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Interactive Brokers

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Discount Brokerage Weekly Roundup – May 9, 2014

If there’s one fear that doesn’t seem to be present in the market, it appears to be a fear of heights. Once again markets are touching new highs and venturing into uncharted territory – but they weren’t the only ones.

In this edition of the roundup, we cover quite a bit of ground starting with a pair of “growth-oriented” investor conferences that took place in Vancouver. Next we check out a couple of recently launched discount brokerage promotions and contests. Following that we report on an interesting level of hiring activity by different brokerages. Finally we end with a selection of thoughts from other Canadian investors via the investor forums & message boards.

Growing Opportunities

This past week Vancouver played host to two interesting growth-themed conferences.

The first was the new medical-marijuana focused Green Rush conference. According to reports, it was surprisingly well attended for a new conference and it drew in those curious about the potential ‘pot-of-gold’ at the end of the medical marijuana rainbow. Whether or not investors will see the green in their portfolios at this point is still too early to tell, but the speculators were out sniffing around.

Another growth themed conference took place a short distance away – this one with a focus on small cap companies. The spring edition of the Vancouver Small Cap conference showcased several guest speakers along with small cap company presentations. As with conferences past, there were a number of interesting tips and perspectives on a segment of the market that is typically classified as ‘high risk’. Read our full review of the Vancouver Small Cap Conference for more information.

ETF Contest on the Horizon

Horizon’s Exchange Traded Funds (ETFs) in partnership with National Bank Direct Brokerage are once again running their Biggest Winner contest. The contest runs from market open on May 20th to market close on June 27, 2014.

This year the prizes consist of $500 cash weekly for the 6 week duration of the contest, a grand prize of $7500 at the end of the competition and a runner up prize of $2500. The grand prize will be awarded to the portfolio that has the highest account value at the end of the competition. The weekly prizes will be awarded to the individual with the highest percentage gain. For full details on the contest or to register, click here.

Cash is King

According to the following forum post via the Financial Wisdom Forum, BMO InvestorLine has another cash back promotion running (not advertised on the front-end of their website) geared towards investors depositing either $250,000-$499,999 or $500,000+. The promotion offers either $700 or $1500 cash back depending on the deposit size. Full details on the promotion are available here.

BMO InvestorLine was also busy this week announcing updates to its adviceDirect service. Specifically a number of additional updates were released that focus around personalized ETF buy and sell recommendations and an improved ability to personalize recommendations with sorting functions.

New Features Coming to Questrade

Another interesting nugget from the investor forums came from a Questrade representative posting on the RedFlagDeals forum. Specifically, the rep let readers know that bracket orders would soon be launched by Questrade as part of the new release of the IQ platform. Traders on advanced platforms such as TD Direct Investing’s ThinkOrSwim (aka the US Trading Platform) and Active Trader platforms, or Interactive Brokers’ TWS have been able to take advantage of bracket orders (aka conditional orders or One Cancels the Other orders).

Questrade bracket orders

With Questrade now providing the feature it will be an interesting selling point for their platform. There are other online brokerages (who unfortunately cannot be named at this point) who are also currently working on the implementation of bracket orders.

Hiring Spree

Two points a trend does not make. That said, there seems to have been a slightly greater than usual spike in the number of job postings coming from Canadian discount brokerages.

In a recent roundup we covered the launch of Questrade’s new careers twitter handle and in these past two weeks there have been a number of postings for sales reps and client reps.

While it is difficult to pin down exactly what is prompting the timing, hiring more staff to either service or “onboard”new clients is a sign that several brokerages are not sitting back when it comes to looking for new business.

Among the brokerages with recent hiring posts:

 From the Forums

Activity across the forums looks like it pulled back a bit – perhaps on account of the nicer weather pulling folks away from the screens and into the better weather. This week’s selection comes from the RedFlagDeals forum as well as from the Canadian personal finance section of Reddit.

Questrade vs Virtual Brokers – encore

Comparing the two low cost online brokerages is a popular source of discussion – here is yet another interesting thread comparing them both.

Keeping it Casual

As we pointed out last roundup, seeking out advice from Reddit can be a hit or miss proposition. Nonetheless a thread that crossed our radar (which can be found here) was from a user looking to find the best brokerage for a “casual investor”. The responses of users were interesting and it was also noteworthy to see that even on Reddit, folks are prone to having multiple brokerage accounts.

That does it for this week’s roundup. We wish all the moms of the bulls and bears out there a wonderful Mother’s Day. For those brave enough to be looking for a Mother’s Day themed investment or three, this interesting segment from CNBC might provide a few ideas other than flowers:

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Discount Brokerage Weekly Roundup – May 2, 2014

Dramatic playoff hockey, incredible playoff basketball, markets hitting new highs (again) and the new Star Wars cast announced. It looks like May is bringing more drama than it is flowers. As we round the corner into May, the drama among discount brokerages continues to unfold, albeit with less flare than the heart pounding finishes from both the Habs & Raptors.

