try to become a “technology leader”.

Ironically, this exchange on Twitter (also shown below) that happened just a few days ago showcases the jumping off point the new President is working from. This certainly suggests that there are some hearts, minds and browsers that need some adjusting before “technology leader” springs to mind for many DIY investors when thinking of BMO InvestorLine.

screengrab from Twitter

Regardless of who lands in the driver’s seat next, we’re happy to extend an invite to the BMO InvestorLine team (some of whom are regular readers of the roundup) or the future president to drop us a line if you’re interested in achieving some of your strategic objectives.

Desjardins Online Brokerage launches a new app

On the technology theme, earlier this month Desjardins Online Brokerage released a new app for its Disnat Classic clients on both iOS and Android.

The new mobile trading app adds another way in which to access the Desjardins Online Brokerage or Disnat online trading experience since there is already a mobile site that enables DIY investors to perform the essential functions of trading online.

Some key features of the app include streamlined account summaries, clean charting and an easy to use interface for placing orders or checking their status.

In terms of response, the early ratings in the respective app stores appears to be positive. With a user interface that appears modern and in line with better practices, users have given the app close to a 4.5 out 5-star rating on Android and 3.5 star rating for iOS – the new mobile experience has managed to score high praise (albeit with a small number of reviews) compared to other online brokerage mobile apps.

Active traders who use the Disnat Direct platform, however, are out of luck for the moment. Nevertheless, it appears that evolving the online user experience, especially on mobile, is definitely now on the radar and task list of the team at Desjardins Online Brokerage.

TD Direct Investing selling the sizzle

In a news release yesterday, TD Direct Investing shared some interesting data on what millennials seem to think about DIY investing.

The data, derived from a survey of about 1750 “millennials” which took place between February and March of this year, suggested that a lack of money and know-how were the key barriers to getting started with investing. Also, given the insane volatility at the time, it shows that timing market surveys on the stock market is also a tricky gig – but we digress.

According to TD Direct Investing, there are 3 tips (labelled the “ABC”) which they are hoping might inspire some younger investors to look more closely at the DIY investing world:

  1. Act Now
  2. Brush up on the basics
  3. Choose your own adventure

 

The nudge towards considering DIY investing comes at an interesting time for the wealth management landscape.

An increasing number of ‘millennial’ investors are being courted by and turning to robo-advisors, the digital wealth management solution that can cut out the tasks of having to act, learn or choose. Showcasing the benefits of DIY investing over and above the robo-advisor route won’t be an easy sell.

Robo’s aren’t the only challenge for Canada’s largest online brokerage either. It looks like they’re increasingly being surrounded by programs or promotions aimed squarely at the same audience they’re hoping to reach.

Last week we reported on Qtrade Investor launching a young investor pricing program as well as highlighting several other initiatives from online brokerages that are directly targeting ‘younger’ (aka millennial) investors.

In TD Direct Investing’s case, this press release might be the signal that they’re preparing to respond more emphatically to the changes going on in the DIY investing space, which should be an interesting set of adventures for all.

Discount Brokerage Tweets of the Week

On a short week it may have been a week to be short. Either way clients chimed in about some of the issues on their minds. Mentioned this week were BMO InvestorLine, Questrade, Scotia iTRADE and TD Direct Investing.

From the Forums

Drinking the not-so-Kool Aid

Well this is a new one. This post on reddit from one supposed bank-owned brokerage employee provides an interesting window into a) airing grievances about a job to the world and b) what happens with your trading accounts when you start working in the industry. Fascinating stuff.

What to do with 5K?

Crowdsourcing financial advice seems like an interesting approach to money management however it’s clearly a sign of the times. On this post from the Personal Finance Canada subreddit, one keen would-be investor wanted to know what the best route forward would be to deploy the hard earned cash.

Into the Close

That’s a wrap for this week’s roundup. Coming off the long weekend last weekend, it’s nice to have this one show up a little sooner. For sports fans, it’s a great weekend with football back on the timetable north and south of the border, the Paralympics in Rio and hockey back in focus. Also it’s a welcome distraction from the nuttiness that was today’s trading day – and speaking of distractions, this post on Facebook should hopefully provide a welcomed dose of the chuckles. Have a great weekend!

