Online Brokerage Price Wars Spell Savings for Investors

It’s been an interesting two months for investors trying to pick an online brokerage. RBC Direct Investing decided to start a price war and it soon heated up – the best thing is that the fighting has resulted in savings for investors.

RBC Direct Investing Drops the Trading Fee for All Customers

RBC Direct Investing was the first company to make a major price change recently. This January, they reduced the cost to execute a trade to $9.95 for all of its clients, regardless of their account balances. So if one of their clients wants to buy 57 shares of BCE it will cost them just $9.95 plus the current trading price for 57 BCE shares.

TD (Waterhouse) Direct Investing Follows Suit

The next to drop its fee to $9.95 for all customers was TD Direct Investing. They changed their fees in February.

BMO InvestorLine Folds

InvestorLine has now also dropped its fee to $9.95.

Scotia iTrade and CIBC Investor’s Edge Are Still Studying Their Hands

As of today, February 11, 2014, iTrade and Investor’s Edge still require a minimum balance or a certain activity level or other related assets for their clients to qualify for $9.95 trades.

I give it about another week before they see the way the cards are falling.

Warning! Check for Minimum Balance and Inactivity Annual Fees

Don’t let the price per trade be the only factor in your decision to pick a brokerage. Look at all of the costs, including any fees for having a small balance or for not being an hyper-active trader.

I discuss the required minimum RRSP balances for most brokerages in Questrade Has the Lowest Annual Fee RRSP Brokerage Account with No Minimum Balance: Or Does It? but you should always double check for changes before opening an account.

Discount Online Brokerages Vs Big Bank Online Brokerages

There are a variety of other brokerages available to Canadians some of which offer trading fees which are even lower than $9.95. Their offerings vary considerably so you should check the details carefully. It’s also a good idea to look for reviews of their services and for any complaints before enrolling. (That holds true for all brokerages, independent or bank-affiliated.)

What Are Some Other Key Cost Differences Between Online Brokerages?

  • RBC Direct Investing has a good RRSP offer: If you sign up for pre-authorized contributions of $100 or more per month, the fee for having a low balance in your RRSP is waived.
  • CIBC Investor’s Edge has a no annual fee, no minimum, RESP account.
  • RBC Direct Investing and BMO InvestorLine let you have a USD side to your RRSP for no fee.
    CIBC Investor’s Edge and TD (Waterhouse) Direct Investing do not have a USD side to their RRSPs.
    Scotia iTrade charges a fee for a USD side to their RRSPs.

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Are you pleased to see the costs to trade stocks and ETFs dropping for low asset investors at the “Big Bank” online brokerages? Please share your views with a comment.

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