Interesting recent action by Canadian brokers...

Discussion in 'Retail Brokers' started by Chagi, Apr 5, 2006.

  1. Chagi


    Anyone else been noticing how so many of the Canadian brokers have been suddenly jumping onto the "active trader" pricing bandwagon?

    The original lower cost solutions in Canada were IB, Questrade and Trade Freedom (in that order). We're seeing a large advertising campaign by Etrade, TD Waterhouse has already launched lower commissions, and tonight I noticed that BMO InvestorLine also issued a press release at the end of March announcing lower commissions effective July 1 for active traders. Probably worth noting that BMO undercut TD (BMO requires 30 trades/quarter for active trader status, TD requires 150/quarter , wonder if TD will respond?).

    While it's great to finally see some progress with Canadian brokers, I wonder if this is quite enough? The problem I see is that a trader under most of these new schemes would need to make a large quantity of trades in order to qualify for the lower prices, at much higher prices. So we're talking about 30+ trades per quarter at $20-$30 each before you could qualify for the $10/trade commissions.

    Anyone else have some thoughts regarding this? Will we see some further price action by some of the smaller brokerages?

  2. Save your breath and stick with IBCanada.
  3. Give an example of a Canadian retail account...
    That comes close to IB's "unbundled rate" of roughly $0.003/share with free platform and API.

    And "prop deals" don't count... they are uninsured and variable and often smoke and mirrors.

    ** The core issue **:
    Very few firms... only the ones built computerized from the ground up...
    Can make money at these levels.

    Like Google... IB has slashed it's margins...
    In order to force competitors to run at a loss.


    :cool: :cool: :cool:
  4. Yes, even at these 'bargain basement' rates, the Canadian banking oligopoly cannont even come close to IB and the like. You basically have to be ingnorant to what's out there to continue to use them.

    There is another option besides IB though, they'll be rolling out retail accounts next month and match IB on rates with better software. They're not a site advertiser yet, so I won't mention the name, but you can PM me if you want some info.
  5. mcelitetrader

    mcelitetrader ET Sponsor

    cmon friend...

    Smoke and mirrors?

    Dont continue the stereotype!!!!
  6. Fohat


    RBC Action Direct is also reducing its' commissions to around $9.95/trade for active traders making 30+ trades per quarter, starting May22

    It looks like they are simply price matching each other.
  7. Well, they're all very late to the game, its 2006, the "online trading revolution" happened around 1999 !! What took them so long, lol...I guess its good to *finally* see the oligopoly "cracking" if we can call it that yet. How laughable that canadians are the first people to get turned away by US brokerages for all these years, because canadian laws work to "protect" canadian brokerages' inflated commission pricing..and how laughable that u have a better chance of opening an account with a US broker if you live outside this solar system than if you live in canada, is this what "Free Trade" is all about? (no pun intended lol)
  8. plugger


    It's been a good month. TD rolled out their new pricing structure and IB lowered their Canadian commissions from 2 cents per share (first 500) to 1 cent. Ironically, for a brief few days, TD had a lower pricing structure than IB for Cdn equities. The problem with all the large Cdn brokers (owned by the banks of course) is their minimum. Regardless of whether you trade 100 shares or 1000, you were still stuck with the base commission. It was great when I discovered IB.

    We still need lower commissions in Canada. When i'm trading an interlisted stock (TSX and NYSE), my order always goes to the U.S. for the lower commissions. Typically the liquidity is the same. Just think of all the volume the TSX loses because of people like me (and i'm just a very small fish). Drop the rates and they'll regain this lost trading revenue.
  9. Chagi


    I think that oligopoly is actually a very approriate term for this, it has taken a very long time for the unified front of high commissions to break down. Even now things are not ideal, since one would need to spend a great deal of money on commissions in order to qualify for the lower rates, and would need to continue high volume trading in order to keep those rates.

    I personally suspect that all of this is because of IB Canada.
  10. I talked to john see during a Tdwaterhouse meeting. He said he was aware that bmo and royal were both lowering their commissions to match tdwaterhouse's. I said BMO was giving customers active trader status at 30 trades a quarter, matching their tier 1. He said, tdwaterhouse, will consider matching BMO.

    #10     Apr 5, 2006