Online trade fees go to zero

Discussion in 'Sharemarket Investing Platforms, Tools & Services' started by ChrisP73, 2nd Oct, 2019.

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  1. ChrisP73

    ChrisP73 Well-Known Member

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    ChrisP73, 2nd Oct, 2019
    #1
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  2. Simon Hampel

    Simon Hampel Founder Staff Member

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    Race to the bottom?
     
    Simon Hampel, 2nd Oct, 2019
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  3. Dean Collins

    Dean Collins Well-Known Member

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    [Mod edit: merged from another thread]
    Not sure if it made news in the fintech space in Australia but Schwab announced $0 trades from Oct 7 (Currently they charge $4.95)

    Was really interesting to see that Schwab only make 7% of income on trades and 60% in interest on margin loans.....that concerns me that too many retail investors are too highly leveraged.


    So basically....they can go to $0 per trade and only lose 7% of revenue......BUT if they are "lending you money" to go long or shares to go short......they still make more profit.
    How Much Is Charles Schwab Being Affected By Zero-Commission Brokerages?

    (BTW as a matter of interest i trade with Ameritrade because of their Think Or Swim software platform which was the best choice when i tested 4 of them in 2018).
     
    Last edited by a moderator: 3rd Oct, 2019
    Dean Collins, 3rd Oct, 2019
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  4. Dean Collins

    Dean Collins Well-Known Member

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    lol.......got an email this morning.......

    TD Ameritrade are also going $0 commission for USA equities as well.

    TD Ameritrade

    Hmmmm i think i'd actually prefer to pay a fee so i know "where" im being screwed.
     
    Dean Collins, 3rd Oct, 2019
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  5. XBenX

    XBenX Well-Known Member

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    Here come the frontrunners. Interesting to read the details.
     
    XBenX, 3rd Oct, 2019
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  6. Dean Collins

    Dean Collins Well-Known Member

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    Yep thats what worries me as well. At the end of the day you would never know as you think the price action being displayed is real.....but who is to say one broker or another "adjusts" the price slightly......
     
    Dean Collins, 3rd Oct, 2019
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  7. geoffw

    geoffw Moderator Staff Member

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    I suspect that Chess sponsorship fees may stop share trades from being free - unless the broker holds the shares on your behalf, which some brokers do, and it's something I wouldn't like.

    I don't understand however why some brokers still operate on a commission model. Surely the paperwork involved is the same for a large or a small transaction - just that a commission means that the buyer is less likely to worry about the fee for a larger trade.
     
    geoffw, 3rd Oct, 2019
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  8. cberg86

    cberg86 Active Member

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    Interest on margin loans or margin of interest on cash balance?
    Most brokers in Oz have a fair bit of the latter.
     
    cberg86, 3rd Oct, 2019
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  9. gman65

    gman65 Well-Known Member

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    Yep, they'll try and make it back on the spread..e.g. how most CFD providers operate.

    Get enough volume and you can set your bots to work against your "clients"...
     
    gman65, 3rd Oct, 2019
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  10. Dean Collins

    Dean Collins Well-Known Member

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    As TDAmeritrade pays me practically nothing on cash balance....i suspect a bit of both considering they lend it out at 8% etc.

    Like i said......its going to be interesting to see how it affects retail traders. I generally trade in fairly large volumes about once or twice a week so will be interesting to see how much more/less trading i do and how it affects my style - i can imagine trading more in smaller lots.
     
    Dean Collins, 4th Oct, 2019
    #10
  11. Fargo

    Fargo Well-Known Member

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    The ASX is a monopoly. no rebates are paid to the broker. It is a different system in the USA known as" payment for order flow" where brokers get a rebate from market makers such as Citadel.. There are 13 SX's competing for order flows who get revenue from trade fees, gap( what they keep) selling data and research, holding collateral etc. They pay market making/ execution firms to trade on them, rebates are paid to the broker who " sells " the order flow.
     
    Fargo, 4th Oct, 2019
    #11
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