iTRADE – Page 4 – SparxTrading

Posted on March 22, 2021December 31, 2021 by user

Discount Brokerage Weekly Roundup – March 22, 2021

Spring has officially arrived. And while the arrival of the new season didn’t fall on a quadruple witching day, in the online brokerage world it nonetheless lived up to its reputation of bringing change, volatility, and the promise of sunnier days ahead.

In this edition of the Roundup, we look at the latest trading commission price drop from a bank-owned online brokerage and the potential consequences it will have for DIY investors and fellow online brokerage competitors. Next, we jump into some interesting deal activity that’s taken place this month, including the launch of a new offer that might trigger even more promotions to start sprouting this spring. As always, we’ve got chatter from DIY investors courtesy of Twitter and the investor forums.

National Bank Direct Brokerage: Commission Price Drop

The days of the $9.95 standard commission pricing for trades at Canadian online brokerages are numbered. How much lower they go from here and how quickly these changes take effect will depend on who among the larger or more popular players decides to act. A recent commission pricing drop by National Bank Direct Brokerage, however, is likely to add significant cause for other Canadian online brokerages, big and small, to revisit their own commission pricing structures.

This month, we noted that the standard equity commission pricing at National Bank Direct Brokerage (NBDB) dropped about 30%, from $9.95 down to $6.95 for all clients. Previously, NBDB charged $9.95 per trade to all clients, but for those clients who were also a client of National Bank – the parent brand to NBDB – a discounted price of $6.95 was available. That restriction is no longer in place, and the $6.95 price is available to all.

Why NBDB chose to lower their commission rate to the $6.95 level and why they decided to do so now are a good indication of how the industry as a whole has approached lowering their commission prices, even in the face of a growing competitive presence in Canada of zero-commission trading and increasing expectations (thanks to Robinhood and other US online brokerages) that trading online should be commission-free. Online brokerages in Canada, for the most part, are taking a measured and stepwise approach to lowering commission pricing, taking cues from competitors as a way to estimate the prices for commission rates that can be supported.

One important driver for National Bank Direct Brokerage is likely competition from its longtime local competitor, Desjardins Online Brokerage.

The drop in standard pricing brings National Bank Direct Brokerage in line with Desjardins Online Brokerage, which lowered the standard commission pricing for the “everyday investor” product, Disnat Classic, to $6.95 in early 2020. While there are still pricing gaps between these two Quebec-focused online brokerages at the very active trader pricing segment, the interesting consequence to National Bank Direct Brokerage enabling all clients to have access to the $6.95 pricing is that National Bank is pursuing an expansion strategy across Canada, implying that NBDB would now also set their sights on other markets outside of Quebec.

The takeaway for the online investing space in Canada is that a much more robust bank-owned online brokerage offering is now available to Canadian DIY investors. Unlike the lower-cost non-bank-owned online brokerages, National Bank Direct Brokerage brings with it many of the features and the convenience of a big five bank-owned online broker. This means that someone looking for the lower cost pricing typically available at an independent online broker but the convenience and perceived security of a larger institution will now have a serious look at NBDB as an online broker. And, once they start looking, there will be some interesting things for investors of all activity levels to find.

For young investors, for example, National Bank Direct Brokerage offers 10 commission-free trades per year and an even lower commission pricing of $4.95 per trade, simply for being 30 years old or younger. No other Canadian bank-owned online brokerage (yet) has this double feature set. Also, the threshold of 30 years old is higher than at several competitors, where the definition of “young” typically ends at age 25 or 26.

Very active traders at National Bank Direct Brokerage also have access to deeply competitive pricing, at $0.95 per trade, and an advanced trading platform, Market-Q. While Desjardins Online Brokerage’s active trader brand, Disnat Direct, does have cheaper pricing, at $0.75 per trade, the reality is that at the sub-dollar-per-trade range, the other factors of banking convenience might come into play.

Lowering commission pricing is something that Canadian online brokerages have seen as inevitable. That said, how quickly the commission pricing drops has shown itself to be highly dependent on who is the one setting the pace.

Despite the existence of a zero-commission provider, for example, there haven’t been any other Canadian online brokerages that have felt compelled to drop their standard commission prices to that level. Instead, we have observed that certain products, such as ETFs, have become the entry point into zero-commission trading, with firms such as Qtrade Investor, Questrade, Scotia iTRADE, and most recently with TD Direct Investing’s Goal Assist. In the category of commission-free ETFs, National Bank Direct Brokerage has also been somewhat of a leader among the bank-owned segment of online brokerages. In 2017, they launched completely commission-free ETF trading – both buying and selling, albeit with minimum purchase requirements.

For NBDB to capitalize on this latest pricing shift, the challenge, it seems, will be to overcome the marketing and advertising hurdle created by the likes of Interactive Brokers, Questrade, TD Direct Investing, and Wealthsimple Trade in markets outside of Quebec. Another online brokerage that has significant market awareness with large markets across Canada is Qtrade Investor, courtesy of their multiple wins and strong finishes in the online brokerage rankings of influential financial research sources. Each of these brokerages commands significant awareness, and, as a result, NBDB has their work cut out for them to start becoming part of the mainstream conversation of online brokerages.

That said, with 14 Canadian online brokerages for National Bank Direct Brokerage to compete against, their pricing immediately makes them worthy of a top-five or -six consideration. When competing against bank-owned online brokerages, however, they could potentially move into the top three.

Undoubtedly, TD Direct Investing would be high on the list of bank-owned competitors, followed, potentially, by BMO InvestorLine in terms of active marketing and advertising. Clearly, by lowering their standard commission rates to $6.95 per trade, National Bank Direct Brokerage has just earned themselves a major advantage relative to their peers. The online broker with the biggest risk of being displaced is CIBC Investor’s Edge, which, up until now, had retained the position of offering the lowest standard commission among the big bank-owned online brokerages.

When we first reported the pricing drop by CIBC Investor’s Edge to $6.95 per trade in 2014, the impact among DIY investors was immediate. Our data showed that DIY investors soon came to see CIBC Investor’s Edge as a value-based option for trade execution. Even so, the pricing structure reflected some of the limitations for active trader experience at Investor’s Edge.

In this case, National Bank Direct Brokerage has pricing for the “passive investor” but also has platforms and pricing for very active investors and young investors. This makes them unique among the “banking” peer group.

Given the propensity of Canadian online brokerages to make smaller moves – especially among the bank-owned online brokerages – we expect that standard commissions might not be the starting point to match the new pricing at National Bank Direct Brokerage. Other places that online brokerages might be able to target to retain clients would be in their definition of “young” investors, which NBDB defines as 30 and under, or with commission-free ETF trading.

National Bank Direct Brokerage’s latest commission pricing move has made them an option that many DIY investors will be hard-pressed to ignore going forward. As a result, it may not be too much longer before the bank-owned online brokerages cannot ignore them either, and yet another wave of commission pricing drops ensues.

So long as the commission-pricing at NBDB stays quiet, the online brokerage industry in Canada won’t have to move quickly. That said, in a day and age of Reddit threads and social media reach, all it might take is one post for that to change.

Deals & Promotions Updates

March is synonymous with spring and with the changes that accompany a new season. While the beginning of the month saw a significant reduction in the number of Canadian online brokerage offers from larger players, we predicted that it would likely not be too much longer before new offers sprouted up again. And, it turns out, we didn’t have to wait that long after all.

This month, we’ve already seen BMO InvestorLine replace an outgoing deal with a new cash-back promotion, and, excitingly, this past week we noted that National Bank Direct Brokerage also launched a new 100-commission-free-transactions offer. More on that in just a moment.

Starting with the BMO InvestorLine cash-back promotion, the new promotion, like its predecessor, is a tiered cash-back offer. The starting deposit tier for the latest offer is higher, however, starting at $25,000, compared to the previous $15,000. Cash-back amounts have also been scaled back significantly at most deposit tiers. Starting tier deposits qualify for a $50 cash-back (compared to $150 the last time), and the highest deposit tier, $1 million and over, still qualifies for a bonus of $2,000.

For National Bank Direct Brokerage, this has been a big month, with newer pricing (see above) and the revival of a 100-commission-free-transactions offer. The new offer provides 100 commission-free trades, which are good for use for up to one year after the account is opened. This new promotion runs until the end of June and is open to new and existing clients so long as the account type is new. Interestingly, the offer applies to trades of stocks and options (and ETFs), which are sometimes not available during certain commission-free trade promotions.

The (re)launch of a commission-free trade offer from National Bank Direct Brokerage, along with their new pricing offer, might prompt other online brokerages to consider coming to market with an offer this spring as well. Interest in investing and trading remains elevated among DIY investors. However, if the thesis that the catalyst for the surge of interest was individuals working from home or putting stimulus money into investing products, then the reopening of the economy (and sports and travel) could lead to decreased interest or availability of individuals to continue actively trading.

Most Canadian online brokerages elect to take a “wait and see” approach to emerging trends rather than risking taking the position as a leader in innovation. With that in mind, deals and promotions offer a proven method to continuously stay on the radar of investors – especially those who might be lured to leave because of dissatisfaction with pricing or service.

What deals and promotions cannot do is solve for technology or service gaps (even though we have seen compensation in the form of trading commissions help smooth out some service shortcomings). So, it is likely – perhaps even sound business strategy – for those online brokerages who are confident in their ability to deliver strong service and technology to lean into promotional offers at a time when other firms are struggling or lagging. As such, a promotional offer could be seen as a sign of confidence and strength in the service delivery model, and an absence of one – at least in the near term – might have DIY investors asking why certain brokerages are choosing to stay out of the spotlight.

Discount Brokerage Tweets of the Week

Discount Brokerage Tweets – Curated tweets by SparxTrading

From the Forums

My Definition Is This

In this post, an investor who is unsure and nervous about how the Canada Revenue Agency defines day trading asks if it’s okay to sell stocks from a TFSA after owning the stocks for just a few days. The CRA doesn’t provide a clear definition, so Redditors weigh in with their opinions.

New Tuber in Town

A new investor asks in this Reddit post if the Canadian Couch Potato method of investing is still relevant in 2021. An in-depth discussion ensues, touching on ETFs, meme stocks, and more.

Into the Close

That’s a wrap on another week. While markets and investing are the focal point of the Roundup, there’s also a human side to this, and this past week was a dark chapter for the AAPI community. Sadly – and, frankly, unacceptably – the level of hate crimes against women and Asians in particular has increased during the pandemic. It is up to all of us to speak up against racist behaviour wherever possible. Here are some steps from Stop AAPI Hate that anyone can take to assist a person experiencing a racist attack or hate crime:

Take action: Approach the targeted person, introduce yourself, and offer support.
Actively listen: Ask before taking any actions, and respect the other person’s wishes. Monitor the situation if needed.
Ignore the attacker: Using your discretion, attempt to calm the situation by using your voice, body language, or distractions.
Accompany: If the situation escalates, invite the targeted person to join you in leaving the area.
Offer emotional support: Help the other person by asking how they’re feeling, and assist them in figuring out what they want to do next.

Posted on March 8, 2021March 9, 2021 by user

Discount Brokerage Weekly Roundup – March 8, 2021

March is here in full force. Even though the RSP contribution deadline for 2020 is now behind us, there is no shortage of activity taking place this month on the digital front. From Fraud Prevention Month to International Women’s Day to rising oil prices to NFTs to a bombshell interview from Oprah, there is a lot to tune in to. And one more thing: There’s still a global pandemic.

This edition of the Weekly Roundup leans into the convoluted but interconnected web of signals to pull out two fascinating stories on the online brokerage space in Canada. The first story looks at the deals and promotions for March but dives deep to provide context on the current state of deals activity against a new competitive landscape. And, speaking of competition, Canadian online brokerages that might not be concerned about a new entrant showing up any time soon may want to rethink that position as we profile the long and winding journey of one US online brokerage that is poised to make a move north of the wall. Of course, what would a Roundup be without comments and perspectives from DIY investors? Be sure to check out some thought-provoking conversations taking place in the forums and on Twitter.

Online Brokerage Deals & Promotions Update

It’s official. The 2020 RRSP season is officially over, and while the huge rush to ensure that money moves to the appropriate place by the contribution deadline has ended, the data analysis on the campaigns deployed by Canadian online brokerages is now in full swing.

Normally, the start of a new month is accompanied by a deals update that follows a standard format of recapping the latest deals and promotions offered by Canadian online brokerages, as well as discussing what deals are new and which ones have expired.

Contextually, however, 2021 is still very much an anomalous year when it comes to DIY investing and especially online brokerage promotions.

One of the most important insights to emerge over the past year at Canadian online brokerages is that there can actually be too much of a good thing. Normally, promotions and deals are used by online brokers to incentivize DIY investors – new and experienced alike – to consider choosing a particular brokerage.

Last year, however, we saw numerous online brokerages, especially around March and April, pull back or withdraw their offers altogether. It was the first time we had witnessed that happening in at least five to six years. The reason: Demand for online accounts was simply too high, and Canadian online brokerages were overwhelmed and opportunistic. If people were willing to pay (and also to wait), a promo probably wasn’t required to get them to sign up.

The dry spell in deals started to clear toward the tail end of 2020. At that point, we started to see a more normal course of activity, with multiple large Canadian online brokerages offering up cash-back promotions as part of their lead-up to RSP season. And then January 2021 happened.

Recall that it was just over a month ago that yet another surge of online investors poured into the world of DIY investing and trading, this time fueled by trading communities like Wall Street Bets and social media channels feeding a frenzy of momentum trading.

Data we reported on in the previous Weekly Roundup about Interactive Brokers, for example, showed that January 2021 resulted in a 221% month over month increase in new accounts and an almost 700% increase over the same period last year. The latest metrics released by Interactive Brokers from February revealed that almost 76,000 new accounts were opened during the month. While significantly lower (-35%) compared to January in terms of net new accounts opened, when compared to the same point last year, the number of accounts opened in February is over 400% higher.

In the Canadian marketplace, data from financial services research firm Investor Economics also shows that over 2 million online brokerage accounts were opened in 2020, up from just shy of 850,000 in 2019. It is thus not hard to triangulate that, for the beginning of 2021, and in particular RSP season, Canadian online brokerages have had another exceptional year in terms of volume of interest.

This backdrop is important when looking at the current slate of deals and promotions offered by Canadian online brokerages, especially with a view toward whether or not more promotional offers can be expected to show up in the near- to intermediate-term. Having deals from large providers such as TD Direct Investing, Scotia iTRADE, CIBC Investor’s Edge, and Qtrade Investor expire at the same time is enough to cast some doubts on what happens for the next few months.

