Category: News

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.

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).

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.