In this week’s roundup we launch into May with a new set of deals and information on investor education events; we report in on the always interesting trading metrics and activity of investors stateside; we take a quick peek at another ranking of Canadian brokerages and we close off the week with some discount brokerage encounters for the far edge of the internet.

Let’s May-ke a Deal

Here in the SparxTrading camp, the beginning of the month signals a time for a new overview of discount brokerage deals and promotions. This month the deal landscape looked much the same as it did in April. With one new deal announced as we come into May, it appears that discount brokerages are digging in until June with their core offers. The only new deal to announce was from BMO InvestorLine. Click the following link to learn more about the discount brokerage deals for May 2014. And, if history is any indicator, there ‘may’ still be some deals coming down the wire.

Learning About Earning

On the educational front, it appears Canadian discount brokerages are upping the ante for their focus on providing education and support to clients looking to learn more about investing.

This past week TD Direct Investing held a 45 minute webinar covering its web-broker platform that reportedly had over 10,000 registrations (they didn’t mention how many actually logged in) – an enormous number for any kind of education focused event online or offline. TD Direct Investing has recently added webinars to their mix of educational offerings, scheduling the online events on the last Wednesday of every 2nd month (the next one will be June 25th 2014).

In addition to the brokerage-sponsored education events, investors will probably want to take note of the Small Cap Conference coming up in Vancouver next week and also the CambridgeHouse International Investor Conference in early June – both of which will offer some opportunities to learn more about investing. Check out our investor education events calendar for more details on what’s being offered where & when.

The More the Scarier

This past week, Interactive Brokers released their trading metrics for the month of April and depending on the frame of reference there is either reason for applause or reason to pause.

When compared to the same point last year, Interactive Brokers trading volumes look stunning – 20% higher Daily Average Revenue Trades (DARTs), margin loans 34% higher than last year and the number of customer accounts 16% higher. On a monthly basis, however, the gains are more modest for margin loans and customer accounts (2% improvement), and there was a 1% dip in DARTs. Additional coverage in this article from CNN also reconfirms the signals from other brokerages that retail investors are stepping back into the market.

Veterans of the market understand that having more investors in the market means a good run for a while but also the likelihood of getting close to a top. Interestingly the impact that the returning retail investor may have on the deals and promotions is that brokerages may not have to aggressively price promotions – choosing instead to focus on other features to attract and retain new customers.

Picking the Top Discount Brokerages for 2014

As part of their June issue, MoneySense teamed up with financial analysis firm Surviscor to provide their annual “Best Canadian Discount Brokerage” checkup. Author Dan Bortolotti walks through the Surviscor results while providing insights across different metrics like ease of use, banking integration, customer service, fees & commissions, reporting & record keeping and market intelligence.

Interestingly, the paradox of the ‘best discount brokerage’ shows up here in two ways.  First, there are so many ‘bests’ across different categories that it’s difficult to proclaim unequivocally that one brokerage is ultimately the best. What is ‘best’ for one investor may not be for another. Second, the data used to assess brokerages relies on history to infer quality about the present and/or future.  While that’s usually what anyone has to go on, it has been our observation when looking back at the historical analyses of the best discount brokerage rankings from years past (whether quarterly or semi-annually) who get’s crowned ‘the best’ changes quite often. In other words, pricing, features and service quality are constantly changing so titles such as ‘the best discount brokerage’ have a short shelf life in such a competitive space. Nonetheless, Bortolotti and Surviscor offered their ‘top picks’ overall as BMO InvestorLine and Scotia iTrade, with honorable mentions going to RBC Direct Investing and Qtrade Investor.

From the Forums

This week we thought we’d do something a bit different and venture out to the far reaches of the internet onto Reddit to find out what folks were saying about Canadian discount brokerages.

In this post from the Canadian personal finance section, readers chime in on BMO InvestorLine and how it stacks up to some of its competitors. As fair warning though, Reddit can be quit the wild arena for discussion and oddities so take the comments with a grain of salt.

That does it for this week’s roundup.  With a full dance card of thrilling events this weekend, good luck to the Habs & Raptors – May the Fourth be With You.

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Discount Brokerage Weekly Roundup – April 11th 2014

Between a few days of markets selling off and glitch named ‘heartbleed’ that is turning the internet upside down, it has been a tough week for anyone sitting behind a screen. For those with a view of the outdoors, however, it has probably been even tougher as the nice weather has finally started to show up in Montreal and Toronto (save the bragging Vancouver). The online brokerages may have to wait to get outside, however, as many of them were very busy this past week dropping prices, introducing products and navigating the ‘busy season’ for investors.

In this week’s roundup we look at an interesting trend highlighted by one of Canada’s largest discount brokerages. Next we look at another cost reducing product for investors, this time in the mutual fund space. A pair of updates to the deals section takes us to the halfway point. For TFSA holders, we found a great video offering tips for those trading US stocks with dividends. Finally we round out with some interesting tweets that we spotted as well as some informative forum threads.