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Discount Brokerage Weekly Roundup – September 2, 2016

September’s here and it’s all about the kids – well at least what some people consider to be kids anyway. After a summer spent huddled away figuring out what the ‘cool kids’ of investing may want, the Canadian discount brokerages have launched into September with some new features that are clearly aimed at winning the interest of millennials.

In this week’s roundup we start with a look at the latest deals and promotions activity from Canadian discount brokerages to see which deals dropped and which ones popped heading into the busy season for investors and brokerages alike. Next, we’ll take a look at the first in a series of exciting rollouts from one online brokerage that has upped the ante for firms interested in working with millennial investors. From there we’ll take a look at one bank-owned brokerage’s foray into commission-free ETF investing and what that means for DIY investors and other brokerages big and small. As usual, we’ll cap off the roundup with chatter from across Twitter and the Canadian investing forums.

Deals update

If this week is any indicator, the final stretch of 2016 will be an interesting one to watch, especially in terms of deals and promotions. To start September, the current landscape of promotional offers appears to be quite close to where things were in August, with 21 open offers available for DIY investors to choose from, slightly lower than the 23 there were last month.

At first blush it looks like Canadian discount brokerages are playing the busy fall stretch close to the vest. Case in point is the expiry date for a couple of key players’ offers.

BMO InvestorLine, for example, replaced their summer cash back offer with a much simpler cash back and commission-free trade “fall promotion.” Despite the length of the season, this offer is currently scheduled to expire on October 31st. As any good options trader knows, however, BMO InvestorLine has the right but not the obligation to let the offer expire, extend it or replace it with something different.

Another interesting expiry date was spotted on Desjardins Online Brokerage’s long standing $500 commission-credit offer. Previously this offer was set to expire at the end of August however it was extended yet again but this time only a month out until the end of September.

These maneuvers, however small, signal that the last stretch of 2016 still has some surprises. BMO InvestorLine, for example, will be rolling out new features so there may, in fact, be further related updates or incentives to coincide with that launch. Additionally, Desjardins Online Brokerage is now tied with Questrade in offering the most number of concurrent offers (there are four each in the categories we track). And, let’s not forget the fact that there are a dozen other brokerages that are constantly working to improve their position in the very competitive market for investors.

Another interesting observation coming into the new month is that Virtual Brokers has yet to roll out a new offer. If the past several months is an indicator, that won’t be the case for too long. Other noteworthy absences from the ‘commission-free’ or ‘free-trade’ categories this month include Scotia iTRADE.

There are also two other very exciting developments in the deals/promos section.

First, for investors, we’ve started to collect data on what kinds of deals are the most important to DIY investors. To fill out the survey click here – we’ll be publishing the results of this after the end of the month to see what incentive offers SparxTrading.com users are looking for.

The second exciting development is that we will be rolling out a more formal industry snapshot report (paid), aimed towards professionals who want to track what’s going on in the Canadian discount brokerage space.  Anyone interested in receiving the report can click here to let us know. We’ll notify you when we plan on going live.

Just two days into September, its already shaping up to be a month in which there are going to be many changes as well as the potential for deals activity to tick up based on the new features being rolled out at many of Canada’s discount brokerages.

Made for Millennials: Qtrade Launches Younger Investor Pricing

Big news coming out of Qtrade Investor this week as they rolled out a new pricing plan aimed at younger investors. Specifically, Qtrade is offering DIY investors aged 18 to 30 a break on commission pricing, no account minimums, and no quarterly administrative fees.

Screenshot from Qtrade Investor homepage

The move positions Qtrade well heading into the online brokerage rankings from the Globe and Mail this fall. Already a long-time favourite of Rob Carrick, the fact that Qtrade’s new pricing plan caters to the ‘millennial’ investor, a segment that gets particular focus in the Globe and Mail discount brokerage rankings, is sure to score points.

In terms of specifics, this new plan lowers the standard commission price for qualifying individuals to $7.75 per trade instead of the standard $8.75, (ECN fees are still charged with this plan). At Qtrade Investor this is a significant savings as the only other ways to get a lower commission price are to have at least $500,000 in assets with Qtrade or to trade at least 150 times per quarter. The biggest score with younger investors, however, will be absence of an account minimum balance and a waived account maintenance fee.