The short answer is that it does seem like Canadian online brokerages are willing to deploy promotional offers between now and the kickoff to next RRSP season, which generally happens at the beginning of November. For anyone keeping score, that is about six months away. Here’s why we think that’s the case.

First, there’s the inevitable restart of the economy through the summer. While folks have been working from home, it has probably been a lot easier and less noticeable to nosey coworkers to have a trading window open or be trading online or watching stocks on your phone. When offices start reopening and individuals begin going to the office again – as will happen – the mechanics of being able to trade from work are going to become harder. That bodes well for deals and promotions since a more “normal” cadence of activity is likely to require online brokers to work harder to get individuals to pay attention to investing while those individuals go back to juggling life as usual.

Another reason we’re bullish on deals and promotions heading into the stretch between now and the start of November is that there is increased competition for incumbent Canadian online brokerages – especially from Wealthsimple Trade but also from potential new entrants looking to make a splash in the Canadian market (see next story below).

For anyone who’s spent any time on YouTube, Wealthsimple Trade’s barrage of advertising should be a clue that they’re heavily investing in spending big money to get attention. Wealthsimple Trade’s commission structure alone should garner them attention, but it was still fascinating to see them start to launch promotional offers at the tail end of 2020 as well as some even bigger promotions linked to referral offers mid-February 2021.

Larger or more well-known Canadian online brokerages may have a buffer against this advertising and promotional onslaught, but outside of three to four online brokerages in Canada, the rest of the field has to reevaluate a lot about how, when, and where they show up to Canadian DIY investors.

One viable option for online brokerages to compete is through offering deals and promotions on an ongoing basis, with different offers available at different points in the year. Another option is better marketing around offers that are already available – with a case in point being Scotia iTRADE. They have a promotion for commission-free trades that is bundled with a premium banking package offered by their parent brand, Scotiabank. Despite having traction with value-hungry consumers, this offer is relatively under-advertised to the general public.

On the good news front for DIY investors, there are still online brokerages offering deals and incentives for investors looking to get into the markets or who are interested in a new service provider.

Promotional offers from RBC Direct Investing – a major bank-owned online brokerage – are still available through the end of March, and BMO InvestorLine also launched a new cash-back offer to replace their RSP campaign. In the case of BMO InvestorLine, the minimum deposit amount on their new cash-back offer was raised to $25,000 and expires on June 1^st, 2021.

Also, as stated earlier, it is bullish that a firm that currently has zero-commission trading is offering promotions on top of their ultra-competitive pricing. And considering Wealthsimple Trade’s aggressive marketing, it is unlikely that their competitors can afford to stay quiet for much longer.

Whether it is because of elevated trading activity, the dynamic nature of the restart of return to work, or the new competitive landscape for online brokerages in Canada, we believe that more Canadian online brokerages than normal will turn to promotional offers as a fast, effective way to stay relevant to DIY investors.

What the data from 2020 and early 2021 have shown is that large pools of DIY investors can quickly rush to market to get on board with a trading opportunity. Online brokerages looking to get ahead of the next big push, as well as to get in front of the big return-to-work shift, will likely be considering deals and promotions as a tactical way to be visible throughout these next few months. The takeaway: Investors who haven’t already joined the market can anticipate some interesting offers without having to wait until the fall to take advantage of them.

A Taste of Something Different: Signals Point to 2021 Arrival of Tastyworks in Canada

It started out, at least for me, in the Las Vegas airport on a journey back to Canada in 2014. I stared up at the TV in the departure lounge and saw a strange cherry logo alongside messages about online trading. It all seemed very Vegas, but the name tastytrade was something I made a mental note to remember.

Little did I know at the time that the combination of curious name and logo would potentially become one of the bigger stories in the Canadian online brokerage space in 2021.

What Is Tastytrade?

Back in 2014 and 2015, it was difficult to answer exactly what this firm was all about. After doing a little bit of research on tastytrade, it became clear that this brand was something different in the online investing space.

Launched in 2011, it was all about providing content on investing, with a heavy focus on options trading, mixed in with some fun and insightful segments. One thing it wasn’t short on was opinion and debate. But, they were American, and being in Canada meant that aside from an alternative to programming on CNBC or BNN, the talking heads on tastytrade probably wouldn’t have a direct influence on life here in Canada. At best, it seemed like a fun channel to tune in to for trading banter.

The next time tastytrade came back on my radar was October 2015. Back then, my hair, like the Weekly Roundup, was shorter, and the big news of the day was that TD Direct Investing had just “officially” joined Twitter. And, for good measure, one of TD Direct Investing’s early tweets: tastytrade would be coming to Canada for the first time on October 26^th as a guest of TD Direct Investing.

Guess who’s coming to Canada for the 1st time? @tastytrade RSVP before all the seats are gone http://t.co/4XxXuJXLcV pic.twitter.com/EliW1VczeI
— TD Direct Investing (@TD_DirectInvest) October 6, 2015

I was fortunate enough to attend that first session at the CBC studios in downtown Toronto. In the before times, when travel and live events were a thing, investor education was also something Canadian online brokerages invested in far more heavily than they do today. Calendars on online brokerage websites were crammed with investor education events – which, at the time, is what this seemed like it would be.

Little did anyone know at the time how big of a deal it would be that the largest online brokerage in Canada was bringing a new financial brand north of the wall.

Thanks to @TD_DirectInvest & the @tastytrade team for a great live event! Looking fwd to the next one! pic.twitter.com/CXTUI5sA99
— Sparx Trading (@SparxTrading) October 26, 2015

The session itself lasted the better part of a day. While spending a good portion of a day at an investor education event geared toward options was something I had done before (a couple of times), it was clear from the get-go this event was different.

First, it was impressive that instead of an education session, it felt more like a rock concert. There was fancy sushi (no boring sandwiches here), and the auditorium was filled with a community of fans who came to see and hear the founder of tastytrade, Tom Sosnoff, do his thing live. The energy in the room was unique. It could have been, in part, because attendees were actually part of the live broadcast of the tastytrade show. They could see that the personalities they tuned in to for options trading and market chatter were the same in person as they were behind the screen: funny, chill, and very smart.

While the actual segments of the shows were interesting, the most interesting thing to observe and experience was what happened during breaks.

Sosnoff was approached and literally encircled by a flock of adoring fans peppering him with questions about trades and options. He was able to engage an audience with a topic that most people – even back then – found opaque and mysterious. Again, this was Canada and it was 2015. No big rush to Robinhood, no GameStonks, no Reddit army. Whatever the following and fan base here, it was likely significantly higher in the US.

For TD Direct Investing, at the time, it was a big score to have tastytrade come to Canada. This event was a huge deal for their active options trading audience and, as it turns out, for their associates who ran the thinkorswim platform. Fun fact: Sosnoff created thinkorswim and sold it to TD Ameritrade in 2009 for US$750 million.

The next few years for tastytrade were spent continuing to grow and engage with their audience across the globe and launching their own online brokerage, tastyworks, in 2017. In the US online brokerage market at or about that same time, Robinhood was starting to make more waves among online investors. Not too long after the launch of tastyworks did we start to see comments left by DIY investors on SparxTrading.com that the best pricing for options trading was being provided by tastyworks.

In a very short period of time, the tastytrade and tastyworks brands established themselves as a powerful force for active traders and investors who want to get the full experience of trading online, offering a unique community and great trading tools and user experience.

In a Weekly Roundup from February 2019, we spotted tastyworks’ rise in the US online brokerage rankings, where they appeared to be gaining ground on traditional online brokerage names in the space. Again, this was just two years after the tastyworks launch. The following interview from the Moneyshow in Toronto was also telling of the footprint tastytrade had developed in Canada by that time.

It wasn’t until 2020, however, that chatter around tastyworks coming to Canada started to pick up steam. To be clear, prior to 2020 the tastyworks team mentioned publicly that they intended to come to Canada. Unfortunately, regulatory and technology hurdles made coming here much slower.

Despite several suggestions in the past that didn’t quite work out, things seem different this time. The series of signals that the arrival of tastyworks in Canada is imminent seems to be growing. If we rewind back to January 2020, a tweet from the current Co-CEO and President of tastyworks, Kristi Ross, about the online brokerage coming to Canada was the first strong indicator big things were coming:

2020: Canada 🇨🇦 here we come!!
— Kristi Ross (@KristiRossX) January 26, 2020

Then, in June, another interesting update, again from Twitter:

Hmmm, I like it!! Although we do have a team working on TW Canada 🇨🇦…just sayin’…I know I’ve put out dates before, but Q4 2020…possibly a late holiday gift 🎁!
— Kristi Ross (@KristiRossX) June 11, 2020

Then, in September, on Twitter:

The short answer is yes and TW Canada does expect to offer RRSPs and TFSAs on day one.
— Kristi Ross (@KristiRossX) September 29, 2020

We were primed to see a new online brokerage set up shop in the Canadian market before the end of the year, but it did not end up happening. As it turns out, though, the tastyworks folks were also busy with some big news of their own.

Tastyworks announced at the beginning of 2021 that they were being acquired for $1 billion by IG Group Holdings.

After about a decade, Tom Sosnoff had done it again, turning an idea about trading options and building a community of users into a multimillion-dollar payout. According to the press release, the management of the tastyworks brand was to continue on, but it did raise some questions about whether or not a move to Canada was still in the cards. That question, however, was put to rest in a video in early February:

Although the video clearly signals tastyworks’ own acknowledgement of yet another delay, this article from The Globe and Mail about tastyworks coming to Canada was published last week, lending more weight to the idea of tastytrade’s Canadian launch actually happening this year. One of the biggest questions will be “What is tastyworks?” and, in all likelihood, this article is but one of many to come that will seek to answer that question as the tastyworks and tastytrade advertising machinery ramps up.

The journey to Canada for tastyworks has been a long and winding road.

Since their first hints in 2018 of coming to Canada, the online brokerage landscapes in both Canada and the US have changed significantly, with the biggest change being the shift in commission pricing. As we’ve seen over the early part of 2021, however, just because a platform offers a great user experience and low pricing does not guarantee customer delight. There has to be something deeper.

For online investors, especially active ones, community is huge, and Sosnoff is well aware of this. Tastytrade is a financial content powerhouse, boasting an audience in Canada of 10,000 daily viewers and a global audience of about 900,000. These aren’t just passive viewers, however. Scan comments and forums relating to options trading and pricing conversations and tastytrade comes up a lot – and with a lot of (generally) positive emotion. It has a loyal fan base and a vibrant community.

For Canadian online brokerages, the move north by tastyworks will be an inflection point for the standard of online investor experience. Tastytrade content is engaging, entertaining, and educational. There are 20 shows that take place on the network. There is fresh content every day, and you can watch the founder and other members of his team trade throughout the day. They don’t just talk about this stuff, they actually do it. Add to that the price for trading stocks and options that tastyworks will bring, and the picture forming is that most Canadian online brokerages are staring at a potential game-changer coming soon.

The irony of the tastytrade and tastyworks journey coming to this point in 2021 is not lost on me.

When, seven years after the fact, an online brokerage can get you to remember the first time you ever saw their name (let alone on a return trip from Vegas), that says something about the power of the brand. The fact that TD Direct Investing set in motion the chain of events that led to tastyworks coming to Canada, and that I have been able to watch it unfold, is amazing.

Also pretty cool is seeing that having a penchant for disruption, a passion for giving online investors great experiences, and keeping your hair long can end up working out after all.

Discount Brokerage Tweets of the Week

Discount Brokerage Tweets – Curated tweets by SparxTrading

From the Forums

Hitting Rock Bottom

In this post, a 40-something investor with a wife and children asks for advice on how to rebuild after a financial catastrophe – that he brought upon his family through a series of bad bets on leveraged ETFs. Hundreds of Redditors offer words of encouragement and advice on everything from investing in simple ETFs to being grateful for family during tough times.

Risky Business?

A new investor with a lot of money to invest for 20+ years asks in this post how risky an ETF is and wants to know if a HISA or GIC would be a better choice. Redditors have strong opinions on the matter.

Into the Close

That’s a wrap on another edition of the Roundup. As alluded to in the opening, there’s a lot happening this month, and the Oprah interview is just the tip of the iceberg. We’re still tuning up the new features on the SparxTrading.com website and are looking forward to upcoming enhancements. While we might not get Oprah as a guest contributor (just yet), we are looking forward to including more interviews with interesting folks in the near future. In the meantime, we want to wish our readers tuning in today (Monday) a happy International Women’s Day and a profitable week ahead!

Posted on March 1, 2021March 23, 2021 by user

Discount Brokerage Deals & Promotions – March 2021

*Updated March 23* It seems that time flies when you’re hurtling towards the RRSP contribution deadline. At least, that’s the sentiment among many-an-online brokerage as the start of March heralds a new month as well as the end of the busiest stretch in the year for most online brokerages.

And, speaking of busy, the end of RRSP season also means that many online brokerage deals and promotions have expired or will be expiring soon. Specifically, offers from most of Canada’s largest bank-owned online brokerages are set to expire in the first week of March, drastically reducing the number of cash back offers for DIY investors hoping to open an online trading account.

Interestingly, the news isn’t all bad. Wealthsimple Trade actually launched a new promotion at the tail end of February that is part referral bonus, part contest, and offers clients who refer in new customers a shot at winning one of six prizes of $10,000. The timing and nature of this offer, are like most things Wealthsimple Trade, a challenge to other incumbents in the space.

“Normally” promotions filter out at this point with only a select number of online brokerages launching new offers which generally extend through the spring. Wealthsimple Trade’s new offer, described below, is relatively short in duration, large in terms of prize money and lands exactly at the point in the calendar where activity is busiest.

Also new to kick off March, the deals and promotions experience at SparxTrading.com. Readers can still get a quick overview of the latest deals and promotions offered by Canadian online brokerages in this post, but we’ve now added interactive tools to search for and filter deals information based on different parameters like the kind of offer, or account type or even the minimum required deposit.

The good news for DIY investors is that despite the big pull back in offers from some of the bank-owned online brokerages, smaller brokerages might use this opportunity to launch some new offers without having to fight for a crowded field. There is a higher-than-historically-normal amount of interest in trading and investing which means there are still online investors interested in opening up new accounts. While it is not at the excessive levels seen last March, it is actually a bullish signal for online brokerages to continue to compete by providing some kind of incentive offer.

We’ll continue to monitor the turnover in the deals space and if you have any offers or promotions that would be of interest to other online investors, let us know so we can highlight them here.