Thoughtful Thirties

There’s something about turning 30 that makes people, and discount brokerages, a little more reflective. This past week, as part of their 30th anniversary, TD Direct Investing reflected on how the profile of the ‘typical’ investor has changed since the launch of their discount brokerage service in 1984. As part of their news release, TD Direct Investing highlighted that online investors are more diverse with younger investors and women investors forming a greater percentage of the investing population. The timing of this announcement was interesting as there were two separate articles that also highlighted the growing interest and perhaps the advantage that younger investors have in the online trading space.

Mutually Assured Discount

BMO InvestorLine recently announced the roll out of a new group of 33 discounted mutual funds, known as Series D, to online investors. Also in the announcement was the news that management fees were being lowered on the Series F products. The move by BMO InvestorLine into the low-cost mutual fund arena appears to be in line with both RBC Direct Investing and TD Direct Investing in this space.

Discount Brokerages Dealing Back In

A pair of moves in the discount brokerage promotions section over the past week signaled that competition for clients remains high.

Starting with Questrade, they have taken a seat back at the $100,000 table by introducing a cash back offer of $250.  Their iPad mini offer (or cash back) offer for deposits at this level recently expired however this latest move looks like they’re interested in buying back in.

BMO InvestorLine also checked on their $300 + 300 trade offer by further extending the deadline for this deal from April 9th to April 30th.

Little Birdies

Birds chirping is a great sign of spring.  Online however, tweets from investors across the Twitterverse can be a little less delightful. This past week there were a couple of interesting moments we spotted. First, as Questrade found out, even though the ice on the sidewalks is gone, there’s still room for tax slips to cause problems. Of course, with the warmer weather also comes a bit of heat – which is what one twitter user sent Scotia iTrade’s way when asking about the ability to route orders to the new ‘HFT – free’ exchange IEX.

No Party in the TFSA

While Miley Cyrus may enjoy rocking out in the USA, having US dividend paying stocks in a TFSA is a bit of a portfolio wrecking ball. The following video from Rob Carrick and the Investor Education Fund provides a quick overview on how to navigate the tricky waters of withholding taxes and registered accounts.

From the Forums

Bucking a Fee

In the following post from RedFlagDeals, community members were alerted to an interesting observation from an Interactive Brokers Canada client – namely that minimum monthly fees of $10 appear to be waived for clients with assets over $100,000.

D is for…

The announcement by BMO InvestorLine of a low cost mutual fund series that could rival either TD or RBC was certainly enough to get the discussion going on the forums. Interestingly while the announcement caught the attention of forum members, so too did the way in which the roll-out took place.

That does it for this week’s roundup. For those in the west – enjoy the summer, and for those in the east, brace yourselves for a potential dusting. Yes, April is still full of surprises all around. For those trying to make sense of all the heartbleed hype, here is a comical explanation:

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Discount Brokerage Weekly Roundup – April 4, 2014

If the acronym HIMYM means something to you, then you know this past week was a drama filled one on screens across the globe. It’s hard to imagine more drama than the HIMYM ending, however that was certainly the case across the screens of traders as the debate on high frequency trading has taken a very public turn, implicating online brokerages, exchanges and crazy computers.

In this week’s roundup there is a full dance card. We take a look at another major Canadian online brokerage that has connected to the Canadian Securities Exchange, the new set of deals that have come along with the beginning of April, trading volumes from a major US brokerage, a major online trading story rattling investors’ nerves north and south of the border and finally, some interesting views from the Canadian investor forums.

Scotia iTrade Goes Online with the CSE

Although Scotia iTrade had telegraphed earlier in March that they would be enabling online trading with the Canadian Securities Exchange (CSE), a formal announcement was made this past week from the CSE and Scotia iTrade.  For self-directed investors, the move means that it is becoming easier to access trading on this increasingly popular exchange. To learn more about which major online brokerages offer online trading access to the CSE listed stocks, click here.

New Month New Deals

With the month comes a new set of promotions and deals from Canadian online brokerages. The current deals section showcases two of the major offers that were announced in March by TD Direct Investing as well as Desjardins Online Brokerage respectively. Even though there were many deals that expired at the end of March, it is likely that additional offers will be coming from several brokerages looking to get the attention of self-directed investors in the market for a new trading account.

In addition to the list of offers, there is a contest that was announced by Questrade earlier this week focusing on Spring Cleaning one’s portfolio. They will be giving away prizes of 5 free trades per week as well as a grand prize of 10 free trades to one lucky winner. To qualify, individuals must post on the Questrade forum or Facebook page, or write a tweet to @Questrade with #SpringCleaning in the message. For full contest details, click here.

Trading Volumes Steady

Interactive Brokers released their monthly trading statistics from March of 2014. On a year-over-year basis, the latest figures paint an improving picture across key metrics such as daily average revenue trades (DARTs), new accounts and margin loan balances.  When compared on a month-over-month basis, however, the figures are about the same as the previous quarter.

