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Wealthsimple - $0 commission trading app
March 13, 2019
9:15 am
Save2Retire@55
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Wealthsimple Trade is here
It's finally here: Wealthsimple Trade is now available to everyone in the App Store and the Google play store.

Wealthsimple Trade is Canada's first $0 commission, $0 minimum stock-trading service. Through a beautifully simple mobile app, you'll be able to buy, sell, and track thousands of stocks and ETFs — no paperwork, no financial jargon.

I am not going to use it yet but a great idea for those who enjoy trading. Time to dump the big banks trading portals. This is even cheaper than Questrade that I currently have.

Need to check the fees and details.

March 13, 2019
9:22 am
Doug
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I got an invitation a few weeks ago, but ultimately held off for the following reasons:
- No web-based interface, which is silly; and,
- No registered accounts.

I value simplicity over saving $10-30 per year in trading commissions and I don't want to have a non-registered account with one institution and registered accounts at another. 🙂

Cheers,
Doug

March 13, 2019
6:52 pm
Norman1
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I wouldn't dump the other online brokerage accounts. Wealthsimple Trade is not a full brokerage account.

In their FAQ answer to Why can't I find the particular stock or ETF I'm looking for?, limitations are listed. Not everything trading on the stock exchanges is supported. Preferred shares, warrants, and partnership units not included:

To summarize, in order to purchase an asset on Trade, it must:

  • be a common stock or ETF,
  • be actively listed on a supported exchange (NYSE, NASDAQ, TSX, TSX-V),
  • be CDS eligible,
  • have a 52 week high price that exceeds $0.50 (stocks only),
  • have an average daily volume that exceeds 50,000 shares (stocks only),
  • and be the Canadian-listed security if dual-listed

According to How up-to-date are the quotes I'm seeing?, price quotes are not live:

Wealthsimple Trade does not currently support real-time quotes. Market price quotes displayed in the app are delayed by up to 15 minutes!

This does not mean that data is updated every 15 minutes - instead there is an up-to-15 minute delay on the data you're seeing updated continuously. …

March 13, 2019
7:24 pm
Doug
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Thanks, Norman. I hadn't realized that, though not having access to warrants and partnership units is not a huge loss. I'm a bit surprised preferred shares aren't included, but the liquidity just isn't there for most preferred shares so it does make sense. Also, I have kind of a love/hate relationship with preferred shares, though not in the traditional sense in that I don't love to hate them...there are aspects I like about them and aspects I don't. The trouble with them is they offer bond-like returns, but with a risk profile somewhere between bonds and common shares. Also, some people think that you can just buy preferred shares below their par value and you're good. To be clear, it's important not to pay a premium to par value, but the company is under no obligation to call (redeem) those shares. sf-cool

The only of those rules that troubles me is, "have an average daily volume that exceeds 50,000 shares (stocks only)." Lots of ETFs don't trade at least 50,000 shares per day, on average...does that mean you can't trade them? What about HFR and HPR (two good fixed income ETFs)?

Cheers,
Doug

March 14, 2019
5:54 am
Loonie
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WealthSimple has always defined themselves as fitting a niche where investments are "Simple" while giving people a good and economical shot at the markets.
Preferred shares and various other things that most people don't understand very well are not simple.
So, I think they are being quite consistent and continuing to meet the needs of their market niche.

(I do not have an account with them.)

March 14, 2019
7:26 am
canadian.100
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Doug said
Thanks, Norman. I hadn't realized that, though not having access to warrants and partnership units is not a huge loss. I'm a bit surprised preferred shares aren't included, but the liquidity just isn't there for most preferred shares so it does make sense. Also, I have kind of a love/hate relationship with preferred shares, though not in the traditional sense in that I don't love to hate them...there are aspects I like about them and aspects I don't. The trouble with them is they offer bond-like returns, but with a risk profile somewhere between bonds and common shares. Also, some people think that you can just buy preferred shares below their par value and you're good. To be clear, it's important not to pay a premium to par value, but the company is under no obligation to call (redeem) those shares. sf-cool

The only of those rules that troubles me is, "have an average daily volume that exceeds 50,000 shares (stocks only)." Lots of ETFs don't trade at least 50,000 shares per day, on average...does that mean you can't trade them? What about HFR and HPR (two good fixed income ETFs)?