Expired Deals

At the time of publication there are no deals that have expired however here are the list of deals scheduled to expire on the first day of March:

March 1:

Qtrade Investor Cash Back
Scotia iTRADE Cash Back
TD Direct Investing Cash Back

Extended Deals

No extended deals to report at this time.

New Deals

*Updated March 23: National Bank Direct Brokerage (NBDB) has just (re)launched a commission-free trade offer. They are offering up to 100 commission-free trades, which are good for one year, to individuals who sign up for a new account. This promotion is open to new and existing clients and expires at the end of June. See the deals and promotions section for more details.*

Wealthsimple Trade has launched a new contest combined with their referral program that offers existing clients who refer in new clients the opportunity to enter a draw for one of six prizes of $10,000.

This new promotion, which runs until March 15th, enables existing clients to refer in a new client and if that new client trades at least $100, then the referrer gets $25 plus one entry into the contest and the referee gets $10. Draws for winners will take place on March 2nd, 9th and 16th and in order to enter or receive the prize, an individual must hold or open a Wealthsimple Trade account. Be sure to read the terms and conditions for more information.

Looking for the deals & promotions data? Head over to the new online brokerage deals index to browse through active promotions.

Posted on February 16, 2021December 31, 2021 by user

Discount Brokerage Weekly Roundup – February 16, 2021

It’s fitting that after so much discussion about “shorts” in the news, we also now have a short(er) trading week upon us. With one fewer trading day, it also means the deadline for RRSP contributions is ticking closer, adding to the pressure that is evidently already building at Canadian online brokerages this month.

In this edition of the Weekly Roundup, we take yet another look at the customer service angle at Canadian online brokerages, this time zeroing in on another recent set of rankings that measure digital interactions. From there, we dive into some exciting new features being launched by Canadian brokerages that will help take some of the guesswork out of investing before and during retirement. As always, we’ll serve up a generous helping of investor commentary from Twitter and the investor forums.

Canadian Online Brokerages Struggle at Delivering Service Online

The drumbeat for better customers service among DIY investors in Canada is getting louder by the day.

Increased coverage among high-profile financial writers in Canada, as well as a number of studies by financial research firms, validates what we have been seeing for many months on social media: Most Canadian online brokerages are falling short on providing timely customer service experiences.

Columnist @rcarrick said he’s received complaints about several bank-owned firms, but @TD_DirectInvest was named most often. As the largest player in the brokerage business, TD has had issues keeping up with client demand to speak to its live reps. https://t.co/J7SXJWBNWx
— Ellen Roseman (@ellenroseman) January 25, 2021

While data has been emerging this year that puts the issues faced by online brokerages in the spotlight, it is somewhat confusing for online investors since different studies measure different aspects of the “service” experience.

Both the actual wait times experienced by Canadian DIY investors and the unpredictability of what users can expect when reaching out as either a customer or an interested consumer have potentially far-reaching consequences to the industry as a whole. And, as the data shows, if these issues are not addressed, the recent online brokerage challenges taking place in the US could spill over to providers here in Canada.

The Story in Numbers

At the end of January, a couple of important Canadian online brokerage rankings were published. We covered The Globe and Mail’s online brokerage rankings in detail earlier this month, with a significant amount of time spent diving into the wait times that were measured at Canadian online brokerages in January (2021).

Online Brokerage	Wait Times (min)
BMO InvestorLine	87
CIBC Investor’s Edge	101
Desjardins Online Brokerage	170
HSBC InvestDirect	125
Interactive Brokers	66
National Bank Direct Brokerage	69
Qtrade Investor	28
Questrade	128
RBC Direct Investing	90
Scotia iTrade	179
TD Direct Investing	58
Virtual Brokers	7

For a quick refresh, the table above contains the average wait time data reported as part of the online brokerage rankings among the 12 firms that were reviewed. Interestingly, in a post by DALBAR on LinkedIn, additional information about the wait times was provided that illustrates the range of wait times at each firm. Readers of the Weekly Roundup post in which these numbers were thoroughly examined can appreciate why average values, on their own, might not convey the full picture. The study data cited by The Globe and Mail rankings reported the average wait times, but the graphic below adds additional context around those average values.

Aside from the 25x difference between the average of the lowest wait times (Virtual Brokers) compared to the highest average wait times (Scotia iTrade), one of the most striking trends to jump out is variation in wait times that occurred as online brokerages took longer to respond. At the far right of the chart shown above, five firms in particular stand out with highly variable wait time ranges:

Of these firms, it was most evident that Questrade had the highest range of wait times, which stretched from about 50 minutes to just under 300 minutes, with an average of 128 minutes. By comparison, HSBC InvestDirect had an average of 125 minutes but a much narrower range of wait times, stretching from just over 60 minutes to about 210 minutes. When ranges this wide are part of the service experience, it is essentially a gamble for DIY investors as to exactly how long they are going to have to wait before connecting with a service agent.

Another striking feature of the data on the chart is where Qtrade Investor landed in terms of wait times. Their “worst” wait time (of about 50 minutes) was approximately the best wait time that any firm behind them could achieve.

These data points are also important because of how they compare against another set of online brokerage rankings that focused specifically on service levels. Financial services research firm Surviscor also released online brokerage service rankings at the end of January and concluded that there were clear and persistent shortcomings in the response times of most Canadian online brokerages.

Unlike the DALBAR study, which took a snapshot of one week’s worth of telephone data in January 2021, Surviscor conducted 163 service inquiries per online brokerage between January and December of 2020 on contact forms, emails, and social media channels.

Firm	Response Time (hours)
Questrade	2.90
Qtrade Investor	4.02
Canaccord Genuity Direct	11.15
National Bank Direct Brokerage	29.38
RBC Direct Investing	39.17
TD Direct Investing	39.27
Interactive Brokers	52.28
Laurentian Bank Discount Brokerage	62.30
BMO InvestorLine	76.10
HSBC InvestDirect	77.55
Desjardins Online Brokerage	89.75
Virtual Brokers	91.68
Scotia iTrade	94.20
CIBC Investor’s Edge	104.17

The average industry response time in 2020 ended up being 55 hours, which was actually an improvement over 2019, in which response times across the industry averaged out to 62 hours. One of the most compelling points observed in the Surviscor analysis of service response times, however, was that service has been trending in the wrong direction for many years now, and although COVID-19 can certainly be considered a contributing factor, the data shows that even before the pandemic, meeting customer response times online was a challenge.

Change the Channel or Channel the Change

When comparing the data from the Surviscor and DALBAR studies, it’s clear that the kind of service experience a consumer can encounter with a Canadian online brokerage depends on the channel used, which is a big problem on a number of levels.

First, and perhaps most ironic, is that when it comes to online capabilities for service touchpoints at Canadian online brokerages, in spite of the hairpulling wait times, it is still faster (in most cases) to wait on the phone than it is to send electronic correspondence.

In fact, when comparing the magnitude of the difference between the phone and online channels, the range went from 1x (Questrade) to 786x (Virtual Brokers). Excluding the outliers, the average factor difference was 39x between phone and online interactions. One clear standout in both the digital and telephone categories was Qtrade Investor, which had the shortest wait time on the phone and the second-fastest response time online.

To Surviscor’s point, the digital interactions may have been deprioritized compared to phone channels because customers would be more likely to use the phone channels; however, as far as making a first impression count, most Canadian online brokerages would not get a flattering response.

A second important consideration is that for the financial services industry as a whole, trust is an integral part of consumer confidence.

Granted, DIY investors are flocking to the markets in droves because of perceived generational opportunities to build wealth, but when those same investors are hitting roadblocks to getting issues addressed or questions answered, confidence takes a hit. If you add issues of platform stability to that, then individual investors lose faith that financial services firms are up to the task of safely and reliably providing the opportunities for wealth creation that much of the marketing suggests is possible.

With just a few weeks to go until the RSP contribution deadline for 2020, this is prime time for DIY investors looking to online brokerages for RSP options. It is against this backdrop that the wait times experienced by Canadian investors stand out as something that could ultimately become a much more important component to online brokerage selection than has been the case in the past. Deeper than that, however, the notion of lag time is anathema in the age of online investing.

The recent Robinhood debacle that resulted in trading in certain securities being restricted has been blamed on wait times for trade settlement – a stunning vulnerability in the year 2021. For DIY investors in Canada, the clear and present risk to consider is an online brokerage’s capacity to meet a respectable service delivery standard, especially during times of market volatility or heightened interest (which is arguably when those systems are needed the most).

For Robinhood, not only did they suffer a blow in the court of public opinion, but they are also going to have to answer tough questions from lawmakers and face the wrath of an increasing number of lawsuits. Other than the growing chorus of complaints from Canadian consumers and financial media, there isn’t anyone holding online brokerages accountable for their service standards.

Ironically (again), the longer Canadian online brokerages take to address these service gaps, the more likely it is that the industry will find themselves taking centre stage in a mass media story or, worse, the focal point of a Reddit wave. Make no mistake, the clock on this story is most certainly ticking.

New Features From Online Brokerages Chip Away at Guesswork

After talking at length about where Canadian online brokerages are struggling, it’s a nice change of pace to shift the focus to areas in which they’re looking to innovate and deliver additional value to clients as well as to DIY investors more broadly.

Readers of SparxTrading.com know that we regularly engage with Canadian online brokerages on a number of new features and developments (case in point: our Look Back / Look Ahead series). Two interesting features that were brought to our attention from Canadian online brokerages are worth highlighting to readers.

BMO InvestorLine Launches a Checkup for Portfolios

With a tsunami of new investors joining the stock market, one of the biggest challenges many of them face is understanding how to answer a very basic question: “Am I on the right track?”

Fortunately for DIY investors, BMO InvestorLine recently announced a new online tool that helps investors analyze their current portfolios against a set of investor profiles, to see whether or not their portfolios are in line with their desired investment objectives.

The adviceDirect Portfolio Health Check tool is interesting for a number of reasons, but chief among them is that it is freely available to the general public to use, and it is both simple and fast to complete.

Individuals can enter details about their financial picture (no personally identifiable information is captured) and assess it on four key parameters: asset allocation, diversification, security ratings, and risk. In about three steps, users can quickly see where they measure up to their “personality” type and also see what they may want to consider changing in order to bring their portfolio in line with their respective investing personality type.

In terms of who might be interested, this tool appears to be built around investors (rather than traders) who are interested in taking a portfolio approach to building wealth. This means that the tool is likely to have mass appeal, and it serves as a great starting point to the conversation about whether or not the composition of a portfolio is on target.

From a business development standpoint, this is also an interesting and savvy move by BMO InvestorLine to be part of the conversation about wealth management. Analogous to mortgage calculators helping potential homeowners understand some of the mechanics around house purchases and borrowing, the adviceDirect Portfolio Health Check tool is a timely resource for anyone wanting to get a digital “second opinion” on how their investments stack up. This is entirely in line with their adviceDirect offering, which enables investors to consult with a licensed investment professional about recommendations but leaves the actual work up to the investors themselves to implement.

In a crowded landscape of online brokerages that would normally be focusing on commission pricing, this public-facing tool will enable BMO InvestorLine to be visible to the right kinds of investors at the right moment and, because it is free, for the right price.

Looking in the RRIF-View Mirror

Against the backdrop of service enhancements at Canadian online brokerages, one important feature launched at the end of 2020 will help clients of RBC Direct Investing who are thinking about income when retiring.

Starting in December 2020, RBC Direct Investing enabled clients with Registered Retirement Income Fund accounts (such as RRIFs, LIFs, LRIFs, RLIFs, PRIFs) to be able to view payment details online, without needing to call or wait for a letter. In light of the wait times on the phone channel, this is a timely development.

To help navigate the most important details of a RRIF, the “RRIF View” provides a snapshot of a client’s plan, with information on the required minimum annual withdrawal amount and scheduled payment dates.

While this is a small development, it is an interesting example of a feature that is important to users who have this kind of account – it got a quick highlight as part of the Navigators series that publishes updates at RBC Direct Investing.

At this time of year, there is a lot of discussion about contributing to RRSPs, but there isn’t nearly as much information available on the next steps of funding retirement, in particular the variety of options available to individuals with an RRSP.

Fortunately, RBC Direct Investing also has a fairly good guide explaining RRIFs, which is helpful for individuals needing to navigate this new account type. With this new feature, RBC Direct Investing might also have the opportunity to spark a conversation about online brokerage platforms and the ease with which RRIF account holders can stay on top of key information.

Discount Brokerage Tweets of the Week

Discount Brokerage Tweets – Curated tweets by SparxTrading

From the Forums

Timing the Market

A potential investor asks in this post whether they should wait until after the stock market crash – or at least massive correction – that many experts predict is imminent, in order to buy stocks at rock-bottom prices. Fellow Redditors share their strong opinions about the value of time in the market versus trying to time the market.

Up, Up & Away

From boredom to FOMO to a record bull market, there are many reasons that retail investing is surging in Canada right now. In this post, hundreds of Redditors discuss meme stocks, cryptocurrency, market bubbles, crashes, index funds, interest rates, and a whole lot more.

Into the Close

With the combination of Lunar New Year, Valentine’s Day, and Family Day, there have been many reasons to celebrate this past week, and Friday being that much closer certainly adds one more item to the list. There’s a lot of gripping drama playing out in the US this week, with the GameStonks trade under the microscope. With snow and cold showing up just about everywhere, including Texas, this is going to be a weird one. Hang in there.

Posted on February 8, 2021March 8, 2021 by user

Discount Brokerage Weekly Roundup – February 8, 2021

February is now well underway. In case you might have missed it, a forty-something quarterback managed to nab yet another Super Bowl win, and for the moment, it appears that the forty-something-plus crowd on Wall Street managed to squeeze out a win over the younger investors – at least for now. History is in the making all around.

In this edition of the Roundup, we dive into the deals and promotions activities that Canadian online brokerages are up to. From there we analyze the fallout from the meme stocks push and contemplate what it should make Canadian online brokerages think about as we head out of this historic turn of events. As always, there’s thoughtful commentary from the investor forums and a selection of interesting tweets.

Forecast for Deals & Promotions: Mostly Sunny for February

The month before the official start of spring is a good news/bad news moment. Yes, better weather is around the corner, but no, it’s not here yet.

Fortunately for DIY investors, the forecast heading into the deadline for RSP contributions is filled with some bright patches, most notably that the Canadian online brokerage deals section is brimming with activity. If there is a dark cloud lingering over deals activity this year, it’s that several online brokerages have opted to stay on the sidelines rather than post an offer during RSP season for DIY investors.