While it is too early to tell what this plateau means, it certainly is an interesting development because the growth rate in retail investor participation may be tapering.

HFT Coming to a Flashpoint

Slowing momentum in retail investor is one thing however a loss of confidence from investors is something completely different.

While the story of whether high frequency trading is harmful to markets or helpful has been playing out over the past few years, it seems that the story has taken a recent twist. Specifically, recent publicity from 60 minutes and media coverage of the book “Flash Boys” by Michael Lewis has touched off a firestorm of scrutiny and renewed the debate on whether or not HFT should be curbed altogether.

Many online brokerages in the US were caught in this crossfire, with the publicly traded ones suffering some early selling pressure of their stocks on the speculation that their participation in paid order flow will either end or be curbed.  Even major trading exchanges, such as BATS, have been caught in the fray.

The story continued to pick up steam as Interactive Brokers announced that they would be connecting to the ‘HFT free’ exchange IEX, started by one of the individuals who blew the cover off HFT practices, Brad Katsuyama.  Within Canada, the promise of an “HFT free” exchange has been taken up by Aequitas Innovations.

The debate on HFT and paid order flow is far from over. With the recent revival of interest and major publicity, it is a safe bet that major Canadian brokerages and market participants will be looking at how to position themselves on the issues of paid order flow and HFT. Stay tuned as this will be exciting to follow.

From the Forums

Algorithms Gone Wild

The debate around HFT was not only played out in the media but also on many threads on the Canadian Investing forums. Here is a list of a few very interesting conversations that took place on high frequency trading:

Financial Wisdom Forum: Proof of Front Running and How to Prevent it

RedFlagDeals Forum: on Stewart interviews Michael Lewis on high frequency trading (HFT)

Tweed Goes Up In Smoke

Every now and then a really instructive moment comes along about how ‘reliable’ online trading can sometimes not be. In an interesting story, a company named ‘Tweed’ that is linked to medical marijuana, had more than a few trading hiccups as it debuted trading.

The following posts highlight some of the frustrations experienced by discount brokerage clients that couldn’t access the early trading. Interestingly, this is one of those times where being shut out by the trading gods actually works out for the best.

That does it for this week’s roundup. For those Game of Throne’s fans that do not manage to catch the premiere, it will be an epic adventure to avoid any spoilers! Good Luck!

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Discount Brokerage Weekly Roundup – March 28th, 2014

As March comes to a close, winter still seem reluctant to leave so many Canadians. Even so, spring is in the air and it is bringing with it some surprises from online brokerages which will hopefully leave DIY investors with more green in their accounts.

In this week’s discount brokerage roundup we cover the news on one discount brokerage that received an award of a different kind – as a well managed company. In addition we focus on deals poised to expire, new deal announcements and a couple of interesting educational offers linked to discount brokerages.  Finally, we share some very interesting threads from the investor forums on ETF price drops, switching online brokerages and important buyer-beware notices for a major online brokerage’s dividend procedure.

Don’t Stop Believing

Earlier this week, popular online brokerage Questrade released a video (below) that highlights what their employees believe is great about working for this discount brokerage. The release coincided with Questrade’s third award from the Canada’s Best Managed Companies program. For a full list of this year’s winners of the Canada’s Best Managed Companies, click here.

As part of their news release, Questrade appears to be looking to hear about “what Canadians believe in” via social media channels. Interestingly, neither the Twitter chatter nor their Facebook page seemed to ask the questions directly to their respective followings.

What was also interesting to note was the rare show of finance collegiality that Questrade received from CIBC (a sponsor of the Canada’s Best Managed Companies program and parent to rival brokerage CIBC Investor’s Edge) via CIBC’s twitter feed.

Investor Education Back on the Map

It appears that investor education is literally being put back on the map for a couple of discount brokerages this spring.

Larry Berman’s speaking tour (co-sponsored by Scotia iTrade) continues to wind its way through stops across Canada for April and May.

In addition, Desjardins Online Brokerage (aka Disnat) is also launching a Stockscores tour similar to their “SCATE” tour which ran last year. This new Stockscores tour appears to be focused online as well as out in Western Canada with events planned for Calgary and the Lower Mainland of BC.

As part of this tour, there will be a promo entitled the “Hat Trick” promo because it offers those who sign up for a Disnat Direct account with a deposit of at least $10,000. For more details on the offer, check out our discount brokerage deals section.

Deals Are Springing Up

Spring is synonymous with renewal and also with new life. For Canadian online brokerages, the decision to renew, release new deals or let deals expire is an important question heading into April.

There are 8 discount brokerage promotions or offers that were set to expire at the end of March and whether some or all of these change will be interesting – especially given the announced offers recently by TD Direct Investing as well as the deal launched by Desjardins Online Brokerage.

Of those offers poised to expire, only Desjardins Online Brokerage has extended their long running $300 commission credit offer out to August 29, 2014. It will be interesting to see what some of the major bank-owned players as well as the independent online brokerages have planned in response.