Cheers,
Doug  

Doug - very interesting your comments on Preferred Shares. If one does hold them for the longer term, they do work well - the trouble is people panic and sell at low market value. The dividends on preferred shares are now yielding 5.5% to 7% (before the dividend tax credit) on solid companies which have not missed dividend payments. Even if the values drop a bit, the high dividends that one has been receiving for the last 10 years have more than compensated for the low GIC rates (remember they were 1% or lower) which existed after 2008 downturn. Some advisors are actually recommending a % of a portfolio to be in preferred shares if you want some good income and the benefit of the dividend tax credit.

March 14, 2019
9:09 pm
Norman1
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Doug said

… I hadn't realized that, though not having access to warrants and partnership units is not a huge loss. I'm a bit surprised preferred shares aren't included, but the liquidity just isn't there for most preferred shares so it does make sense. …

Lots of Canadian real estate organizations trade as income trust units and not corporate shares. Some international ones, as well as power generation organizations, trade as partnership units instead of corporate shares.

Maybe something stupid with their app. Can accept "BCE" for BCE common shares. But, can't handle "BCE.PR.S" for one of BCE's preferred shares or "REI.UN" for RioCan income trust units.

The only of those rules that troubles me is, "have an average daily volume that exceeds 50,000 shares (stocks only)." Lots of ETFs don't trade at least 50,000 shares per day, on average...does that mean you can't trade them? What about HFR and HPR (two good fixed income ETFs)?

ETF's are exempt from that daily volume requirement:

… We impose a price constraint of $0.50 per share minimum (based on the 52 week high of the stock) as well as a volume constraint where average daily volume must exceed 50,000 shares. Note that both of these constraints only apply to stocks and not ETFs.

March 14, 2019
10:47 pm
Doug
West Kelowna
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Thanks, Norman, for clarifying that ETFs are exempt from the daily volume requirement. That's positive. I thought about REITs and other structures (i.e., Brookfield Infrastructure L.P.), but wondered if they were included in that "partnership units" prohibition or if they meant non-publicly-traded partnership units. I agree, there's a lot of qualifiers that make Wealthsimple Trade less compelling.

Wealthsimple did say, in reply to my tweet, that they are looking to add registered accounts (RRSPs, TFSAs, and Locked In RRSPs & LIRAs; no plans for RDSPs and RESPs at this point), but still no plans on launching a web-based version either, which sucks.

In other news, Scotia iTRADE has suddenly gotten a lot more compelling for me: they now have a U.S. dollar sub-account for RRSPs and TFSAs and they removed the quarterly fee that used to be applied to their U.S. Friendly RRSP (some people liked that, since they gave you the bank's midrate [staff rate] on FX conversions in registered accounts); however, there are ways around FX currency conversion commissions (i.e., Norbert's Gambit).

Cheers,
Doug

March 15, 2019
4:48 pm
Norman1
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Doug said
Thanks, Norman, for clarifying that ETFs are exempt from the daily volume requirement. That's positive. I thought about REITs and other structures (i.e., Brookfield Infrastructure L.P.), but wondered if they were included in that "partnership units" prohibition or if they meant non-publicly-traded partnership units. I agree, there's a lot of qualifiers that make Wealthsimple Trade less compelling.

I highly suspect anything trading on the exchanges that is neither a common share nor an ETF unit is excluded. So, the limited partnership units of Brookfield Infrastructure LP would not be accessible through them.

There's also a $50 fee to handle a "Voluntary Corporate Action/Election". $50 to call in to tender one's shares to a takeover bid, for example. sf-frown

March 16, 2019
8:19 am
Doug
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Norman1 said

Doug said
Thanks, Norman, for clarifying that ETFs are exempt from the daily volume requirement. That's positive. I thought about REITs and other structures (i.e., Brookfield Infrastructure L.P.), but wondered if they were included in that "partnership units" prohibition or if they meant non-publicly-traded partnership units. I agree, there's a lot of qualifiers that make Wealthsimple Trade less compelling.

I highly suspect anything trading on the exchanges that is neither a common share nor an ETF unit is excluded. So, the limited partnership units of Brookfield Infrastructure LP would not be accessible through them.

There's also a $50 fee to handle a "Voluntary Corporate Action/Election". $50 to call in to tender one's shares to a takeover bid, for example. sf-frown  

You might be trying too finely parse the wording of their fees, Norman. I would be very surprised if they would charge $50 to tender one's shares in a takeover bid, considering that's largely an automated process (sometimes involves manual posting of credits to client accounts in the case of cash takeovers). Or, the inclusion of the word "voluntary" means if you wish to tender to an unsolicited takeover bid, one of those "mini-offers," or otherwise wish to exercise an election that is contrary to the recommended/default action?