In more “normal” times, not having a deal during RSP season would be unlikely. With the sustained interest by DIY investors in opening new accounts – especially given the recent run in “meme stocks” – many online brokerages are struggling to keep up with the level of demand and, thus, pacing themselves when it comes to bringing on new customers. It appears that there can be too much of a good thing after all.

For online investors looking to open an online brokerage account, February is the last month to be able to take advantage of the selection of offers. Most of the promotions in the cash-back or commission-free trade categories end at the beginning of March.

The current offers in the most enticing category for investors show that competition between the big five bank-owned online brokerages is fierce, with all of these discount brokerages putting forward competitive cash-back offers. Joining the bank-owned online brokerages in this category are Qtrade Investor and Questrade.

Curiously, mid-tier and newer online brokerages do not currently have a cash-back or commission-free trading offer, a signal that these providers might either be more strained by the substantial interest in investors coming to market or be pursuing a different strategy to attract new clients.

While deals and promotions are an effective strategy to attract DIY investors, another interesting way in which Canadian online brokers attempt to connect with new clients is via advertising – specifically on the world’s biggest search engine, Google.

As part of our proprietary research, we’ve reviewed recent search engine marketing tactics of Canadian online brokerages and found some fascinating results. One of the important findings is that there are fierce battles taking place between a small number of online brokerages on Google.

For example, it appears that Wealthsimple Trade is spending advertising directly on names such as Interactive Brokers, Qtrade Investor, Questrade, and TD Direct Investing. Alternatively, Interactive Brokers is advertising directly on Questrade, Wealthsimple Trade, and Virtual Brokers. It is especially interesting considering Wealthsimple Trade and Interactive Brokers couldn’t be more different in terms of user experience and intent.

Interactive Brokers is built, intentionally, for active traders. In contrast, when Wealthsimple Trade launched, it was built deliberately to support some trading, but active trading – and day trading in particular – was explicitly viewed as undesirable and something they stated they could intervene on if the trading activity would be deemed “inappropriate.”

It is therefore interesting to line up the sentiment expressed in the messaging of Wealthsimple Trade’s help page on day trading with their advertising targeting investors interested in Interactive Brokers and Questrade.

With just three weeks to go until the RRSP deadline, Canadian online brokerages are likely to ramp up their efforts to win over investors, and the most likely place this will happen is with heightened “promotion” via online advertising – and yes, even during the Super Bowl.

In the February edition of the deals and promotions section, the big five Canadian bank-owned online brokerages are well represented, along with Questrade and Qtrade Investor. Of the online brokerages not on the current list of promotions, however, it appears that two popular names, Interactive Brokers and Wealthsimple Trade, are instead fiercely battling it out with one another on Google search advertising and likely other channels, such as Facebooks, as well.

That two very different brands are battling it out directly with each other is telling of the competitive dynamics in the current online brokerage market in Canada. It does raise the question, however, of when that competition will materialize into something more value-added to a client than a convenient link on Google.

GameStop(ped) Out

Oh, what a difference a fortnight makes in the stock market of 2021.

Just over two weeks ago, Elon Musk wasn’t just talking about launching rockets into space, he was also weighing in on the meteoric rise of “GameStonks.” Same with Mark Cuban, AOC, and so many more people who normally give commenting on the stock market a pass. What has been happening in the stock markets over these past few weeks, however, has been almost impossible to ignore.

The sheer weight of the interest in the “meme stock” phenom was fuelled by a combination of FOMO and a strange quirk of market physics. Since the surge in the stock price of GameStop (ticker symbol GME) and subsequent restrictions on trading it by online brokerages, there have been countless commentaries on exactly what happened and what underpinned the stunning move up and back down in the price.

To be totally transparent, this section is going to add one more commentary to the pile; however, we’re going to sidestep most of what has already been said about short squeezes, Reddit threads, and a cabal of powerful financiers and instead focus on some very important elements that look at the consequences and lessons learned for online brokerages as a result of this recent anomaly.

One of the first things worth stating, especially from our perch here in Canada, is that so much of this story is driven by what happened in the US stock markets. For Canadian DIY investors and Canadian online brokerages, however, the opportunity to make fast money was still just as tempting. What ultimately ended up getting in the way for Canadian investors were the numerous friction points, such as commissions for trades, lack of fractional trading, or time required to fund a new account, to name just a few. Which, all told, probably saved some heartache for some investors.

Nevertheless, in the cast of stock market characters surrounding the great short squeeze of 2021, perhaps the most interesting question that stands out is why, of all the online brokerages in the US that restricted trading in GameStop (and other stocks), did Robinhood find itself cast as the villain?

pic.twitter.com/031zY2YcBy
— Poorly Aged Things (@PoorlyAgedStuff) January 28, 2021

Data gathered from a variety of sources indicate that other online brokerages in the US restricted buying in GME shares, including Interactive Brokers, Webull, and E-Trade. TD Ameritrade (and Schwab) raised margin requirements. Even so, media mentions and social media conversations (and memes) have overwhelmingly been dominated by Robinhood and the fact that they instituted a temporary restriction on purchasing certain stocks.

One possible reason why Robinhood has been singled out is that it became somewhat of a rising star across 2020, attracting more accounts in the early portion of the year than most of its competitors combined. And, although most of its US online brokerage competitors offer zero-commission trading now as well, Robinhood is often associated with making trading more accessible – or, in their words, “democratizing” finance. For years, Robinhood has positioned itself as “anti-Wall Street” and cultivated the narrative of Robinhood as the champion of the small investor in a way that incumbent online brokerages did not. Scandal definitely makes for good TV, and in a world where entertainment options are limited, seeing a rising star have a fall from grace sounds like the plot of another enticing movie about stock markets.

When the carefully curated identity of Robinhood is juxtaposed against the expectations of retail investors that Robinhood is an online brokerage “for the people,” it is understandable that when those same people were not allowed to trade what they wanted to trade when they wanted to trade it, they believed that something was afoul. After all, retail investors believe – and are led by a number of sources to believe – that markets are free from interference by outside forces or entities.

And, while the broader market of investors was willing to give Robinhood a pass on payment for order flow in order to get commission-free trades, the optics of relationships between Robinhood and the very institutions that meme stock proponents sought to profit from (e.g. Melvin Capital and Citadel) cast Robinhood as pro-establishment, essentially violating their brand promise.

Perhaps the greatest insight into this situation can be illustrated in the descriptions of “what happened” by the current head of Robinhood, Vlad Tenev, and the founder and former CEO of Interactive Brokers, Thomas Peterffy.

In the immediate aftermath of the decision to restrict trading in GME, it didn’t help matters that the CEO of Robinhood could not articulate clearly why certain shares were frozen. That lack of clear explanation in the heat of a volatile market meant that retail investors were forced to jump to their own conclusions.

By contrast, it is worth noting a Bloomberg interview with Peterffy in which he clearly alludes to something that goes beyond a freeze on the trading of volatile stocks. Specifically, Peterffy positions as “illegal” the fact that individuals were piling into a name (like GME) to perpetuate and accelerate a short squeeze.

Putting the continuity of the business first and catering to clearing and settlement requirements are prudent activities, and it seems reasonable for people to assert that Robinhood and Interactive Brokers, as companies, would need to stay in business.

That said, younger investors or investors who sought to drive systemic change via “sticking it to the shorts” found themselves on the wrong end of a lock on buying, and the short squeeze that was taking shape ended up fizzling out.

Robinhood has made no secret of their intentional pursuit of younger investors. What seems to be clear, however, is that these “younger investors” have a very different view of wealth creation and investing (trading) than “boomers” do.

And herein lies the issue for all online brokerages. Currently, there are different audience segments that have very different views on financial services and the roles that online brokerages ought to play when it comes to facilitating participation in the stock market.

Aside from mobile app or website design, another important attribute of younger investors is where they go to learn about investing (Reddit or forums). Also, they seek out highly volatile (high risk, high reward) stocks, for a mix of excitement and wealth creation. When combined with the gamification of user experience and a reduction in commissions, the result is a powder keg that, given the right environment, will explode.

Younger investors also bring with them the beliefs and capacity to call out “injustice” or perceived hypocrisy on very public channels. While older investors did use forums to learn from and engage with one another, and occasionally to voice their discontent, it was rare to find social justice narratives or “greater good” themes driving investor choices. The recent events have shown that social media channels, including Twitter and Reddit, move exponentially faster than anything before and include sections like “tl;dr” to cut through the “boring analysis.”

Unlike their US counterparts, Canadian online brokerages did not suffer as significant a backlash from DIY investors, in part because they did not explicitly prevent buying or trading in the meme stock frenzy. That said, Canadian online brokers were not unscathed either.

Platform outages or delays in executing trades from a number of brokerages – along with popular online broker Wealthsimple Trade taking the unusual step of specifically labelling certain stocks very risky, such as GameStop and BlackBerry – did set off a smaller firestorm here in Canada. In particular, investors were upset that an online brokerage would take the position to designate any stock as “too risky” to trade, especially if it met listings requirements on a supported stock exchange.

It is still too soon to say how things will ultimately pan out for online brokerages as a whole. There are, however, some immediate lessons for the online brokerage industry to take heed of.

Regardless of being either an established name in finance or the latest fintech, financial services at their core are predicated on trust and confidence. Among the “older” generation of retail investors, that trust was established in the form of size and stature. Bigger equalled better. Among the “newer” cohort of investors, it could be argued that faster is better.

What is common to all investors, however, is that reliability matters when choosing an online brokerage, if for no other reason than to know what to expect. Nobody likes uncertainty, especially Canadian DIY investors. The events over the past few weeks have made it clear that newer online brokerages will have a much harder time making up for the fact that they don’t have anything to offer other than the promise of a brighter future. At least the established online brokerage brands have either the reputation of their parent brand or their history in the space to point to as a signal that they are stable.

Another really important takeaway from the events of the past few weeks is that the conversation that takes place online, in particular in forums and on Twitter, cannot be and should not be dismissed. Whether it is regulators or other entities who do this monitoring, the fact that retail investors could take a coordinated action on trading specific stocks is remarkable.

The consequences to the industry were made clear: Ignore the crowd at your peril.

We live in a world where individuals such as Elon Musk can become incredibly influential, and based on their whims and caprices on Twitter or Reddit, there can be massive investor behaviour shifts. The events of the past few weeks highlight that, going forward, the online investing industry will have a massive PR problem.

Even here in Canada, where much of the negative press around the events of the past two weeks focuses on platforms and connectivity, online brokerages are going to have to do better because of the circumstances in the US. More advertising is not going to do it, nor will telephone meetings. The bottom line is that investors now look to Robinhood with a suspicion it has never had to meaningfully contend with before. That’s something for Canadian online brokerages to think about as they race to design new interfaces and experiences to connect with investors.

Discount Brokerage Tweets of the Week

Discount Brokerage Tweets – Curated tweets by SparxTrading

From the Forums

What Goes Up?

In this post, an investor wonders if the recent mania in the stock market perhaps signals the end of an epic bull market, which leads to a lengthy discussion that touches on corrections, crashes, business cycles, and much more.

Preaching to the Converted

The devil is usually in the details, and for DIY investors looking to avoid getting dinged with trading commissions, this post about “the catch” when it comes to using commission-free online brokerage Wealthsimple Trade offers up an important lesson.

Into the Close

With yet another Super Bowl win to add to his record, there’s no denying that Tom Brady has been defying physics in the NFL. Credit where credit is due, though (and no, not a margin call pun), there’s definitely something to be said for putting in the effort and seeing the results. As the shine comes off the short squeeze trade, it will be interesting to see how traders fare without wanting to put in the work. Valentine’s Day is just around the corner, and so too is Lunar New Year, so the good news is that this month is filled with even more reasons to celebrate.

Posted on February 1, 2021March 8, 2021 by user

Discount Brokerage Deals & Promotions – February 2021

Just because the month is short, doesn’t mean we can’t be long on fun! From Lunar New Year to Valentine’s Day to Family Day, there is much cause for celebration – with safe social distancing in mind, of course. Another reason for DIY investors to rejoice: there’s still time to meet the RRSP contribution deadline for 2020!

Amidst the recent stock market volatility, there is one constant to look forward to at this time of year: a steady stream of promotions from online brokerages ahead of the RRSP contribution deadline. With over 30 kinds of promotional offers in the mix, there’s bound to be something available from most Canadian brokerages.

For all those looking for sweet deals during this rosy month, be sure to keep reading for all the latest promotions from Canadian online brokerages for February. We forward to a month filled with new surprises, and we will continue to monitor and provide updates on new online brokerage deals throughout the month.

In the spirit of Lunar New Year, we wish everyone an upcoming year filled with good luck and great prosperity – we’re hoping it will start with finding your perfect online brokerage deal here!

Expired Deals

No expired deals to report at this time.

Extended Deals

No extended deals to report at this time.

New Deals

No new deals to report at this time.