It is noteworthy to point out that while Qtrade Investor is not the only Canadian discount brokerage to waive fees based on age, they do offer the longest age range of their competitors, matching what Desjardins Online Brokerage (whose parent owns a significant portion in Qtrade) has done with their Broker@ge program for individuals aged 18 to 30.

Both Questrade and Virtual brokers offer to waive account maintenance fees for individuals however for Questrade the age limit is 25 and for Virtual Brokers it’s age 26. Interactive Brokers also offers a lower minimum account balance ($,3000 instead of $10,000) for individuals aged 25 and under. RBC Direct Investing also offers to waive its quarterly inactivity fee for individuals who have a student banking package (or who had one in the last 5 years), so while not by age, it is still geared towards younger investors.

As with all good things, there usually is a catch and in the case of the ‘young investor’ program at Qtrade Investor, one of the requirements to qualify is that individuals sign up for a $50 per month pre-authorized contribution. While it does mean having to continuously contribute, the contribution requirements are lower than pre-authorized deposit amounts that typically come in at $100 per month elsewhere (see RBC Direct Investing for example) so clearly the team at Qtrade Investor has done some homework to put together a compelling offer.

Catherine Wood, Senior Vice President at Qtrade Investor offered the following comment regarding the launch of the new pricing for young investors:

“It’s important for Qtrade Investor to be a top choice for a new generation of Canadian self-managed investors, and we are seeing a big surge in the number of younger clients opening accounts. Younger investors are astute when it comes to assessing and comparing competing services and they know it’s important to keep their costs down. By reducing our commissions and fees, we can help them kickstart their portfolios and build their assets more quickly.”

It will be interesting to see how Qtrade Investor, a firm that has a very solid reputation for delivering quality customer service experiences over the phone and email, navigates a world where expectations for live chat and twitter have taken hold.

That said, without a doubt, this move is going to attract all kinds of interest in Qtrade and how they handle working with younger investors will ultimately determine whether or not ‘the cool kids’ give this new program the fist-bump of approval.

National Bank Direct Brokerage goes Commission Free for Eh-TFs

After several test runs with offering commission-free ETF trading for Canadian ETFs, it looks like National Bank Direct Brokerage is ready to roll out this feature to all clients starting September 1st. And, with well over 550 Canadian ETFs to choose from, this handily positions National Bank Direct Brokerage as having the most commission-free ETFs (to both buy and sell) of any Canadian discount brokerage.

Within the Canadian online brokerage space, the term “commission-free” ETF warrants some clarification. They key for DIY investors is to distinguish between offers that allow commission-free buying and selling and those that are commission-free to buy but not to sell.

For example, firms such as Questrade and Virtual Brokers offer “commission-free” buying of all ETFs, US or Canadian, but charge trading commissions on the sale of the ETF. Alternatively, Qtrade, Scotia iTRADE and Virtual Brokers offer selections of ETFs that are commission-free to buy and to sell. Prior to this roll-out, Virtual Brokers held the highest number of ETFs that could be traded (bought and sold) commission-free at 100, however opening up all Canadian ETFs to be traded commission-free means that National Bank Direct Brokerage now offers the most competitive selection. By a lot.

Screenshot from National Bank Direct Brokerage Website

Like all offers this good, it’s important to ask about the fine print or if there are any important terms and conditions. In this case, there are a few important considerations to this offer. First, there is a minimum quantity of ETF units (100) that need to be purchased in a transaction in order for it to qualify for commission-free status. This is not an insignificant number of units for many beginner investors or modest portfolios. Next, the list of eligible ETFs is determined by those that are published by the Canadian ETF association (that list of ETFs had 568 funds on it as of July 31st and is accessible here). Other important caveats are that commission-free trades don’t count towards activity thresholds that qualify investors for discounts on commission pricing, platforms or administrative fees.

Strategically, this new feature will clearly appeal to the growing number of investors interested in ETFs as well as with a strategic segment that many DIY investor firms are looking at: millennials. Offering up commission-free Canadian ETFs also positions National Bank Direct Brokerage as a worthy competitor to other bank-owned brokerages.

