National Bank slashes online trading commissions to 'Zero'! :-) | Investing | Discussion forum

I guess I was among the few that didn't know that - thanks for the info, Dean.

I agree, Norman1, the big banks cater to the middle of the curve, not the extremities. It's why they're the big ones. Though personally whether a trade costs zero or $10 is irrelevant to me, only if it significantly erodes their business, i.e. I'm an anomally, will the bigs react.

HSBC tried that in the past year or so but you had to do xxx number of trades per quarter before you get the freebies.

COIN said
HSBC tried that in the past year or so but you had to do xxx number of trades per quarter before you get the freebies.  

Are you sure? Investdirect has active trader pricing but there are charges.

Norman1 said
If the other bank brokerages didn't follow National Bank's previous cut to $6.95, why would they follow National Bank's recent cut to zero?

The bank brokerages will do nothing if it turns out only a small number of accounts is lost. Just like their bank owners ignore EQ Bank's 1¼% savings account.  

Agree. A platform's ease of use and features offered will keep/win business. It is way more important than worrying about $7-$10 commission per trade. Unless one is trading tiny amounts all the time, and if that is the case, should not even be trading...

I guess National Bank is looking to mimic Robinhood or other US zero comm broker and cater to the frequent small trades clients.

Keep in mind, brokerage firms will earn rebate fee from the exchange for certain type of trades and volume esp in US stock trades. Not sure how CDN exchanges work.

mordko said

A family of 2 can easily have 10 accounts between them. Dividends drip in. Some monthly, some quarterly. New money needs investing. Some require converting. Norbert’s Gambit requires 2 trades each time. You can, of course, delay your investments to minimize trading costs. But that in itself is a cost of lost opportunity.

I am not saying trading commissions costs are large but its more than the actual commission. Creates psychological barriers and additional losses vs a truly passive approach. So, free trading is attractive to me.  

If someone doing in-and-out trades regularly, then yes trading commission will impact. However I can argue $0 commission may just end up having an adverse impact, as in trading for just the sake of trading, similar to buying cuz its on sale...
On the other hand, for investing purpose, trading commission should be not part of the equation. Its the quality of the asset, the entry price that drives 100% of the decision.
For me, $0 commission is nice but definitely not the deciding factor.

I remember reading a few years ago that Ameritrade made over $800 million in paid orders routed to certain market makers or firms and I would assume the same for all the free or otherwise brokers!
They will also make money from currency conversion, I just moved my RRSP to them and the Norbert Gambit takes 3 days to clear and if you want to convert right away then depending on how much you convert it's anywhere from 2 - 2.6% compared to TD that was 1 - 1.75% and they also washed the norbert trade same day!
I'm also curious if they would make money on the bid ask spread on some of the higher priced stocks?
I'm also with IB and a lot of times I would get filled between the bid ask with TD or NBDB I don't.

geotabs said
I remember reading a few years ago that Ameritrade made over $800 million in paid orders routed to certain market makers or firms and I would assume the same for all the free or otherwise brokers!
They will also make money from currency conversion, I just moved my RRSP to them and the Norbert Gambit takes 3 days to clear and if you want to convert right away then depending on how much you convert it's anywhere from 2 - 2.6% compared to TD that was 1 - 1.75% and they also washed the norbert trade same day!
I'm also curious if they would make money on the bid ask spread on some of the higher priced stocks?
I'm also with IB and a lot of times I would get filled between the bid ask with TD or NBDB I don't.  

Correct, they get rebate with exchanges, and the rebate can be generous depending on the nature of the trade.

Also like you said, pretty much all "professional style" trades are filled btw bid and ask. This is indirectly related to the rebate you mentoned as well. With discount brokerage owned by Cad banks, zero luck they will share that fortune with you. With IB, you can also participate in sec lending which is not avail at the cad owned brokerages.

Having said that, free is still good for the majority of accounts out there, which are not professional and may not even understand all the rebates and fill-at-mid that are going on out there.

COIN said
"With IB, you can also participate in sec lending which is not avail at the cad owned brokerages."

Please clarify. Are Canadian owned brokerages not permitted to lend securities?  

For Cad owned brokerage, your holdings are in segregated acct, so the brokerage are not permitted to use it in their sec lending business.
Cad brokerage do have sec lending, but can only access the shares that are not in the segregated acts.

For IB, one can sign up and have their account holdings participated in sec lending. IB will thus utilize the shares u own in sec lending, and share the interest recd with you. For example if you own some of the meme stocks or even Blackberry which has a very high borrow cost, the interest can be very hefty and juicy for someone who is long the stock and can ‘lend’ it out to the short seller.

It’s a complicated process as IB needs to deposit cash equivalent in your acct daily to mitigate the risk, and need to have the infrastructure in place to handle all that. None of the cad brokerage has that capability is my understanding right now.