Oct 022013
 

I’ve made a number of updates to the UK online stockbroker comparison table and individual entries for UK international stockbrokers in the directory to reflect fee and service changes over the past few months. Most of these are relatively trivial changes, but there have been a handful of more significant events.

  1. Charles Stanley has stopped offering personal CREST accounts through its online Charles Stanley Direct arm (the former Fastrade service) and has hugely increased the fees for the service through the Charles Stanley telephone broking service (effectively to £420 per year once all fees are taken into account). A number of the firm’s other charges and commissions have also increased recently, suggesting that the traditional brokerage business is now concentrating solely on fairly large clients and steering all smaller accounts to Charles Stanley Direct (which represents its attempt to take on the part of the market currently dominated by Hargreaves Lansdown). Investors looking for a more low-cost CREST sponsorship now seem to be limited to Redmayne Bentley or Stocktrade. The personal CREST account comparison table has been updated accordingly. UPDATE: The Fidelity Share Network service, which is based on Charles Stanley’s online platform, will apparently continue to offer CREST sponsorship on the same terms as before, even though Charles Stanley’s own-brand service won’t.
  2. Meanwhile, Stocktrade has made some fairly significant changes to its service. These include:
    • Many international markets are now available online. Previously overseas stocks could only be dealt by phone.
    • Online and phone dealing rates have been made the same
    • Investors can now hold foreign currency in their accounts, rather than settling only in GBP as before
    • FX conversion fees have been switched to a tiered basis. Under the old charges, Stocktrade followed a rather unusual approach of converting at market rates, but charging a fixed fee for doing so. The new system looks as if it should be more favourable to smaller accounts.
  3. Saxo Bank is introducing an inactivity charge for UK clients – £25/quarter, waived if you trade once in the quarter. The new fee applies to dealing accounts only, not to ISA and SIPP accounts (although these are already subject to annual administration fees). This is obviously a change for the worse for less frequent investors, but is not surprising – there is a clear trend towards charging more admin, inactivity and custody fees among brokers, reflecting the loss of revenue from lower levels of trading activity in recent years.
Dec 192012
 

Fidelity now appears to gone live with the eight additional markets they announced they would be adding earlier this year - there doesn’t seem to have been any official announcement of this, but the exchanges, currencies and commissions are now listed on the international trading pages of their website.

The new markets are Austria, Denmark, Finland, Greece, Ireland, Poland, South Africa and Spain and all relevant new currencies have also been added (Danish Krone, Polish Zloty and South African Rand). Rates look reasonable – for online trades, the euro markets are €19 (US$25) like others already on the platform, Denmark is DKK160 (US$28), Poland is PLN90 (US$29) and South Africa is ZAR225 (US$27). However, there is of course a foreign currency conversion charge on top, of up to 1%. Continue reading »

What is a CREST Depository Interest (CDI)?

 FAQs
 

A CREST Depository Interest (CDI) is a UK security that represents a stock traded on an exchange outside the UK. They offer a straightforward, cost-effective way to trade in a number of overseas stocks and are the main means of foreign dealing provided by a number of UK international stock brokers.

In many ways, CDIs resemble American depository receipts (ADRs) and global depository receipts (GDRs). The underlying legal structure and process is very different, but little of this will directly affect the investor.

To understand CDIs, you first need to know a little about CREST, the UK and Ireland central securities depository (CSD) and settlement system. Briefly, CREST is responsible for recording the ownership of dematerialised securities – those that do not have paper certificates – and transferring title between the buyer and seller when stocks are traded.

CREST also distributes dividends, implements corporate actions such as rights issues and carries out many other important function. In short, it’s the centre of the paperless trade processing system that has replaced certificates. Continue reading »

Sep 292012
 

In what looked like a carefully timed attempt to make Charles Schwab’s new international service less newsworthy,  Fidelity has announced that it will be adding eight new countries to its international platform by the end of 2012. The proposed new countries are Austria, Denmark, Finland, Greece, Ireland, Poland, South Africa and Spain.

There are no details on fees yet, but assuming they are sensible, Fidelity’s international service may start to look a relatively decent option for US residents to invest in a wide range of international markets at reasonable cost. Countries such as Poland and South Africa are still hard to trade in a cost-effective way, especially since US investors don’t have easy access to international firms such as Saxo Bank.

Sep 292012
 

Charles Schwab has extended its international investing services, following Fidelity’s decision to do the same earlier this year. The new Schwab Global Account offers online access to 12 non-US markets: Australia, Belgium, Canada, Finland, France, Germany, Hong Kong, Italy, Japan, Netherlands, Norway and the UK.