From the Forums

This past week’s forum activity was very interesting as there were a number of really interesting conversations about issues many self-directed investors follow. We’ve selected three topics that seemed to attract and deserve extra attention.

ETF Price Wars

Investors in two different forums, the Financial Wisdom Forum and Canadian Money Forum, were abuzz at the news that one of the largest ETF providers within Canada (BlackRock iShares), was dropping their management fees on a number of ETFs.  Given the popularity of ETFs amongst Canadian investors for their low management expense fees, the news ignited all kinds of interesting angles on what this means for investors.

Click here to read the Financial Wisdom Forum post and here to read the Canadian Money Forum thread.

Switching Online Brokerages

What happens exactly when going from one discount brokerage to another isn’t exactly clear to most folks. For those who have lived through a switch, the experiences appear to range from seamless to nightmarish. In the following post on Red Flag Deals’ investing forum, there are some interesting comments on making the switch from TD Direct Investing over to Questrade specifically and on changing brokerages in general.

Caveat Emptor for Dividend Strategies

Strategies involving dividend payments are popular with many investors. Outside of registered accounts, however, dividend seeking investors have to be aware of foreign investment rules and taxes that can apply to dividends originating from stocks outside of Canada. A really interesting example of the devil in the details was brought to light from this Red Flag Deals thread about Interactive Brokers. For those considering US stock dividend investing strategies with this brokerage, this is a must read.

That does it for this week. If things look a little darker this weekend, it’s because from 8:30-9:30 PM on March 29th cities all over the world will be celebrating Earth Hour in support of climate change awareness. Learn more about the #MomentOfDarkness here.

For the traders out there, light some actual candles to show support (not resistance!).

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Discount Brokerage Weekly Roundup – March 21, 2014

If there is one thing that March madness can guarantee, its unpredictability. In the discount brokerage space this was certainly the case as we were watching to see who, if anyone, would launch a promotion that could make a splash in the already ultra-competitive online brokerage market. This past week it happened.

In this week’s roundup we’ll take a look at that deal launched by one of Canada’s largest bank-owned brokerages, then see which major online brokerage was crowned ‘#1 online brokerage’. Next we’ll take a peek at some interesting technology that brokerages south of the border are tinkering with. Finally, we round out this week by looking at a couple of interesting investor forum posts.

Kind of a Big Deal

On the heels of their now lowered standard commission offer, TD Direct Investing has upped the ante in the discount brokerage price battle by announcing a new promotion. Until April 30th TD is offering up to 300 commission-free trades for those who open a new account with a deposit of at least $100,000. For those who are depositing less than $100,000, TD is offering 30 free trades. Recently, RBC Direct Investing had a 20 commission-free trade offer however this new promotion by TD Direct Investing is going to make a splash because the sub-$100K depositor can land 30 free trades good for 90 days (or slightly longer depending on when the account is opened). At the $100K+ deposit level, there is still BMO InvestorLine’s offer of $250 + 250 commission-free trades that comes close however the TD Direct Investing deal edges it out when factoring in the cost per trade. At the very least, TD’s latest offer will spur other bank-owned brokerages to put together an offer that can rival the combination of promotion plus lowered standard commission pricing. To learn more about all of the current discount brokerage promotions here.

Interactive Brokers Wins Top Online Brokerage

For the second consecutive year, US financial publication Barron’s has rated Interactive Brokers as the #1 online brokerage. The US online brokerage market is a highly competitive marketplace so edging out the field is no easy feat. Barrons’ ranking compared 20 discount brokerages across 8 categories they felt were relevant to evaluating the user experience and scored all of the online brokerages out of 5 for each category. Interestingly, Interactive Brokers led the field on costs and did well on portfolio analysis as well as trading experience and technology.

Timing the Market

With the competition being so fierce in the US, not only do prices go down, but innovation tends to go up. This interesting article about what US discount brokerage Fidelity is trying to do with smart watches definitely highlights that. While it appears that the jury is still out on whether a watching your stocks on your watch will improve your market timing, it is nonetheless interesting to peek over the fence at our neighbours to the south to see what, if anything, could come our way in Canada. In this case, self-directed investors might be staring at their regular old watches (or smartphones) for quite some time before the smartwatch trading applications land at a Canadian discount brokerage.

From the Forums:

In this week’s forum posts, a pair of interesting threads from Canadian Money Forum crossed our radar.

Settling the Gambit

One of the interesting techniques for potentially saving on US currency conversion fees is called Norbert’s Gambit.

In this thread, there is a great example of the importance of understanding the trade settlement process in detail as well as which discount brokerages tend to fare better for clients wishing to perform this technique.

Here’s My Number, So Call Me Maybe

For many DIY investors, one of the important sources of information about the potential of a stock comes from analysts who follow the company’s ins and outs carefully. The recommendations analysts make about price targets are interesting because they seem to suggest a level of certainty that, in reality, just doesn’t exist. This thread wonders out loud what the value of analyst price targets are and the answers from the forum are worth a read.