Discount Brokerage Deals

Cash Back/Free Trade/Product Offer Promotions
Referral Promotions
Transfer Fee Promotions
Contests & Other Offers
Digital Advice + Roboadvisor Promotions
Offers for Young Investors

Cash Back/Free Trade/Product Offer Promotions

Company	Brief Description	Minimum Deposit Amount	Commission/Cash Offer/Promotion Type	Time Limit to Use Commission/Cash Offer	Details Link	Deadline
	Open a new RBC Direct Investing account by March 31, 2021 and fund it with at least A) $5,000; B) $25,000; C) $50,000; D) $100,000; E) $250,000; F) $500,000 or G) $1M+ by May 31, 2021 and you may receive a cash back of A) $50; B) $100; C) $200; D) $300; E) $500; F) $1,000 or G) $2,000; plus 10 free trades to be used by August 31, 2021. The fund must be from a non-RBC investment account. Use promo code WCMP2 during account opening and be sure to review the full Terms and Conditions.	A) $5,000 B) $25,000 C) $50,000 D) $100,000 E) $250,000 F) $500,000 G) $1M+	Cash Back: A) $50 B) $100 C) $200 D) $300 E) $500 F) $1,000 G) $2,000 Plus 10 free trades	Free trades must be used by August 31, 2021.	Cash Rebate and Free Trades	March 31, 2021
	Scotia iTRADE is offering two choices for new investors who open accounts before March 1, 2021 and fund it with at least A) $5,000; B) $10,000; C) $25,000; D) $50,000; E) $100,000; F) $250,000; G) $500,000 or H) $1M+: Option 1: you can use promo code C21 to receive cash reward of A) $25; B) $50; C) $100; D) $200; E) $400; F) $750; G) $1,000 or H) $1,500; plus a discounted commission of $6.99 per trade until June 30, 2021. Option 2: Use promo code FT21 and you may be eligible for A) 10; B) 20; C) 50; D) 100; E) 200; F) 300; G) 400 or H) 500 free trades to use for 90 days after the account is funded. See terms and conditions for full details.	A) $5,000 B) $10,000 C) $25,000 D) $50,000 E) $100,000 F) $250,000 G) $500,000 H) $1M+	Cash Back: A) $25 B) $50 C) $100 D) $200 E) $400 F) $750 G) $1,000 H) $1,500 or Free Trades: A) 10 B) 20 C) 50 D) 100 E) 200 F) 300 G) 400 H) 500	Free Trades: 90 days	Scotia iTRADE’s Cash Back or Free Trade Offer	March 1, 2021
	Fund your new or existing CIBC Investor’s Edge account before March 2, 2021 with at least A) $10,000; B) 25,000; C) $50,000; D) $100,000; E) $500,000 or F) $1M+ and you may be eligible to receive a cash back reward of up to A) $50; B) $100; C) $200; D) $500; E) $1,000 or F) $2,000. To qualify, the fund must be from outside CIBC. No promo code required. See terms and conditions for full details.	A) $10,000 B) 25,000 C) $50,000 D) $100,000 E) $500,000 F) $1M+	Cash Back: A) $50 B) $100 C) $200 D) $500 E) $1,000 F) $2,000		Program Page	March 2, 2021
	Open a new qualifying account at BMO InvestorLine with new assets worth at least A) $15,000; B) $50,000; C) $100,000; D) $250,000; E) $500,000 or F)$1M+, and you may be eligible to receive a cash back reward of up to A) $150; B) $250; C) $500; D) $800; E) $1,000 or F) $2,000. Use promo code SPARXCASH when registering to qualify. Be sure to read full terms and conditions.	A) $15,000 B) $50,000 C) $100,000 D) $250,000 E) $500,000 F) $1M+	Cash Back: A) $150 B) $250 C) $500 D) $800 E) $1,000 F) $2,000		Winter 2021 Cashback Campaign	March 3, 2021
	Open a new TD Direct Investing account by March 1, 2021 with promo code INVESTNOW and fund it with new assets worth at least A) $15,000; B) $25,000; C) $100,000; D) $250,000 or E) $500,000, and you may be eligible to receive a cash back reward of up to A) $100; B) $200; C) $300; D) $500 or E) $1,000. The fund must be deposited to the account by April 30, 2021 and at least one trade is placed by June 30, 2021. In addition, you may also be eligible for another $100 cash reward by setting up a Monthly Contribution Plan (min. $100 per month) with the first contribution occur before April 30, 2021. The maximum reward one could receive is $1,100. See terms and conditions for full details.	A) $15,000 B) $25,000 C) $100,000 D) $250,000 E) $500,000	Cash Back: A) $100 B) $200 C) $300 D) $500 E) $1,000		TD Direct Investing Cash Back Promotion	March 1, 2021
	New clients who open and fund a new Qtrade Investor account before March 01, 2021 with at least A) $25,000; B) 50,000; C) $100,000; D) $500,000; E) $1M or F) $2M+ may be eligible to receive a pre-paid Visa gift card of up to A) $50; B) $100; C) $250; D) $800; E) $1,500 or F) $2,000. Only the first 500 customers are eligible. Please use promo code VISA2K. See terms and conditions for full details.	A) $25,000 B) $50,000 C) $100,000 D) $500,000 E) $1M F) $2M+	Cash Reward: A) $50 B) $100 C) $250 D) $800 E) $1,500 F) $2,000		Up to $2,000 Visa Gift Card Offer	March 1, 2021
	New accounts opened between Jun 22 and Dec 31, 2020 will be awarded 100 free online trades in one year. This promotion applies to new and existing NBDB clients who use the code “FREE2020” to open new accounts. There’s no minimum funding requirement, however some other restrictions may apply.	$0	100 Free Trades	1 year	Please refer to the full details of the deal.	December 31, 2020
	Open and fund a new account (TFSA, Margin or RRSP) with at least $1,000 and you may be eligible to receive $88 in commission credits (up to 17 commission-free trades). Use promo code SPARX88 when signing up. Be sure to read terms and conditions carefully.	$1,000	$88 commission credit	60 days	Access this offer by clicking here: $88 commission-credit offer. For full terms and conditions, click here.	none
	Open and fund a new account (TFSA, Margin or RRSP) with at least $1,000 and you may be eligible to receive 5 commission-free trades. Use promo code 5FREETRADES when signing up. Be sure to read terms and conditions carefully.	$1,000	5 commission-free trades	60 days	5 commission-free trade offer	December 31, 2021
	Open a new RBC Direct Investing account by December 31, 2020 and fund it with at least $5,000 by March 5, 2021 and you will receive commission rebates for 25 trades that occur within 1 year of account opening. Be sure to use promo code NTBW2 during account opening. You will be charged regular commissions on the trading date, and the rebate will be deposited back into your account after 3-5 business days. If you are an existing customer to RBC DI, the type of the new account being opened must be different from the account types that you current have.	$5,000	25 commission-free trades for a year	1 year	25 commission-free trades	December 31, 2020
	Open and fund a new qualifying account with at least $25,000 and you may qualify for one month of unlimited commission-free trades and up to one month free of an advanced data package. Use promo code ADVANTAGE14 when opening a new account. Be sure to read terms and conditions for full details.	$25,000	commission-free trades for 1 month + 1 month of advanced data.	1 month	Active Trader Program	December 31, 2021
Expired Offers
Last Updated: Feb. 1, 2021 16:00PT

Referral Promotions

Company	Brief Description	Minimum Deposit Amount	Incentive Structure	Time Limit to Use Commission/Cash Offer Deposit	Details Link	Deadline
	Refer a friend to Questrade and when they open an account you receive $25 cash back and they receive either A) $25; B) $50; C) $75; D) $100; or E) $250 depending on the amount deposited amount. Enter code: 476104302388759 during account sign up to qualify. Be sure to read the terms and conditions for eligibility and additional bonus payment structure and minimum balance requirements.	A) $1,000 B) $10,000 C) $25,000 D) $50,000 E) $100,000+	$25 cash back (for referrer per referral; $50 bonus cash back for every 3rd referral) For referred individuals: A) $25 cash back B) $50 cash back C) $75 cash back D) $100 cash back E) $250 cash back	Cash deposited into Questrade billing account within 7 days after funding period ends (90 days)	Refer a friend terms and conditions Code Number: 476104302388759	none
	If you refer a friend/family member who is not already a Scotia iTRADE account holder to them, both you and your friend get a bonus of either cash or free trades. You have to use the referral form to pass along your info as well as your friend/family members’ contact info in order to qualify. There are lots of details/conditions to this deal so be sure to read the details link.	A) $10,000 B) $50,000+	A) You(referrer): $50 or 10 free trades; Your “Friend”: $50 or 10 free trades (max total value:$99.90) B) You(referrer): $100 cash or 50 free trades; Your “Friend”: $100 cash or 50 free trades (max total value: $499.50)	60 days	Refer A Friend to Scotia iTrade	tbd
	You may receive $10 cash incentive for each new client that you refer to Wealthsimple Trade. They must use your unique referral link during account opening and make a trade value of at least $100. The referred friend will also get $10.	$100	You and the referred friend will each get $10.	n/a	Referring a Friend to Wealthsimple Trade	none
	If you (an existing Qtrade Investor client) refer a new client to Qtrade Investor and they open an account with at least $1,000 the referrer and the referee may both be eligible to receive $25 cash. See terms and conditions for full details.	$1,000	$25 cash back (for both referrer and referee)	Cash deposited at the end of the month in which referee’s account funded	Refer A Friend to Qtrade Investor	none
	If you (an existing BMO InvestorLine client) refer a new client to BMO InvestorLine and they open an account with at least $5,000 the referrer and the referee may both be eligible to receive $50 cash. To qualify the referee must use the email of the referrer that is linked to their BMO InvestorLine account. See terms and conditions for full details.	$5,000	You(referrer): $50; Your Friend(referee): $50	Payout occurs 45 days after minimum 90 day holding period (subject to conditions).	BMO InvestorLine Refer-a-Friend	January 6, 2022
Expired Offers
Last Updated: Feb. 1, 2021 16:00PT

Transfer Fee Promotions

Company	Brief Description	Maximum Transfer Fee Coverage Amount	Minimum Deposit Amount for Transfer Fee Eligibility	Details Link	Deadline
	Move your brokerage account to Questrade and they’ll cover the transfer-out fee up to $150.	$150	n/a	Transfer Fee Promo	none
	Transfer $15,000 or more to RBC Direct Investing and they will pay up to $200 in transfer fees.	$200	$15,000	Transfer Fee Rebate Details	none
	Transfer $15,000 or more into a new HSBC InvestDirect account and you may be eligible to have up to $152.55 in transfer fees covered.	$152.55	$15,000	Confirmed via email contact with HSBC InvestDirect Rep. Contact client service for more information.	none
	Transfer $15,000 or more to Qtrade Investor from another brokerage and Qtrade Investor may cover up to $150 in transfer fees. See terms and conditions for more details.	$150	$15,000	Transfer Fee Rebate	none
	Transfer $20,000 or more to a National Bank Direct Brokerage account and they will pay up to $135 plus taxes in transfer fees.	$135	$20,000	Transfer Fee Rebate	none
	Transfer at least $25,000 or more in new assets to TD Direct Investing when opening a new account and you may qualify to have transfer fees reimbursed up to $150. Be sure to contact TD Direct Investing for further details.	$150	$25,000	Transfer Fee Promo Contact client service for more information (1-800-465-5463).	none
	Transfer $25,000 or more into a CIBC Investor’s Edge account and they will reimburse up to $135 in brokerage transfer fees. Clients must call customer service to request rebate after transfer made.	$135	$25,000	Confirmed with reps. Contact client service for more information (1-800-567-3343).	none
	Open a new qualifying account with BMO InvestorLine or fund a qualifying existing account and you may be eligible to have transfer fees covered up to $200. Contact client service for more details.	$200	Contact client service for more information	Contact client service for more information (1-888-776-6886)	none
Expired Offers
	Desjardins Online Brokerage is offering up to $150 to cover the cost of transfer fees from another institution. To be eligible, new/existing clients need to deposit $10,000 into a Desjardins Online Brokerage account. You’ll have to call 1-866-873-7103 and mention promo code DisnatTransfer. See details link for more info.	$150	$10,000	Disnat 1% Commission Credit Promo	January 8, 2020
Last Updated: Feb. 1, 2021 16:00PT

Other Promotions

Company	Brief Description	Minimum Deposit Amount Required	Details Link	Deadline
	The minimum commission per equity trade ($1.99) is waived for new accounts from account opening till December 31, 2020. As a result, your commission is just 1¢/share (max $7.99). However, this offer does not apply to Odd Lot orders (i.e. orders with quantity less than 100 shares if price >= $1 or price < $0.10; or less than 500 shares if price in the $0.10 – $0.99 range). Please be reminded that at Virtual Brokers ETFs are always free to buy.	$0	No Minimum 2020 – Terms & Conditions	December 31, 2020
	Submit your information via the Hardbacon website to be referred to National Bank Direct Brokerage. Open and fund a qualifying account and you may receive up to 200 commission-free trades and discounted trading commissions. Be sure to read full terms and conditions.	n/a	Hardbacon Free Trade Promo	none
	Open a new Non-Registered trading account and fund it with at least $100 by December 18, 2020 and you may receive a random cash bonus ranging from $1 to $4,500. The cash bonus amount will be equivalent to the value of one of the fifteen stocks that have been selected by Wealthsimple Trade for this program. Please refer to the Terms and Conditions for more details.	$100	Wealthsimple Trade Free Stock Promotion	December 18, 2020
	Desjardins Online Brokerage is offering 5 commission-free trades for new 18-30 years-old Disnat Classic clients depositing at least $1,000. See terms and conditions for full details.	$1,000	Broker@ge 18-30 Promotion	none
	Scotiabank StartRight customers can receive 10 commission-free trades when investing $1,000 or more in a new Scotia iTrade account. Trades are good for use for up to 1 year from the date the account is funded. Use promo code SRPE15 when applying (in English) or SRPF15 when applying in French. Be sure to read full terms and conditions for full details.	$1,000	StartRight Free Trade offer	none
	Be one of the first 100 clients to open and fund an account with a minimum of $10,000 at Qtrade Investor using the promo code TRADE695 and you may be eligible for 100 trades at a preferred commission rate of $6.95 for 6 months. See terms and conditions for more details.	$10,000	100 Discounted Commission Trades	March 1, 2020
Expired Offers
Last Updated: Feb. 1, 2021 16:00PT

Digital Advice + Roboadvisor Promotions

Robo-advisor / Digital advisor	Offer Type	Offer Description	Min. Deposit	Reward / Promotion	Promo Code	Expiry Date	Link
	Discounted Management	Open and fund a new Questrade Portfolio IQ account with a deposit of at least $1,000 and the first month of management will be free. For more information on Portfolio IQ, click the product link.	$1,000	1st month no management fees	KDKFNBBC	None	Questrade Portfolio IQ Promo Offer
	Cash Back	Open a new SmartFolio account and fund it with at least $1,000 and you could receive 0.5% cash back up to $1,000. Use promo code SFJAN1000 when opening a new account. See terms and conditions for full details. This offer is limited to new SmartFolio clients only, and can be combined with the refer-a-friend promotion.	$1,000	0.5% cash back to a maximum of $1,000.	SFJAN1000	March 2, 2021	SmartFolio Cash Back Promo
	Discounted Management	Open a new account with BMO SmartFolio and receive one year of management of up to $15,000 free. See offer terms and conditions for more details.	$1,000	1 year no management fees	STSF	April 30, 2019	SmartFolio New Account Promotion
	Cash Back – Referral	BMO SmartFolio clients will receive $50 cash back for every friend or family member who opens and funds a new SmartFolio account. Friends and family referred to SmartFolio will receive $50 cash back for opening and funding an account, plus automatic enrollment into SmartFolio’s mass offer in market at the time. See offer terms and conditions for more details.	$1,000	$50 cash back (referrer) $50 cash back (referee)	Unique link generated from SmartFolio required.	None	SmartFolio Website
	Transfer Fee Coverage	Transfer at least $25,000 into Virtual Wealth when opening a new account and you may be eligible to have up to $150 in transfer fees covered by Virtual Wealth.	$25,000	up to $150 in transfer fees covered	None	None	Contact customer service directly for more information.
Last Updated: Feb. 1, 2021 16:00PT