In their news release announcing the launch of this program, President of National Bank Direct Brokerage Laurent Blanchard commented

“We’re changing the online brokerage landscape, no transaction fees for all ETFs listed in Canada. This will make online investing more accessible for a greater number of investors. At the same time, it ensures that National Bank Direct Brokerage remains at the forefront of innovation.”

The latest offering from National Bank Direct Brokerage is a great development for DIY investors.

At a minimum there is at least one bank-owned brokerage that is prepared to meet a growing need for access to ETFs at a low cost and this fact alone may entice another bank-owned brokerage to improve its ETF offering.

Another reason this is advantageous for DIY investors, and perhaps a challenge to competitor firms such as Questrade and Virtual Brokers, is that the value proposition has to improve at these independent firms without pushing the cost of operating an account up. Thus, services will have to get better or if they remain the same they have to be cheaper.

This is still early days in what’s shaping up to be a very busy end of summer/fall season, there may be some very interesting counter offers coming.

Discount Brokerage Tweets of the Week

This week’s hits and misses from Canadian discount brokerages highlight the fact that online brokerages need to be ready to answer all kinds of questions. Mentioned this week were CIBC Investor’s Edge, Questrade, Scotia iTRADE and TD Direct Investing.

From the Forums

Too good to be free?

In this post from Canadian money forum, National Bank Direct Brokerage’s commission free ETF announcement started to make waves. Of course, more than a few skeptics were wondering how it would be possible to let investors trade ETFs commission free. More than a couple of interesting theories there. Also in this post from reddit, there’s an interesting view on the 100 unit minimum purchase.

Into the Close

That’s a wrap on a busy week. Markets are closed on Monday for Labour Day so hope everyone has a wonderful and safe long weekend!

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Questrade’s IPO Centre: What you need to know

If you haven’t heard much about IPOs this year, you’re not alone.

Globally, investment bankers have had a lot more time on their hands and deal flow has slowed to its lowest levels in a decade (see data on Global IPO proceeds below, courtesy of Renaissance Capital).

Global IPO Proceeds to June 2016 Source: Renaissance Capital

Just about 6 months ago, however, Questrade waded head first into IPO deal waters by launching a new feature on their website: an IPO Centre. Despite the challenging environment, Questrade’s vision for this area appears to be one of convenience for those investors looking for information about companies raising capital from initial or secondary offerings.

Here are some highlights for DIY investors:

First, it’s free to access, which is always nice for investors looking for interesting investment ideas. Deals are listed in a table format and after a deal link is clicked on, Questrade provides further details and a summary of the product in question, from the deal size to the use of proceeds. While due diligence is naturally required, fundamental investors will appreciate this essential overview format.  Questrade advises clients to read the company issued prospectus, as would any broker.

Second, there’s more than just companies coming to market. Despite the name, IPOs of company stocks aren’t the only types of offers featured.

Questrade’s IPO Centre also highlights fixed income deals, new structured products, and secondaries for equities. In fact, in the 6 months since its launch, Questrade has featured 106 deals (as per the “closed” section of the IPO Centre), and at the time of publication, there are currently two open offers. Interestingly, of the closed offers, the vast majority (about 88%) have been some kind of treasury or structured product offering, validating many observations that the Canadian IPO market for companies coming to market has been virtually non-existent for 2016. It should be noted that Questrade’s IPO centre covers Canadian IPOs only.

Number of closed offerings on Questrade’s IPO centre ytd (Source: Questrade IPO Centre website)

While the branding and layout are cool, this kind of feature is evolutionary rather than revolutionary. US brokerages such as TD Ameritrade, E-Trade Financial and Interactive Brokers provide similar platforms and in Canada, Scotia iTRADE offers a variation on this deal information. In this case, Questrade looking to differentiate itself from its Canadian discount brokerage competitors. In a highly competitive market, every little feature helps.

Despite the rough year in IPOs,  Twilio’s successful IPO in the US earlier this summer and  speculation that Real Matters may seek to go public in Canada this fall suggests that there still might be a headline or two left before the year is out. In the meantime, all that Questrade’s IPO Centre can do is continue to be prepared.

For additional information on Questrade’s IPO Centre, check out this blog post.