That does it for this week’s roundup. Enjoy the first official spring weekend and hopefully it won’t be filled with too many basketball or weather induced facepalms!

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Discount Brokerage Weekly Roundup – March 7, 2014

The beginning of March has seen a frenzied week across international markets and here at home in the discount brokerage space.  While the world is watching to see what unfolds between the Ukraine and Russia, markets paused only briefly on the news but then continued to push higher into new all-time highs (for the S&P 500) illustrating once again that markets and headlines don’t always agree on the state of the world. Sorry bears.

Closer to home, many discount brokerages were busy attending to the last minute RSP contributors who managed to get in ahead of the March 3rd deadline.  Now that RSP season is over, brokerages are taking a slight pause before trying to land the deposits from tax returns into new trading accounts.

In this week’s roundup, we cover yet another major online brokerage that has dropped their standard commission pricing, we report trading activity from a an independent online brokerage, news from a major investor conference that took place in Toronto and a couple of interesting threads from the Canadian investor forums.

Desjardins Online Brokerage Lowers Commissions

It seems that there has hardly been a week that has gone by that hasn’t seen an announcement by a major online brokerage lowering their standard commission fees.

This past week, Desjardins Online Brokerage (aka Disnat) became the latest discount brokerage to do so by lowering their standard equity commission trading rates on their Disnat Classic platform from $29+ to $9.95.  While the Disnat Classic rates have changed, Disnat Direct will still have the same standard pricing structure for equity trading ($19.95+).

Also lowered is the cost of options trading via Disnat Classic – it is now a $1.25 per contract with a minimum charge of $8.75 per trade.

As with the bank-owned brokerages, there may be an administrative (aka inactivity or minimum account balance) fee that is charged depending on the trading level or balance or whether a registered account is held.

For Disnat Classic, an administrative fee of $25 per quarter can be waived for account holders whose portfolio balances are greater than $15,000, or if they make 2 or more trades are within a year or if they also hold a registered account.

Trading Figures Still Strong

The passage into March means that trading activity statistics from Interactive Brokers were made available for the month of February.  According to the latest figures, trading was up 19% on a year over year basis compared to February 2013, however on a month-over-month basis the Daily Average Revenue Trades (DARTs) were about the same.  DARTs for February 2014 totaled 581,000.  The number of client accounts at Interactive Brokers continued higher with 247,300 accounts representing a 2% growth over the prior month and a 19% increase over the same point last year.

Prospecting for Prospects

One of the world’s largest mining conventions took place this past week in Toronto.  The Prospectors & Developers Association of Canada (PDAC) held their annual convention and, despite the downturn in commodity markets, there were enormous crowds of investors (retail and institutional) as well as industry, government and media in attendance.

The size and scale of the convention reflects just how important it has become as a place for the mining industry to converge and for deals to get done.  Prime Minister Stephen Harper spoke at the event as well as other key political representatives.

One thing that stood out was the sheer number of attendees looking to generate business – a great example of the fact that prospecting underground also requires a lot of prospecting above ground too.

Commission-Free ETFs Back on the Radar

With pricing at major bank-owned online brokerages dropping into line with one another, many of these banks as well as other brokerages are going to be trying harder to highlight features and benefits apart from pricing that make them stand out from their peers.

One of the products offerings that will likely get attention as a result of this are commission-free ETFs.  A recent article from the Globe and Mail this past week reiterates much of what is covered in our special series comparing commission-free ETFs at online brokerages – namely that while paying low or now commissions is nice, ultimately you have to look at what exactly you are buying and whether that is the right fit for your portfolio needs.

Recently, Rob Carrick of the Globe and Mail has also put together an ‘ETF Buyer’s Guide’ available via the following links:

  1. Vol. 1: Canadian Equity ETFs
  2. Vol. 2: U.S. Equity ETFs
  3. Vol. 3: Global ETFs
  4. Vol. 4: Income Paying ETFs
  5. Vol. 5: Bond ETFs

From the Forums

Portfolio Orientation

A post from this past week’s forum scan serves as a great example of the importance of knowing what it is that you are buying when looking at either ETFs or low-cost mutual funds.  Click here to read what the Canadian Money Forum users had to say to one RBC Direct Investing client who’s decided to go it alone.

On the Margins

Margin and margin accounts are typically used for trading stocks or options, however there are cases when they can be used for more.  This post from Canadian Money Forum shows how one user is thinking outside of the box when using margin, however the message from the community is: if (or when) things go down in value, beware of the dreaded margin call.

That does it for this week’s roundup.  In case you missed it, here’s the link to the March Madness edition of our monthly newsletter.  Have a great weekend and don’t forget, clocks spring forward by an hour!

