This might be what the gang at Schwab was thinking when they first got wind that eTrade was upping its commitment to foreign investing for its retail customers.eTrade will be providing direct access to stock markets in Canada, France, Germany, Hong Kong, Japan and the UK. I don't know if this means that things like the commodity ETFs from ETFSecurities and GDRs (a type of foreign listing not available to US retail investors) would somehow be available or not.
Account holders will also be able to trade and hold British pounds, Japanese yen, loonie, euros and Hong Kong dollars.
That these markets are now easily accessible may not be the thing but what this portends for the future might be. I think an obvious evolution is being able to access markets all over the world from one account. I don't know how many years it will take for this to unfold but it is a first step that the other discount brokers will have to match.
This move by eTrade really steps on Schwab's toes. Schwab can help you access many markets but it is a couple of intermediaries away from being direct access plus Schwab is much more expensive in many instances than the $20 eTrade plans to charge.
To Schwab's credit I will say that the people who answer the phone on the global desk are usually very knowledgeable but for trades that cost $100 or more you have to assess whether that knowledge is worth $80 or more (stocks below US$1, which is how low some country's stocks trade, can cost hundreds of dollars). Also not helping Schwab is that when you call in you have a 50/50 chance of getting someone who will be quite impatient with you (sorry guys but its true).
While I expect that in the future you could have a Pakistani stock, some Polish zloty and Hungarian forint in your account you won't need all that. But the idea that in looking for a frontier investment you would not need to devote time to research what is accessible could be a boon. If the one frontier thing you want is bank from Cyprus you should be able to just buy it.
A further note about Schwab is that this demonstrates that yet again they are not first to market anymore. They used to be very innovative but that ship seems to have sailed, at least that is the perception.
7 comments:
For the wall of fear, I saw this news this morning:"
... Bloomberg reported the total margin debt at the NYSE has reached an all-time record 285.6 billion. The previous all-time high margin debt was right at the top of the last Bull market (March 2000) at 278.5 billion.
Debt related to securities purchases is a serious issue.
Today the Bank of Japan raised its key rate by 25 basis points to +0.50 pct. Inflation is low but credit expansion is leading to speculation in securities trading. The higher central bank rate affects the margin on loans, and the carry trade."
Interactive Brokers allows you to trade in a number of world markets ... though they don't have access to the australia market :(
Bank of America expanded $0 online equity trades to California this week. Actually it is between 30 and 60 commission-free trades online pre-month per-$25,000 bank deposit account.
I think trading cost/friction is being reduced. I am not sure if this is good or bad?
Roger, care to comment.
CA
I have had an incredibly piss-poor experience with every aspect, I mean to the very last detail, of my HSA which is almost like brokerage that I don;t think they can get it together to have an impact. I am at two months and counting on trying to transfer to options express.
BTW BAC is a client holding which is something I have to wrap my hands around as far as still keeping or not. For now, undecided.
Anonymous said...
Interactive Brokers allows you to trade in a number of world markets ... though they don't have access to the australia market :(
10:43 AM
Will eTrade have a restricted list of stocks like IB, or will you able to buy anything listed, like the exchange-listed hedge funds and ETC's we're not supposed to have access to?
P.S. Australia is available through the online Boom Brokerage in HK.
The question is nt how but why you would want to trade these lesser know positions on the foreign markets. That is a tough job, unless you have intimate knowedge of those bourses. There are enough equities in the US to keep you busy and invested for several lifetimes....
ETF are a good alternative to these as they keep you a bit more diversified and at least have managers with a better level of overall knowledge and access.
Also, as per Schwab: I have been working with their institutional division for 10+ years. Their goal is not to be the hot shot, they want quality and look to provide service. The BOA model of free trading is not so free when you look at the market making and the other hidden fees (just look at bond markups.
Does $5 or $10 really matter in the big scheme? If we are focussing on that amount, we better hone our trading abilities and try to look for better profits fro the trade.
Adverse comment on Options Express. I hope this is not too off-topic. They especially, but also E-trade are difficult to deal with, and have rules on documentation that must have been thought up by a relatively stupid lawyer.
They require online entry of Social Security number to open an account and to obtain an
Account Transfer form. They refuse to allow use of a blank form or allow entry of a dummy
SS number for online purposes. This violates various privacy acts and Internet privacy acts
which forbid compelling persons to seriously compromise critical financial and personal data
in order to do business.
Also, they sent me an e-mail 1 day prior to January options expirations when I had about 80
expiring positions. The e-mail threatened to disrupt my closing activity by intervening to
close positions without notice on expiration day. It cost me many hundreds of dollars to get
clarification on this (apparently harmless, merely reiterating their right but not intent to intervene),
because of lost work and investment opportunities.
It took them 5 days to do a simple wire transfer of cash $28k to my domestic bank. (There was
no special situation on my side. The whole delay was their fault.)
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