Offers for Young Investors

Brokerage	Offer Type	Eligible Age Range / Client Segment	Offer Description	Min. Deposit	Expiry Date	Link
	Student pricing	Clients with CIBC Smart™ Account for students	$5.95 per trade and zero annual account fees	not required	None	CIBC Student Pricing
	Broker@ge 18-30	18-30 years old	Benefits: * 5 free transactions (Minimum deposit of $1,000 required) * No inactivity fees * No asset minimum to maintain for free registered accounts * Exclusive events * Disnat Mobile App	$1,000	None	Broker@ge 18-30
	Offers for professionals & students	Students in selected fields of study	Professionals and students in the below fields can benefit from a reduced pricing structure: * Engineering students * Legal, accounting and business students * Healthcare students * Health sciences students * Nursing students Benefits: * $5.95 commission on equities * $0 commission on ETFs * $0 annual administration fee	not required	None	NBDB Student Pricing
	Young investors offer	18-30 years old	Accounts holders who are 30 years old or younger are offered 10 free trades each year. After the free transactions, a commission rate of $4.95 per transaction will be applied (which is just half of the regular price).	not required	None	Young Investor Offer
	Young investor pricing	18-30 years old	Benefits: * $7.75 commissions for stock and ETF trades * No account minimums * No quarterly admin fees	min. $50 a month through pre-authorized contributions.	None	Young Investor Pricing
	Waiver of account maintenance fee	Clients who have RBC Student account, currently or in the past 5 years.	The Maintenance Fee ($25 per quarter) is waived, regardless of the account balance.	not required	None	Zero Account Management Fee
	Young investors offer	Clients 26 years old and under	Low activity account administration fee and the RSP account administration fee are waived.	not required	None	Young Investors Offer
	Waiver of account administration fee	Clients younger than 26 years old	The account administration fee ($24.95 per quarter) is waived.	not required	None	$0 Account Administration Fee
Last Updated: Feb. 1, 2021 16:00PT

Posted on February 1, 2021January 10, 2022 by user

Discount Brokerage Weekly Roundup – February 01, 2021

So. Much. To. Unpack. Unlike most pundits this week, we’re not going to talk about GameStonks, at least not in the kind of depth we normally would. No, for the moment we’ll save the commentary for the forum chatter and DIY investor feedback from Twitter.

There’s plenty on the menu for this edition of the Roundup. In fact, there’s so much to say about the latest online brokerage rankings from Rob Carrick at The Globe and Mail that we’ve decided to focus this edition on the wealth of data and insights the latest edition has delivered. To keep things on point with the conversations happening online, we’ve also included highlights from the forums and on Twitter. Get comfy – this is going to be a long (but fun) ride.

The Unsettled Elephant in the Room

We can safely say this up front: This current market is unlike anything we’ve ever seen before.

Specifically, the mobilization of massive waves of investors pouring into stocks that are heavily shorted and being able to generate shockwaves through the capital markets. Never before, or at least not in recent memory, have so many people learned so much about shorting, squeezing, margin, clearing, and settlement as they have in this past week.

Moreover, the lesson in what matters most to online investors – content and community – came courtesy of Reddit, a website that eschews modern aesthetics.

An almost incalculable number of lessons are to be learned from the time we’re living through (especially as DIY investors), so we won’t be covering these in this edition of the Roundup because there’s simply not enough time and space this week for all of it. In fact, in compiling the reactions online to the Canadian discount brokerages via Twitter, the software we use crumbled under the sheer volume of the conversation, taking with it hours of work sifting through visceral and convulsive reactions by online investors (traders) to the trading of GameStop, AMC, Blackberry, and others.

For now, it’s sufficient to leave this video as a tongue-in-cheek summation of events.

a normal person explains what’s happening on the stock market: pic.twitter.com/zKKvULCirX
— Avalon Penrose (@avalonpenrose) January 27, 2021

Rest assured, as the dust settles (probably faster than trades from Robinhood – had to do it), the spotlight will move to the seismic shift in trading behaviour we’re witnessing right now.

ICYMI: Robinhood CEO Vlad Tenev spoke out yesterday after the company decided to restrict trading in GameStop and other stocks. “In order to protect the firm and protect our customers we had to limit buying in these stocks,” he told @andrewrsorkin. https://t.co/LsJ5iNjJAB pic.twitter.com/XutnOQn9YN
— CNBC (@CNBC) January 29, 2021

2021 Canadian Online Brokerage Rankings: Spotlight on Service

Now in its 22^nd edition, The Globe and Mail online brokerage rankings, authored by Rob Carrick, are one of the most popular rankings available for Canadians who are shopping around for a new online brokerage or are simply interested in making sense of trends in the DIY investing space.

This past week, the latest edition of the rankings was published, and this one is by far one of the most interesting editions yet.

Fair warning, this post is going to be a long one, in part given the historic nature of current market conditions but also because of additional data added to this year’s review that doesn’t ordinarily appear in it.

What Goes Into the Online Brokerage Rankings?

Over the past two decades, there have been numerous changes to the review, ranging from what time of year it gets published, to the criteria used to evaluate brokerages, to the accessibility of the reviews themselves. These small changes make comparing absolute performance from year to year a challenge, so as a result, one of the best ways to understand the meaning of these reviews is on a relative basis. Contextually, there are important changes or factors that arise over time that make up part of how online brokerages get evaluated.

An important factor to note in the assembly of the rankings is that this review is based on data from the prior year. Or at least that’s how things used to operate. While the bulk of the 2021 online brokerage rankings are based on data from 2020, there is a significant addition to this year’s results: telephone customer service wait times that were collected in mid- to late-January of 2021. The data, which was supplied by financial research firm DALBAR Canada, tested the telephone wait times at all Canadian online brokerages.

It bears mentioning that the likely reason behind including telephone customer service experience stems from the many (many) complaints from online investors over the past year and especially in the latter portion of 2020 (and early 2021) concerning reaching an online brokerage by phone. If there is one thing that Rob Carrick’s reviews and commentary on the online brokerage space in Canada have evolved into, it’s a barometer for some of the most salient issues (and frustrations) faced by DIY investors.

With some important context out of the way, let’s dive into the results themselves to see what the scores looked like across the board this year, who was included (and who was not), as well as some of the important drivers of success in this year’s rankings.

Results from the 2021 Canadian Online Brokerage Rankings

To help put this year’s results into context, the table below compares the most recent set of scores to those of the past two years (2020 and 2019).

Online Brokerage	2021	2020	2019
BMO InvestorLine	B	B-	B
CIBC Investor’s Edge	C+	C	C
Desjardins Online Brokerage	C	C	C-
HSBC InvestDirect	D+	D+	C-
Interactive Brokers	B+	B+	B+
National Bank Direct Brokerage	B	B	B-
Qtrade Investor	A	A+	A
Questrade	B+	B+	A-
RBC Direct Investing	B	B+	B
Scotia iTrade	B	A-	A-
TD Direct Investing	A-	A	A
Virtual Brokers	B	B+	A

One of the first things that jumps out is in relation to first place in these rankings and which online brokerage scored the best: Qtrade Investor.

For the past three years, Qtrade Investor has achieved the highest score in this ranking and, in 2019, had to share that accolade with Virtual Brokers and TD Direct Investing. Since 2019, however, Qtrade Investor has handily outscored its rivals – including last year, when it scored an A+ rating. This year, Qtrade did earn the highest mark, an A, but it was a lower score than last year. No stranger to the podium, Qtrade Investor has been voted best online brokerage by The Globe and Mail 12 times in the 22-year history of the rankings.

Coming in second this year was TD Direct Investing, which is one of Canada’s largest and most popular online brokerages. As with Qtrade Investor, TD Direct Investing saw their score in 2021 drop from 2020, in this case falling to an A- from an A.

Third place, interestingly, was a tie between Interactive Brokers and Questrade, both of whom received grades of B+. One of the reasons this is an interesting result is because Interactive Brokers was, for many years, not included in The Globe and Mail rankings since they primarily catered to more active investors and traders (as opposed to the “everyday investor”) and they lacked an RRSP offering, which they now currently do offer. Since 2019, Interactive Brokers’ score has remained fairly level at B+, but Questrade has seen their score slip slightly, from an A- in 2019 to B+ in both 2020 and 2021. This year, however, that B+ was good enough to tie for third place.

While the middle-of-the-pack experience has largely remained intact, HSBC InvestDirect has consistently remained at the bottom of the rankings for the past three years. Despite their low commission rates, international access, and award-winning client service, several factors that matter more to these ratings, such as mobile accessibility, impacted the scores.

Also of note this year, only two of the 12 Canadian online brokerages covered this year improved in their scores relative to last year. BMO InvestorLine raised their score from a B- to a B, and CIBC Investor’s Edge improved from a C to a C+. In contrast, five online brokerages dropped in scoring compared to last year, the most notable among them being Scotia iTrade, which went from an A- to a B. Another interesting negative trend showed up for Virtual Brokers. In 2019 they tied for the highest score, an A that year, with Qtrade Investor and TD Direct Investing. In 2020, however, they slipped to a B+, and in 2021 they scored a B.

Not on the list of Canadian online brokerages reviewed for this ranking was Wealthsimple Trade – a notable absence given both the visibility and the popularity with younger investors. This is not the first review that the newest kid on the online brokerage block has had to sit out. However, in the context of Wealthsimple Trade’s features, pricing, and volume of interest, not to mention sheer growth in numbers, DIY investors are likely curious about how the brokerage would fare in the rankings framework.

As far as grades go, a comparison to 2019 shows that performance across the board has, on a relative basis, worsened. The strongest drivers for scoring on The Globe and Mail brokerage rankings have always leaned toward the experiences of “everyday investors” rather than more-active traders. This year, the ranking criteria are based on:

Convenience and security
Cost
The investing experience
Tools

Importantly, a big part of the convenience and security component of this year’s results included phone access, something that has been a major pain point throughout 2020 but especially into the end of the year.

Call Options

To address this timely topic, in addition to relying on data generated from 2020, this year the online brokerage rankings included telephone wait time data supplied by financial services research firm DALBAR Canada – and those results were also fascinating.

One of the first, and most glaring, results from that snapshot is that wait times in January at online brokerages averaged out at 92 minutes, with a standard deviation of almost 52 minutes. The importance of reporting the standard deviation here is clear because, while an average wait time of 92 minutes is bad enough, it doesn’t accurately convey how bad things are right now for DIY investors trying to contact customer service.

For a more accurate view, there’s going to be a little bit more math required.

What the overall average of wait times doesn’t convey is that the data has a couple of very clear outliers at both the short and the long ends of wait times. To help put this into perspective, the shortest wait time average was 7 minutes (Virtual Brokers), and the longest was 179 minutes (Scotia iTrade). That works out to almost 26x more time spent waiting to speak to someone at Scotia iTrade than at Virtual Brokers.

Online Brokerage	Wait Times (min)
BMO InvestorLine	87
CIBC Investor’s Edge	101
Desjardins Online Brokerage	170
HSBC InvestDirect	125
Interactive Brokers	66
National Bank Direct Brokerage	69
Qtrade Investor	28
Questrade	128
RBC Direct Investing	90
Scotia iTrade	179
TD Direct Investing	58
Virtual Brokers	7

These two extreme data points suggest they were outliers, and outliers tend to add noise or skew the more realistic picture. The next outlier in the data was Qtrade Investor, with an average wait time of 28 minutes – which is still long by most reasonable standards but is significantly lower than the next highest online broker, TD Direct Investing, where telephone wait times were 58 minutes on average.

Excluding the wait times of Virtual Brokers and Qtrade Investor as outliers, the average wait times at 83% of the Canadian online brokerages worked out to be 107 minutes, more than double what it would be if Virtual Brokers and Qtrade Investor were included in the analysis. Even more telling, the standard deviation drops to 42 minutes. At the upper end of the wait time range, if we exclude Scotia iTrade, with a wait time of 179 minutes, and Desjardins Online Brokerage, with a wait time of 170 minutes, a much more accurate view of wait times emerges.

The average wait time drops from 107 minutes to 91 minutes (about a 15% decrease), and the standard deviation drops from 42 minutes to 26 minutes (a 38% decrease). This represents 66% of the data, or eight out of 12 online brokerages.

Wait Times	Average (mins)	Standard Deviation (mins)	% of Brokers Represented
All Brokerages	92	52	100
Shortest Outliers Excluded	107	42	83
All Outliers Excluded	91	26	66
3 of Big 5 Banks (outliers excluded)	93	7	25

In light of the above data (that excludes outliers at the upper and lower extremes), and assuming a normal distribution, 68% of the time, calling an online brokerage in Canada in January would have resulted in a wait time of between 65 and 117 minutes. And 95% of the time, or 19 times out of 20, the wait time for a DIY investor would have been between 39 and 143 minutes. And 99.7% of the time, a Canadian DIY investor would have waited between 13 and 169 minutes. In other words, getting served quickly would be more because of good fortune than because of the system working as it should.

Let that sink in for a moment. These are private, profit-driven, million- or billion-dollar brands (in some cases) that are posting these kinds of numbers. For illustration, three out of the big five Canadian bank-owned online brokerages posted a remarkably consistent range of wait times: 93 minutes with a standard deviation of 7 minutes. On a peer-to-peer basis, this highlights how far ahead TD Direct Investing’s scores (with wait times of 58 minutes) would be relative to the others and how far behind Scotia iTrade sits. In either of these two cases, these would be considered so far outside of a statistical norm that it is not by accident that they’re achieving these numbers.

Imagine the frustration, dropped calls, and erosion in trust that occurs when an on-demand world meets a two- or three-hour wait time. And this doesn’t even factor in waiting by online chat.

It naturally raises the question: What are Virtual Brokers and Qtrade Investor doing so well, which causes them to be able to answer the phone so fast (relatively speaking), and what are Scotia iTrade and Desjardins Online Brokerage doing so poorly? One possible conclusion points to a capability of being ready to scale up, as pointed out in the Influencer Edition of the Look Back / Look Ahead series.

Now, to be clear, these numbers do not indicate whether or not issues were resolved, just how long it took for someone to answer the phone. Also, these are snapshots in time, and there is no comparable data taken from similar time periods to benchmark against. The fact that these tests added to the caller queue means they affected wait times, even if the impact was slight, so the numbers do need to be treated with some caution.