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Discount Brokerage Weekly Roundup – February 28, 2014

inconvenient power outageLess than a week after skiers and snowboarders were making their way down the slopes, a different set of peaks and valleys are now confronting investors. At the peak, the S&P 500 chased a new all-time high this week. Down in the valley is bitcoin because of the loss of a major exchange to a possible theft.

Canadian discount brokerages were also busy navigating their own ups and downs this past week. In this roundup we look at a major Canadian online brokerage that went temporarily offline, roll outs of a new set of US Dollar registered accounts, the continued ripple effect of standard commission price drops, a couple of interesting educational resources and finally, some insightful threads from the Canadian investor forums.

TD WebBroker Goes Offline

As one of Canada’s largest bank-owned discount brokerages, clients of TD Direct Investing had a rough couple of days this week when WebBroker (and EasyWeb) went offline due to technical difficulties.  The cause of the outage was not disclosed however the outage caught the attention of investors on social media, forums and mainstream media.


The outage is an important example of what can sometimes go wrong when trading online and also where traders can turn when something unknown happens. Active traders that had open positions or trades going against them were likely in for a white-knuckle ride as they were forced to wait and watch the market unfold.  For others who were looking to contribute into their RRSP accounts ahead of the deadline, the downtime was understandably frustrating.

While it is cold comfort to investors or traders who are unable to access their account, the fact is that technical glitches can happen to any online brokerage, exchange or data providing member in the convoluted pathway between buyer and seller. Part of trading online means preparing for and accepting these hazards.

Even though TD did apparently broadcast the service interruption, it was interesting to note that on Twitter there were a number of messages from users indicating the issue first arising, escalating and finally being resolved.  The use of Twitter as a way to stay informed about what’s happening in near real-time comes in handy when other channels aren’t providing much information.

USD Registered Accounts Quietly Rolling Out

US dollar registered accounts are great feature for those who do a great deal of trading in US listed equities and options. While several bank-owned online brokerages do offer this, some of the major brokerages such as TD Direct Investing, have yet to bring this feature to clients.

A comment left by visitor ‘Jin’ earlier this week brought to light that National Bank Direct Brokerage is quietly offering existing and prospective clients USD TFSAs and RRSPs. Upon following up with a client rep from NBDB, they explained that these accounts are being rolled out as part of a multi-phase plan and that currently they are about 2/3 of the way through this process.  What this means for investors is that, for the moment, these registered accounts can accept deposits in USD and clients can trade (and hold) USD equities, however withdrawals from the account will result in a currency conversion back into CAD.   We’ll continue to monitor this as more information becomes available.

Price Drops Continuing to Make a Splash

While Canadian discount brokerages commission pricing still has plenty of room to fall when compared to brokerages in the US (such as Robinhood which doesn’t charge any commissions on a trade) the recent moves by bank-owned online brokerages are continuing to make waves with investors. This article from the Toronto Star is a perfect example of the spotlight now shining on pricing.  For those considering the new lower commission costs, it is also important to consider any other costs that still may be associated with the account, such as inactivity fees or minimum balance fees. The second of our two-part series (released this week) looks at the commission-price drops at bank-owned online brokerages and in particular at some of these fees.

Know Your Options

One of the new ‘battlegrounds’ for the deep discount brokerages is in options trading.  Recently Virtual Brokers released a new promotion that offers free data for their PowerTrader Pro platform for clients who make one or more complex options trades.  Earlier today, Questrade released a free guide to options trading which explains some of the complex trade types that can be placed using the Questrade IQ platform.  To download a free copy of the guide, click here.

Another interesting story readers may be interested in tracking is a special by CBC Marketplace this Friday (tonight). This story is the result of a mystery shop exercise at Canadian financial firms (including Canada’s big 5 banks) to see what kind of financial advice was being dished out by the firms’ “financial advisers”.

From the Forums

This week’s forum threads  capture the outage at TD described above (and the lessons other investors can draw from this situation) as well as an instructive post on how to convert from USD to CAD using Interactive Brokers.

Murphy’s Law

The forums were alight with users of TD Direct Investing not being able to access their accounts.  Check out the following posts on Canadian Money Forum and Red Flag Deals as a sobering reminder that as DIY investors there’s a lot more that can go wrong when trading online.

Crossing the Border

For those curious about using their brokerage to convert between USD and CAD, there have been a number of different approaches.  This post on RedFlagDeals’ forum provides a concise ‘how to’ for users of Interactive Brokers.

That does it for this February-ending edition of the weekly roundup. Have a safe and warm weekend!

 

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Discount Brokerage Weekly Roundup – February 14, 2014

On this Valentine’s Day edition of the discount brokerage weekly roundup, romance is definitely the air for many folks.  Yes, it appears more bank-owned discount brokerages are lining up to show just how much they love their self-directed investor clients by offering lower commissions.   Courting self-directed investors, however, is going to take more than just price cuts.  As one low-cost brokerage showed this past week, getting fancier bells & whistles may be part of what’s needed to woo investors their way. In addition to ‘stuff’, another brokerage took to winning the ‘hearts and minds’ of investors by timing an Olympic themed promo.  Finally, this week’s review rounds out with some interesting education events being offered and a great forum thread on RESPs.