Nevertheless, the lack of registered accounts and the online banking platform preclude me from switching to Wealthsimple Trade. On those basis (Loonie, the resident Canadian linguist of the boards, is there not a plural of the word "basis"?) alone, I'll be sticking with Scotia iTRADE. Also, we don't know how Wealthsimple Trade's trade execution stacks up. sf-cool

Cheers,
Doug

March 17, 2019
12:24 pm
Norman1
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Doug said

You might be trying too finely parse the wording of their fees, Norman. I would be very surprised if they would charge $50 to tender one's shares in a takeover bid, considering that's largely an automated process (sometimes involves manual posting of credits to client accounts in the case of cash takeovers). Or, the inclusion of the word "voluntary" means if you wish to tender to an unsolicited takeover bid, one of those "mini-offers," or otherwise wish to exercise an election that is contrary to the recommended/default action?

The process for handling tenders, takeover bids or otherwise, has been manual through a live person.

A notice would arrive by mail with instructions to call and provide instructions by phone. I haven't seen one yet where I could log into my discount brokerage account online and just click on a button or link to tender my shares.

I'm not surprised Wealthsimple Trade would charge $50 to take such calls. They charge $45 to handle a trade by phone, if one, for some reason, cannot submit it through their app.

I agree. It is odd that Wealthsimple Trade is app-only access and no access through a standard web browser. No access if one is using a computer or tablet that runs Microsoft Windows, instead of Google Android or Apple iOS.

March 17, 2019
12:32 pm
Doug
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Really, Norman!? I can personally attest to Scotia iTRADE's automated process because last spring, I, unfortunately, had my Pure Industrial REIT LP units taken away from me by Blackstone's cash takeover bid. I didn't have to respond to the offer; my Scotia iTRADE account was just credited for the full value per unit of the cash offer within a week to 10 days of the offer closing. Thankfully, it was in my TFSA, so incurred no capital gains, which were significant (albeit on a small base as I only had a few hundred units). Is that not typical?

Cheers,
Doug

March 17, 2019
3:51 pm
Norman1
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That's not typical.

The Pure Industrial REIT takeover was done as a "plan of arrangement". Once 2/3 or more of the unitholders voted for it, a court order was obtained to compel transfer of the units to Blackstone.

That was with a REIT. With a corporation, the offer is sent out. Shareholders are asked to tender their shares to the offer. Shareholders need to call their broker to tender. At the end of the offer period, if enough shares are tendered, but not yet 90% of the shares, the buyer will extend the offer to allow remaining shares to be tendered. Remaining shareholders need to call their broker to tender.

Once 90%+ of the shares are tendered, the purchaser will exercise the right of compulsary acquisition over the remaining shares. Ownership of remaining shares are transferred and the money deposited in their place.

March 17, 2019
4:36 pm
Doug
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Norman1 said
That's not typical.

The Pure Industrial REIT takeover was done as a "plan of arrangement". Once 2/3 or more of the unitholders voted for it, a court order was obtained to compel transfer of the units to Blackstone.

That was with a REIT. With a corporation, the offer is sent out. Shareholders are asked to tender their shares to the offer. Shareholders need to call their broker to tender. At the end of the offer period, if enough shares are tendered, but not yet 90% of the shares, the buyer will extend the offer to allow remaining shares to be tendered. Remaining shareholders need to call their broker to tender.

Once 90%+ of the shares are tendered, the purchaser will exercise the right of compulsary acquisition over the remaining shares. Ownership of remaining shares are transferred and the money deposited in their place.  

Right, but plan of arrangement, which is most common in friendly deals, it should happen automatically, or is Scotia iTRADE still unique in that way, even in plans of arrangement?

Another plan of arrangement for me was my Yellow Media Inc. shares, whereby the company was recapitalized and I was given 1 share for every 250 that I end, and the 12 above that limit just vaporized. TransForce also did a Dutch auction style tender offer to repurchase a significant amount of shares, but I didn't participate. I've never sold a TransForce share (my best performing stock, by the way). sf-cool

Cheers,
Doug

March 18, 2019
1:52 pm
Norman1
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There is no tendering from the implementation of a plan of arrangement.

After the court order, brokers, like Scotia iTRADE, are just notified to send in the former shares or units to receive the new shares, new units, or the cash.

Usually, the fraction of a share after a plan of arrangement doesn't just vaporize. Company will pay out cash for the fractional shares of individual registered holders.

For clients holding shares with a broker, the broker will aggregate the fractional shares from all their clients. Company will pay cash for the broker's resulting fractional share. Broker will then sell the resulting whole shares to get the cash. Broker will then distribute the cash to their clients in lieu of the fractional share each client was entitled to.

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