Even so, it is cause for concern for DIY investors to see that wait times can be meaningfully measured in hours instead of minutes. Coming into the peak season for RRSP contributions, it means that volume will only increase, as will frustration levels. If there are any outages, huge rallies or crashes in the market, or other market-moving events, then RRSP contributions via telephone are going to be nearly impossible at most Canadian online brokerages.

Of course, telephone service isn’t a major selling point for a lot of online investors. In fact, many will never have to deal with a client service rep on the phone, but there are some things that can happen only by talking to a representative. For a portion of the DIY investor population, that translates into being forced to wait.

That said, there are indications that this is clearly an issue of concern to certain online brokerages and that relief may be on the way.

Relief for Long Wait Times

First, in an interesting interview by Preet Banerjee with BMO InvestorLine’s president, Silvio Stroescu, there were some fascinating insights on the impact of the past year on this online brokerage. According to Stroescu, the huge influx of demand for online investing accounts, as well as from investors looking to “upgrade” their accounts, took customer service wait times from an average of five minutes in early 2020 to about 40 minutes in 2021.

The numbers reported by Stroescu for 2021 are still much higher than he was happy with, and in the interview he did explain a number of steps that BMO InvestorLine is undertaking to close the service gap. In fact, as early as this past summer, Stroescu mentioned that BMO InvestorLine undertook significant hiring and ramp-up to provide additional service support. Nevertheless, the observed results of DALBAR’s numbers and reported numbers of Stroescu all point to a significant wait time for online investors calling in.

Another interesting piece of news came from Questrade, in advance of the RSP season rush, in the form of a client email. In that email, they acknowledged that “longer wait times are the norm with all brokerages at this time,” that over the past year they have doubled the number of client service specialists, and that in the “coming weeks” they are slated to add over 100 customer service agents.

Putting the Pieces Together

Clearly, there’s much to digest from the data in this year’s edition of the Canadian online brokerage rankings by The Globe and Mail’s Rob Carrick.

So much of the story that started in March of 2020 was about the volume of activity as well as the influx of individuals who wanted to trade on the market. The impact on Canadian online brokerages, in terms of service as well as stability, has been clear. The statistics point to a systemic lack of capacity to be able to address the surge in interest in online investing coupled with technology and operational shortfalls.

What, as a DIY investor, is especially worrisome about the online brokerage experience is that it has taken so long to remedy the capacity issues. Markets rely on confidence, and confidence comes from certainty. The relative stability of scores in the Canadian online brokerage space points to a “business as usual” pace that was moving far too slowly, or did not plan adequately, for the kind of strain that ultimately emerged over the past year. That said, at certain online brokerages, the persistent wait times point to a much deeper issue and lack of prioritization of client service. Conversely, some other brokerages have clearly shown the capacity to keep up somewhat reasonable wait times.

The qualitative commentary this year was in line with previous years; however, one of the great features for investors trying to get a quick answer on comparing features is toggling comparisons for key items like commission-free ETFs, high-interest savings ETFs, and performance reporting.

As much as we have said about this year’s rankings, there’s also a lot that we haven’t yet covered, including the reactions of investors to this data. This year’s rankings generated almost immediate reactions by readers, with the dominant theme being wait times at various brokerages.

With the latest rankings data in hand, it won’t just be hedge funds feeling the squeeze this year. The online brokerages in Canada now have added pressure to solve the customer service wait time issue and win back the trust of investors. Failing to do so quickly would almost certainly, at this point, raise the prospect of additional regulation and compliance to mandate accessibility and accountability.

Discount Brokerage Tweets of the Week

Discount Brokerage Tweets – Curated tweets by SparxTrading

From the Forums

Up & Up & Up

After so many years of the markets doing well and interest rates dropping, one investor wonders in this post if a market downturn is now unlikely, if not impossible. Other Redditors share their strong opinions on whether the stock market can stay up forever.

Into the Close

That’s a wrap on just one of the several big events that transpired this past week. Looking forward, there’s a new month, which means a deals update is on its way, and there will likely be no letup from the buying army of retail investors who’ve firmly locked into all sorts of shorted stocks, including silver. Buckle up for volatile times ahead.

Posted on January 26, 2021June 17, 2021 by user

Look Back / Look Ahead: Influencer Edition

As strange as the times are that we currently are living through, stranger still is the world of DIY investing.

Scores of online investors are shut in because of COVID-19, savings for many are up despite massive economic dislocation, interest rates are at near-record lows, and individuals turning to investing online, not only as a means of wealth creation but also as entertainment, have materially shaped the direction, sentiment, and performance of the stock market.

It’s precisely at times of immense change or volatility that the steady hand of experience offers its greatest benefits: important context and insight to help make sense of the current state of investing online. Cue the newest addition to the Look Back / Look Ahead series, the Influencer Edition.

This digital series is a companion to the recurring Look Back / Look Ahead feature of Canadian online brokerages that provide their perspectives on the past and future of the online investing industry. In the Influencer Edition, however, we have brought together the most experienced collection of voices and perspectives available in the Canadian online brokerage industry to weigh in on what they think is important to take away from last year as well as what online brokers and investors should pay attention to in the year ahead.

Rob Carrick, the well-known personal finance journalist at The Globe and Mail, has been covering and ranking Canadian online brokerages for more than two decades. Glenn LaCoste, President and Founder of Surviscor, a leading Canadian financial services analysis firm, has been evaluating and ranking financial services firms, including Canadian online brokerages, in detail for almost two decades. Mike Foy is Senior Director of the Wealth Management Practice for North America at J.D. Power and oversees the annual Self-Directed Investor Satisfaction Study, which has been tracking the pulse of online investor satisfaction in Canada. Finally, there’s yours truly, Hamish Khamisa, the voice behind Sparx Trading; I have been covering the world of Canadian online brokerages and running SparxTrading.com since 2011.

While the credentials and experience of each contributor certainly speak for themselves, the most exciting part of this project has been collecting and relaying the unfiltered perspectives of these influencers in one place. The responses to the questions that were asked are thought-provoking, insightful, and helpful to any Canadian DIY investor interested in investing online or any online brokerage committed to improving their service offering.

Against a backdrop of a historic year, it feels like something equally historic was needed to make sense of the new normal of investing online. Even in the short span of a month, what is considered “normal” activity for DIY investing has radically changed, so the themes identified in this issue around how online brokerages ought to be preparing for change are even more relevant heading into the new year.

On behalf of the Sparx Trading team, I want to thank the authors for their submissions and efforts in providing a voice for DIY investors and driving positive change in the Canadian online brokerage industry. I also want to extend a special thanks to our loyal readers for your continued support and hope you stay safe, well, and healthy in the year ahead.

Hamish Khamisa

Founder, SparxTrading.com

_____________

Click below to read submissions from:

Pages: 1 2 3 4 5

Posted on January 25, 2021March 21, 2021 by user — Leave a comment

Discount Brokerage Weekly Roundup – January 25, 2021

Looking at the calendar, it’s hard to fathom that we’re almost through one month of 2021. Time, it appears, is moving quickly as events unfold, and it seems fitting that, like a good Bernie meme or Tom Brady, what’s old can be made new again.

In this edition of the Weekly Roundup, we focus on the relaunch of the Sparx Trading newsletter and on why there are some important (and timely) elements that we’re putting together for folks interested in online investing. Next, in keeping with the close-out of the month, we’ve collected the stories that we wanted to focus on in January but haven’t had the opportunity to do so yet. Enjoy the medley of stories we found interesting throughout the month. Finally, we wrap up with commentary from DIY investors in the forums and on Twitter.

Don’t Call It a Comeback (But It’s Cool If You Do)

After being dormant for the past seven years, the SparxTrading.com newsletter has officially been rebooted. And, it feels great to be back (on email).

In that time, a lot has changed about the landscape of the Canadian online brokerage industry, and yet, remarkably, there are still some things that have yet to change. Throughout that time, however, there have been a few constants at SparxTrading.com, chief among them the Weekly Roundups and the deals and promotions updates.

We live in a world where people now communicate much more with short videos than with email, so why would we think to a) (re)launch an email newsletter, and b) do so now? Let’s dive into both of those questions below.

One of the biggest constraints for any content creator is resources, and dialing back the clock to 2014, SparxTrading.com and the parent company, Sparx Publishing Group, were much smaller. Today, Sparx Publishing Group has grown to over 15 team members, which enables our team to do some pretty creative and amazing work, including to help take Sparx Trading content to a new level of awesome. Happily, it’s not only the team that’s grown here at Sparx but also the audience of the website and, in particular, the Weekly Roundup.

SparxTrading.com is one of the longest and most continuous sources of coverage on the Canadian online brokerage space, and it turns out that DIY investors appreciate the content being produced. Interestingly, the Weekly Roundup has actually become required reading across the online brokerage space, with many folks at online brokerages tuning in to stay on top of what’s happening in their industry. Also pretty cool: Some rather prestigious research firms that charge a pretty penny for their insights and research on the Canadian online brokerage space use our content to stay on top of the activities and trends.

All told, it’s been an amazing journey to get to this point. There is value being created for audience members, and meaningful change for DIY investors, which arises as a result of the forum we’ve created. Of course, things could always be better. And, with the relaunch of the monthly email newsletter, we think it will be, as this format will help to address the challenge of staying on top of the huge volume of news with highlights of the latest developments, delivered to subscribers’ inboxes. Here’s a full rundown of what’s inside.

First, something fun. We love the imagery of the bull and bear, and so we thought we’d capture these two important stock market characters in fun and interesting ways. The kickoff to the newsletter is in line with that sentiment, bringing a familiar trope back to life from the famous scene in the movie Say Anything.

Of course, superfans of the Sparx Trading universe can check out the Sparx Publishing Group Instagram feed for more fun, movie-inspired posts featuring the bull and bear. Some favourites include:

Dirty Dancing
The Sound of Music
What to Expect When You’re Expecting
Weekend at Bernie’s
Ghostbusters

In addition to a fun start to the newsletter each month, readers can expect to get down to business with updates on the biggest stories from the Weekly Roundups from the previous month. To help keep things quick and easy to digest, we’ll be picking the top two or three stories to feature, with links back to those stories for folks who want to dive into more detail.

There’s also a news section that will include quick updates from Sparx Trading as well as other timely announcements that would be appropriate to flag for our readers’ attention. The reboot version of the newsletter featured an announcement about the upcoming influencer edition of the Look Back / Look Ahead series for this year.

Finally, another reboot inside of a reboot is the relaunch of Mark to Market, a stock market–themed comic developed here at Sparx. Originally published in 2013, Mark to Market is being relaunched to coincide with the launch of the new newsletter, and the origin story and episodes will appear on SparxTrading.com, specifically as part of the blog, which will also be getting a major overhaul in the coming weeks. For some quick context, however, Mark to Market is an edutainment piece, made for DIY investors and stock market enthusiasts, to help assist in navigating the maze of products, services, and providers that self-directed investors encounter. It is especially timely given the surge of interest in online investing that took place in 2020, particularly among new investors.

The relaunch of the Sparx Trading newsletter is one in a number of new initiatives this year. That said, it also highlights the fact that in the world of DIY investing, there are trends and cycles to the investor experience. Email, while not groundbreaking, is still an effective channel to reach a good portion of the audience that relies on or is curious about online brokerages in Canada. Think of it as the Tom Brady of communications channels: still pretty much a reliable delivery mechanism.

If you haven’t already done so, subscribe to the newsletter, and be sure to check out what’s coming up in the next episode!

Lightning Roundup: Other Interesting Developments

After the time distortion that was 2020, it’s amazing to see that January of 2021 is almost over. Much has happened during the month, so this is our chance to shine a spotlight on stories and items that we didn’t get the opportunity to explore more fully during the month. While we’re not going to dive deep, here is a quick highlight of the stories that crossed our radar in January that will be worth watching as the year proceeds.

Gaining Wait: Customer Service Wait Times Raising Tempers

Nobody likes to wait in line, but Canadians are generally a polite bunch and willing to put up with a bit of a queue to resolve important matters. So, when tempers flare and stories emerge of wait times consistently stretching beyond two or three or four hours on the phone just to talk to a representative at an online brokerage, it’s only a matter of time before it hits the news. This is a story that has been a long time in the making; however, it’s gaining momentum among the popular media channels – including The Globe and Mail – and we predict even more to follow. Customer wait times at online brokerages in Canada have ballooned to almost incredulous levels, so much so that this story could gain traction with consumer and investor protection agencies. Can markets operate fairly and efficiently without market participants being able to connect to online brokerages in a reasonable time frame? The most widely impacted clients are those who need to talk to brokerages by phone (and now even online chat is impacted). Check out this story from The Globe and Mail’s Rob Carrick for a clear articulation of the problems DIY investors are encountering when trying to connect to their online brokers by phone.

Columnist @rcarrick said he’s received complaints about several bank-owned firms, but @TD_DirectInvest was named most often. As the largest player in the brokerage business, TD has had issues keeping up with client demand to speak to its live reps. https://t.co/J7SXJWBNWx
— Ellen Roseman (@ellenroseman) January 25, 2021

Getting a Taste for More: Tastytrade Gets Acquired

Buying up online brokerages is all the rage in the US. Schwab bought up TD Ameritrade, Morgan Stanley acquired E*Trade, and now, one of the newer kids on the block, Tastytrade, has been acquired by the UK-based IG Group for $1 billion (USD). Tastytrade was founded in 2011 by Tom Sosinoff, the founder of Thinkorswim (which was acquired by TD Ameritrade for $600 million), and it has earned a reputation for engaging content and a focus on options trading – something that has exploded in popularity through 2020. It will be interesting to see how or if this impacts the plans for Tastytrade to come to Canada. Originally, something was telegraphed for early 2021, but this latest development means that someone else is now pulling the corporate strings, and the move into Canada could be delayed or rethought. Alternatively, a much bigger entity backing Tastytrade could also spell more ambitious opportunities. The details of the transaction reveal that IG Group is ponying up a billion dollars for over 105,000 active accounts (roughly $9.5K per account – yikes). That billion-dollar figure is made up of $300 million in cash and $700 million in stock, which ends up making the shareholders in Tastytrade 14% shareholders in IG Group.

