Slowly but surely, Canada's online brokers are bowing to the reality of sub-$10 stock trades.
Scotia iTrade has just tweaked its pricing scheme so that customers pay $9.99 for trades if they have $50,000 in business with the firm, or with parent Bank of Nova Scotia. Previously, you had to have $50,000 in business just with iTrade. Qualifying for this deal is no great stretch – a mortgage, a line of credit, chequing and savings accounts, personal loans and guaranteed investment certificates will get you there. You also need to sign up for paperless documentation of your account (view your statements online) to get the $9.99 trade. With less than $50,000, Scotia iTrade charges you a minimum of $24.99 for trades.
While it's an improvement, Scotia iTrade's new offer still lags what its big-bank-owned competitors are doing. BMO InvestorLine, National Bank Direct Brokerage, RBC Direct Investing and TD Direct Investing now offer trades just below $10 for all clients, with no small print. NBDB says this on its website: "Trade For $9.95, Any Time, For All Clients."
A different take on pricing among bank-owned brokers can be found at CIBC Investor's Edge, which retains a $28.95 minimum commission unless you have:
– $100,000 in business with Canadian Imperial Bank of Commerce (investments, mortgages or savings); in that case, you pay $6.95 per trade.
– $50,000 at Investor's Edge; in that case, you pay $9.95
Brokers owned by the big banks dominate the online investing scene, but cost-conscious DIY investors shouldn't hesitate to consider other firms with even better prices. Credential Direct, associated with the credit union movement, now offers $8.88 trades to all. Disnat, owned by Quebec's Desjardins group, charges $9.95. Virtual Brokers charges as little as a penny a trade, while Questrade's commissions start at $4.95.
This is the time of year when I start thinking about my annual ranking of online brokers (read the latest ranking here). One thing I can tell you upfront is that brokers offering low commissions on a flat, no-questions-asked basis will have a decided advantage. Sub-$10 stock trades are the new reality in online investing, even if some firms haven't quite accepted it yet.
Rob Carrick