The Three Bank Bobsled Team

This past week, BMO InvestorLine became the third Canadian online brokerage to lower their standard commission fee down to $9.95 (click here to read the press release).  While not quite a race to the bottom, it seems that the banks are willing to match one another on their standard pricing. For self-directed investors this is definitely welcome news as the pressure will certainly be mounting on those remaining online brokerages with high (and complicated) standard fees to drop them. On a related note, there was an interesting article in the Globe and Mail regarding the move by bank-owned online brokerages to lower their fees as a strategic move to bring in revenues from sources other than the banking services.

Getting the Power

Not content to sit idly by as the bank-owned online brokerages drift into their pricing territory, this past week Virtual Brokers took aim at the platform and data category by rolling out their PowerTrader Pro platform in a bundle with free streaming data (with a catch of course).  For those brokerages that’ve been chasing the lucrative active trader segment, platforms and data fees (in addition to commissions) have always been a sore point.   The PowerTrader Pro platform, however, is built on the Sterling Trader Pro platform so it has definite appeal to active traders.  To that end, Virtual Brokers is offering free streaming data with the platform for those making complex options trades.  This package and platform take aim at TD Direct Investing’s US Trading Platform (aka ThinkorSwim), Interactive Brokers’ Trader Workstation and Questrade’s IQ platforms as well as those web based or desktop based platforms that don’t have the fancy scanners, charts and trade planning.

Metals for Medals

An interesting Olympic-themed promotion is being offered by Questrade.  Until February 24th, Questrade is offering 50% off precious metal commissions.  To boot, they are also offering a special promo every time Canada wins either a gold or silver medal.   For the physical precious metals bugs, it is but one more reason to cheer on the stellar performance of this year’s Canadian Olympic effort.

Investor Education Events

With all the talk of athletes and fitness, the couch potatoes out there also have something to cheer about.  Credential Direct announced this past week that they are holding a webinar with Dan Bortolotti aka the Canadian Couch Potato.  This webinar will be about building the “perfect” ETF portfolio and yes, attendees can join this webinar from the comfort of their couches.

Continuing on in the investor education theme, Desjardins Online Brokerage (Disnat) is holding a week-long series of education sessions Montréal & Québec City.  The events are free and topics cover a number of themes for self-directed investors.  Of note is that there are a couple of interesting sessions on taxation for investors/traders.  Check out our investor education calendar for more information.

From the Forums

Given the time of year, there is an increase in the number of questions about registered accounts of all kinds (RRSPs, RESPs and TFSAs).  One thread in the RedFlagDeals forum in particular stood out as being an interesting look at RESPs at discount brokerages – specifically on the point of joint subscribers.  Click on the post below to learn more about what folks had to say about RESPs at Canadian discount brokerages.

RESPs at Discount Brokerages

 

That does it for this week’s roundup.  Hope everyone has a great weekend and just as a reminder, Canadian and US stock markets will be closed on Monday – perfect timing given the release of the new House of Cards!

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Review: Dalbar Canada’s Direct Brokerage Service Award 2013

For individual investors, shopping for an online trading account often requires doing a fair amount of research and comparison between brokerages.  While commissions & fees are the most important factor investors consider when choosing an account, what it’s like to be a client of a particular brokerage is also something many investors are often curious about.

Dalbar Award For Discount Brokerage Customer ServiceFortunately for self-directed investors, one Canadian research firm (Dalbar Canada) measures client experience for most of the Canadian discount brokerages as part of their direct brokerage service evaluation (DBSE) program.  As part of the DBSE, Dalbar Canada also recognizes the high achievers in their evaluation with their Direct Brokerage Service Award.

Earlier this year, Dalbar Canada announced  the two highest performing brokerages on the DBSE:  RBC Direct Investing and HSBC InvestDirect.

Quick Overview

In our previous two-part series explaining the Dalbar Direct Brokerage Service Evaluation, we looked in detail at how the evaluation takes place including the components that go into defining ‘client experience’ at discount brokerages.   Here is a brief overview of why client experience still remains an important feature to track when comparing discount brokerages.

More than Just Price

With competition amongst online brokerages increasing, many of them (especially bank-owned brokerages) have adopted very similar pricing models.  Thus, comparing discount brokerages by price alone may not provide enough information for potential clients to make a decision. Going forward, shoppers will have to turn to the other features of a brokerage (such as client experiences) in order to evaluate how ‘good’ they believe the fit will be.

For those shopping for an online trading account, the only somewhat reliable ways to find out about client experiences have been through third party research/reviews and/or from other investors via investor forums or friends, family and colleagues.  The Dalbar Direct Brokerage Service Award is therefore unique in its focus on client experience and tries to provide a picture of what clients can expect from a brokerage when connecting via phone or email.

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