Schwab is initially is offering zero commission online trades until the end of 2013 – thereafter, international commissions will be in the range of US$15-35 online and US$50-75 by telephone (at current exchange rates). Currency conversion fees will be up to 1% and there is also a 0.1-0.25% fee from the local brokers that Schwab uses to execute trades abroad (something that isn’t clearly displayed on the Schwab website, but can be found in the latest fees guide [PDF]).

The Global Account seems to be distinct from the existing international trading service available through the Schwab One Account, which offered 20-30 countries for telephone trading, albeit at very high costs. While the Global Account mentions access to 30 countries in addition to the 12 online markets, this appears to mean the ability to trade ADRs and OTC stocks from other countries in US dollars, which is not at all the same thing as having direct access to a foreign market (selection will be more limited, liquidity will usually be poorer, spreads may be wider and prices may be stale). Continue reading »

Offshore fund supermarket comparison table

 
Last UpdatedAug 162013

The table below lists brokerages around the world that offer a range of mutual funds from different fund managers and are willing to accept non-resident clients. As a result, they may be useful to expat investors – or anyone else looking to invest offshore – in search of a convenient platform for buying funds.

Investors familiar with fund supermarkets in countries such as the UK and the US may be surprised by the relatively small number of funds available and by the fact that these companies do not offer reduced annual management fees on the funds through trail commission rebates (although most at least reduce or get rid of the entry fee). Unfortunately, straightforward multinational fund supermarkets offering a wide range of funds at low cost don’t really exist at present, for reasons discussed in this article.

Despite their limitations, these firms may well be cheaper and more convenient than purchasing funds directly from a fund management firm. And they are likely to be substantially cheaper and more flexible than the offshore investment bonds from life insurance companies that are aggressively sold to expatriates in Asia and the Middle East.

These fund supermarkets generally do not accept US citizens or residents and offer very limited choices to them if they do. This is a common problem for all US persons trying to open financial accounts overseas today, reflecting the reluctance of foreign firms to risk complications from Regulation S and now FATCA. In practice, investing in non-US mutual funds has tax disadvantages for US persons in any case and it may be better to invest in US funds through a US discount broker.

Continue reading »

Jan 282012
 

Fidelity, the largest US brokerage, at last seems to be making a serious effort in international markets, with the decision to open its international trading service to all account holders.

The firm has long had a decent set of overseas markets available for direct investment (as opposed to over the counter trading of foreign stocks in the US) and fees were generally not too excessive compared with peers. But the associated conditions were baffling – you needed a minimum balance of US$25,000 and over 120 trades per year or a balance of US$1,000,000. Any investor who met those criteria could and should find more suitable accounts at other brokers.

However, international trading is now available in accounts of all sizes, making it a reasonable proposition for the smaller investor. With another five markets just added (Mexico, New Zealand, Singapore, Sweden and Switzerland), it covers a good proportion of the major markets. Continue reading »

Jan 282012
 

There are a few additions and updates to the stock broker directory for Hong Kong international stock brokers. Perhaps most notably, the purchase of Boom Securities by Japan’s Monex Group has led to some expansion of its Japanese markets offering. As well as the Tokyo stock exchange, it now offers Osaka and the three smaller regional ones: Nagoya, Sapporo and Fukuoka.

New additions to the directory include BOCI Securities (BOCI Online), KGI and HSBC Hong Kong. These three firms are unlikely to offer much that isn’t already available for most international investors, but have been added to try to make the directory more comprehensive. There are a few other firms that should be added in the near future.

BOCI Securities states that “commission rate will be determined and agreed between customer & BOCI Securities”, which isn’t terribly helpful in giving an idea of how expensive it might be. Any investors who have used it and can give an idea of what typical rates are is welcome to leave a comment below or send an email via the contact form.

Jan 282012
 

There are a number of new additions and updates to the international stock broker directory. One interesting one is Standard Chartered Bank Securities Trading, which moved into the Singapore brokerage market a few months ago with an unusual product.

It offers online trading in Singapore stocks for 0.2% per trade (0.18% for those with a larger banking relationship) and 0.25% per trade (0.2% for favoured customers) for Australia, France, Germany, Hong Kong, Japan (including both the Tokyo and Osaka stock exchanges), the Netherlands, Switzerland, the UK and the USA. This has no minimum commission, which is rare in the brokerage business and attractive to customers trading smaller amounts.

There are also apparently no account and no inactivity fees, custodian fees, no dividend collection fees, no corporate action charges, making it a commendably clean fee structure. There is one catch though; currency conversions done through Standard Chartered are considerably worse than many Singapore brokers, with users reporting a margin of 2% over the interbank rate. However, you can hold and fund foreign currency accounts with the bank, so you shouldn’t need to pay this every trade, if you’re careful. Continue reading »