Let’s Talk About Trades

The end of a year is a great opportunity to reflect back on big milestones or achievements. One interesting thing that has started to emerge courtesy of Robinhood that has found its way into content schedules among Canadian online brokerages is more attention being given to (and actual reporting on) the popular stocks traded by DIY investors. There was a whole lot of controversy stirred up when sites that monitored Robinhood’s publication of these figures emerged. However, in Canada, the timescale and scope of coverage of “what’s popular” didn’t bring with it the same scale of attention or a rapid enough timeframe to make the same kind of waves as that same information would have in the US. Over the course of the year, we’ve noticed the spotlight shining on popular trades from 2020, with the most recent example coming from RBC Direct Investing.

Influencer’s Gonna Influence

What happens when you get some of the most informed minds in the Canadian online brokerage space to collectively weigh in on trends and developments related to the online trading experience in Canada? This week, readers will find out.

The new Influencer Edition of Sparx Trading’s Look Back / Look Ahead series is set to go live this week, and it features contributions from Rob Carrick of The Globe and Mail, Michael Foy from J.D. Power, and Glenn LaCoste from Surviscor. Each of these contributors has been researching the online brokerage space in Canada for many years, and, as a result, each has a uniquely qualified perspective on the DIY investing experience from a variety of vantage points.

Be sure to follow Sparx on Twitter for the first notification of the launch of the new series! Also be sure to check out the online brokerage version of the Look Back / Look Ahead series to get up to speed on what the industry voice is.

Discount Brokerage Tweets of the Week

Discount Brokerage Tweets – Curated tweets by SparxTrading

From the Forums

Ch-Ch-Ch-Ch-Changes

In this post, a Redditor shares a screenshot about the new pre-market trading hours being offered by one Canadian online brokerage. Fellow Redditors rejoice – and request even more improvements, including after-market trading hours, an improved app, better customer service, and reduced fees.

Engineering a Lucrative Life

A 23-year-old engineering grad with a good job, $100,000 to invest, and zero experience in the markets asks in this post how to get started. Hundreds of fellow Redditors weigh in with advice on everything from couch potato investing to company-matched RSPs.

Into the Close

That’s a wrap on the end-of-month edition of the Roundup. There’s lots of interesting work going on behind the scenes, and the start to 2021 is filled with all kinds of welcome surprises, including Tom Brady making it into the Super Bowl again (some would argue that’s no surprise). Speaking of surprises, there are plenty of earnings slated for the week ahead, and it seems like folks in the US government, starting with the President, are back at work. It’s going to be a full week, so here’s hoping you start on a positive note and finish on a profitable one!

Brady and Mahomes playing in the Super Bowl ⏳ pic.twitter.com/fbiK9SczpM
— SportsCenter (@SportsCenter) January 25, 2021

Posted on January 11, 2021December 31, 2021 by user — Leave a comment

Discount Brokerage Weekly Roundup – January 11, 2021

Sometimes you just have to call a spade a spade. 2021 is shaping up to be more of a hangover than a do-over. Now that we are just over 2% into the new year, the road ahead is clearly bumpy. Thankfully, with talk of new promos and the finer points of design choices, we have much brighter news to report than most of what’s been flying (or not flying) around on social media.

In this post–coup d’état edition of the Roundup, we provide a refreshing piece of good news as multiple online brokerages launch new offers and reset the game clock on existing promotions for DIY investors to take advantage of heading into this year’s RRSP deadline. Next, we weigh in on an interesting conundrum for the online investing experience: innovate quickly or stick to the basics? Happily, we’ve got some interesting forum chatter and informative commentary from DIY investors on Twitter to close out on.

Deals Activity Shows Cash Is King

If there’s one thing we could all use right about now, it’s a healthy dose of positive developments. Fortunately, the January deals and promotions section has been filling up with just that – especially for online investors looking to score a deal on an online investing account ahead of the RRSP contribution deadline.

Kicking things off is the great news that RBC Direct Investing has jumped back into the deals and promotions section with a cash-back and commission-free trade offer. After the conclusion of their go-to commission-free trade promotion at the end of 2020, it seems that RBC Direct Investing made a resolution to start off the new year with something bigger and bolder for DIY investors this RRSP season.

Beginning this January and lasting until the end of March 2021, RBC Direct Investing is offering a tiered cash-back promotion. The cash-back amounts range from $50 (for deposits of $5,000) up to $2,000 (for deposits of $1 million or more). In addition to a cash-back amount, all deposit tiers qualify for 10 commission-free trades that are good through to the end of August 2021, leaving ample time for individuals to use this bonus.

We were also eagerly awaiting what BMO InvestorLine would launch early this month. Their previous promotional campaign expired in early January, unlike many of their peer firms’ deals, which expired at the end of December, so it was interesting to see what BMO InvestorLine would do given the clear trend toward cash-back offers from their competitors this year.

Fortunately for DIY investors, BMO InvestorLine has shown up with a relatively competitive offer and significantly dropped the qualifying deposit amount for the lowest tier of the deal from their usual range of $25,000 to $50,000. As with their previous cash-back offer in the fall, the new cash-back offer is a tiered promotion; however, this promo features deposit tiers starting from $15,000 (which offers $150 cash-back) up to deposits of $1 million and more (which offers $2,000 cash-back).

In addition to the launch of new offers this past week, we also saw several offers have their expiry dates officially updated. Notably, there were a couple of offers from Questrade – their five-free-trades offer, as well as their one month of commission-free trading, saw their expiry dates move to December 2021. Also, the refer-a-friend offer from BMO InvestorLine was extended another year, with the new expiry date falling on January 6^th, 2022.

If there’s one clear trend this year when it comes to online brokerage deals and promotions, it’s that cash is king.

All of the big five bank-owned Canadian online brokers have a very competitive cash-back promotion now live, with most of them expiring at the beginning of March (RBC Direct Investing’s is the only exception, finishing at the end of March). That said, there are some patterns that emerge in the offers that are worth exploring further.

First, it was interesting to note the trends at the extreme ends of the deposit tiers.

At the lower end of the deposit spectrum (generally under $25,000), all of the big bank-owned online brokerages had some kind of offer in place. RBC Direct Investing had the highest offer, with a cash-back award of $50 and 10 commission-free trades, an offer that their only rival at this deposit level, Scotia iTrade, was well behind (Scotia iTrade offers $25 cash-back). Interestingly, BMO InvestorLine, who lowered their deposit threshold to qualify for a deal down to $15,000 (compared to the $50,000 minimum deposit for their fall campaign), went significantly higher than any of its peers with an offer of $150, which is 50% higher than what TD Direct Investing offered ($100).

Meanwhile, at the higher deposit levels ($500,000+), there appears to be a whole new battleground forming.

To start, almost all online brokerages with cash-back promotions have an advertised offer for deposits of at least $1 million. The one online brokerage that does not, however, is TD Direct Investing. This seems like a remarkable decision given the value of the prospective clients at that level, and while for portfolios of $1 million or more the deal isn’t the first thing that a shopper might consider, all else being equal, three direct competitors are willing to pay $1,000 more for the business.

It bears mentioning that the appearance of $1 million as a deposit tier used to be a headline maker; however, this deposit tier has almost certainly become the new-normal top-end deposit. That said, it was also fascinating to observe that Qtrade Investor created a new top-deposit tier for individuals bringing over at least $2 million. Given that the bonus Qtrade Investor is offering for this deposit tier ($2,000) is the same amount that rival online brokerages are offering for deposits of $1 million, it seems as if this tier was a clever way in which to stand out against their competitors. While the dollar amount for the bonus isn’t higher, the deposit tier is, which makes Qtrade Investor appear to be larger than their bank-owned peers. Further, there are no other non-big-five-bank-owned brokerage competitors to Qtrade Investor at these higher-level deposit tiers.

Aside from extreme deposit tiers, it was also fascinating to observe which segments were sought after by specific brokerages.

For example, neither BMO InvestorLine nor TD Direct Investing saw value in putting offers into market for prospects with less than $15,000. Additionally, in the deposit range between $15,000 and $500,000, BMO InvestorLine is aggressively pricing their cash-back bonus. With the exception of the $25,000 tier (in which TD Direct Investing has the highest cash-back offer), BMO InvestorLine either has the highest amount or is tied for the highest amount of cash-back (at the $100,000 deposit tier with CIBC Investor’s Edge).

With several key names still on the sidelines heading into RRSP season, we suspect that there might be a few offers still to come to market; however, it is unlikely that the current prices will be significantly outbid across pricing tiers. Instead, if an online brokerage is contemplating launching a cash-back offer, it is more likely that they will stick to the average offering in that tier or find a way to combine cash-back with commission-free trades to have a more competitive offering.

Thankfully, the deals and promotions news for Canadian DIY investors is actually improving in 2021 – and that was coming off a strong close to 2020 in terms of offers.

Most of Canada’s largest online brokerages have the most popular offer type (cash-back) available, which makes this an opportune time for anyone considering opening an online investing or online trading account to get the maximum benefit for doing so. Of course, we’re curious what some smaller or lesser-known online brokers are going to do in terms of promotions, but from now through the end of February we expect the focus to be on marketing and advertising.

Mind the Generation Gap: User Experience for Online Investing in the Spotlight

There’s no question that the picture of the world we’re living in exposes divisions nearly everywhere we look. In the world of online investing, although it is not nearly as polarizing, there is a significant challenge for online brokerages to contend with: trying to balance providing the kind of user experience younger (read Millennial and now Gen Z) investors expect with that preferred by the existing (and likely higher-asset-bearing) clientele comprised of “boomers.”

Originally, this second story of the Roundup was going to focus on only one topic – either the myriad of recent legal woes experienced by Robinhood while the Weekly Roundup was on hiatus, or an article published by Rob Carrick in The Globe and Mail at the end of December explaining to baby boomers how they can manage their investments using online brokerage apps. In diving into the comments of the Carrick article, however, it became clearer that the story of Robinhood’s regulatory troubles and the realities of mobile apps for older clients represent two sides of a user-experience coin. Hence, they’re both the focus of this particular story.

Starting first with Robinhood’s journey back into the spotlight at the end of 2020. Without question, for most of 2020, it was an incredibly positive year for the balance sheet of the scrappy “zero-commission” online brokerage in the US. At the outset of the COVID-19 pandemic in North America, and for the better part of the first half of 2020, Robinhood saw its client base skyrocket. Stunningly, Robinhood added more new clients in that timeframe than many of their peers – in fact, arguably adding more clients than most of their competitors. In 2020, Robinhood added 3 million new customers to its ranks in the first four months alone, it grew to 13 million users, and it currently sits at a valuation of more than $20 billion (USD). What has helped Robinhood skyrocket in users over 25x in seven years has been a combination of zero-commission stock trading prices as well as a user experience designed around being mobile-first and appealing to younger investors. Clearly, they are onto something.

That growth, however, was not without missteps. Whether it was the botched roll-out of their “chequing account” or multiple trading platform outages, their hypergrowth in 2020 exposed many of the leaks in the system running at full tilt. There was the tragic news of the suicide of a young investor who, because of the way information was presented on his account page, believed he had lost over $700,000 (USD) from a failed trade; there were security breaches with client accounts getting drained; and there were outages in times of heightened volatility.

This past December, however, there were consecutive regulatory arrows slung at the online brokerage, first in the form of a $65 million (USD) settlement with the Securities and Exchange Commission (SEC) for misleading customers about how Robinhood made money from selling order flow to high-frequency trading firms. Also, from securities regulators in Massachusetts in December, the charge that Robinhood resorted to “aggressive tactics to attract inexperienced investors, its use of gamification strategies to manipulate customers, and its failure to prevent frequent outages and disruptions on its trading platform.”

Given the meteoric success of Robinhood coming into 2020, and certainly throughout the year, it has clearly had an impact on the online brokerage industry as a whole in North America and is helping to shape the trading and user experience here in Canada as well. The emergence of Wealthsimple Trade, and their use of tactics similar to the ones that Robinhood used to fuel their own growth, is perhaps the most striking illustration of the Robinhood effect in Canada. More specifically, however, the issue at hand is the interface that users of online brokerages use in order to access their online investing experience, as well as the features they prioritize. Which brings us back to the article posted in The Globe and Mail at the end of December.

As part of the requisite research for the upcoming edition of the popular online brokerage rankings, Rob Carrick dove into the various Canadian online brokerage mobile apps to test-drive what the investing experience was like with all of them. While the article itself provides a useful overview of where mobile apps from Canadian online brokers shine and where they fall short, it was especially interesting to wander through the comments and reactions.

It was clear that “boomer investors” were the intended audience for this piece, and as such, the comments turned up what seemed to be significant resistance to the notion of trading on a mobile app – or to active trading in general – as well as the much greater pain point of the phone experience, which has nothing to do with the online interface and everything to do with customer service staff actually answering the phones at online brokerages in Canada. And therein lies the conundrum for online investing.

When it comes to designing features and capabilities, there has clearly been a shift away from cramming everything that could be done or said on an online investing interface into a more streamlined interface. That is a significant departure for almost a generation of online investors who’ve been accustomed to lots of menu options, features, and information on a landing page and who’ve generally not had a “mobile” interface to contend with, preferring to use a web-based interface instead.

By comparison, the “mobile first” approach to user interface design is highly constrained by the viewing area and behavioural inputs of a smartphone. To put it plainly, designers for phone interfaces need to decide what the most important functions and features to make available on mobile apps are.

Thus, it seems mobile apps reflect the collision course of the newest innovative design aesthetic – something that younger cohorts of investors and clients favour – and the functionality and user experience of managing wealth as a DIY investor. This is both a challenge and an opportunity for Canadian online brokerages.

From a business standpoint, the balancing act between building a technology and user environment for the future versus creating an environment that meets the needs of stakeholders today is what Canadian brokerages need to wrestle with. Based on the feedback accruing from Twitter and DIY investor forums, it appears that neither group – the newer investors nor the established and seasoned ones – is likely to find the perfect experience in one place.

The current slate of lawsuits and regulatory challenges facing Robinhood is likely going to put user experience for investors – especially in mobile environments – under the microscope. At what point does making investing more approachable, plain-language, and enjoyable cross the line into something bad? At what point is change necessary to enable more people to participate in wealth creation? The regulations have been formed, for better or for worse, based on historical notions of what investing ought to be, and, thus, to a degree, what it should look like.

Robinhood, along with the platforms and interfaces that emulate it, represents drastic change. Rules and established norms represent order. There is clearly a middle ground to be struck, but firms that seek to draw a line of best fit through different user groups, instead of building around those groups, risk being “forgettable.”

The real prize, it seems, is achieving more thoughtful customization at scale or accepting being very good at being niche, even if it does mean being “boring.”

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