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India opens up to foreign individuals – to an extent

Earlier this month, India announced details of its new system to allow foreign individual investors to invest directly in the local market – somewhat to my surprise, since when this proposal emerged in November, I though there was a big question mark over whether they would ever be implemented.

So what do the details look like? While the investors will be known as qualified foreign investors (QFIs), the restrictions to be qualified look less tough than we light had expected. Essentially it seems that they will need to be residents of a country that comply with standards on money laundering and are members of the Financial Action Task Force.

However, it was always too much to hope that such a bureaucratic government would allow unhindered access for foreigners to its markets. At first glance, the system is rather cumbersome and is unlikely to see a flood of foreigners into Indian shares.

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India considers opening stock market to foreign individuals

Reuters is reporting that the Indian government is considering relaxing restrictions on foreign individuals investing in Indian shares, in an attempt to attract more foreign capital. If this goes ahead – and that’s a big ‘if’ – it could be a very exciting development.

Very few countries actively bar foreign individuals from investing in their stock markets, although some make it difficult. Oddly enough, it’s the BRICs – the four emerging markets that foreign investors talk about the most – that are the hardest. And India is arguably the most frustrating of all.

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MF Global and brokerage account security

You’ve probably seen that MF Global, one of the big brokers in futures, options, CFDs and other derivatives has gone bust. While we haven’t heard all the details yet, this seems like it might be a rather worrying case when it comes to the safety of your brokerage account.

MF Global went under because of trades it was making on its own account (known as proprietary or ‘prop’ trading). Specifically, it had bought European sovereign bonds on high leverage and couldn’t make the margin calls when these fell in value (fuller details at the FT).

This was an extremely stupid thing to do, but it was MF Global’s own bet. It shouldn’t have mattered to clients.

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South Africa online stock trading from Saxo Bank

Saxo Bank is keeping very busy with new launches. After rolling out Japanese and Polish equities in the last couple of months, it’s now adding stocks and CFDs for South Africa. This makes it the first stock broker outside Africa to offer online trading in cash equities for the Johannesburg stock exchange to retail investors.

Rates look good¬† – 0.25% with a minimum of ZAR100 (US$12) is both cheaper than you’ll pay through other international stock brokers and cheaper than the local brokers. Unfortunately, South African investors can’t take advantage of this – due to local foreign exchange restrictions, Saxo Bank can’t offer the Johannesburg exchange to clients resident there.

It also won’t be available to Swiss residents due to client confidentiality laws there. But for international investors elsewhere, this looks like a helpful development. And the firm says more international markets are likely to be added over the next year or so – in which case, it will reinforce its position as one of the best brokers for international stock trading.

The international stock broker guide and stock broker comparison tables have been updated.

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Interactive Brokers now offering Singapore stocks

It didn’t get much of an announcement given that some customers have been lobbying for it for ages, but Interactive Brokers has finally added direct stock trading for Singapore to its platform (it’s had derivatives for years, but not cash equities).

This plugs the last major gap in the firm’s line-up. There are many other exchanges that it will hopefully eventually add, but the absence of SGX was always strange and the biggest limitation of Interactive Brokers’s otherwise very good and cheap service.

Fees are extremely competitive: 0.12% with a minimum of S$3. This compares with standard rates of around 0.275% and a minimum of S$25 in Singapore; even Saxo Bank charges 0.15%. The one caveat is that, judging by the wording of the announcement, Singapore residents still won’t be able to trade Singapore stocks through Interactive Brokers (presumably it doesn’t have a full local licence).

The stock broker list, stock broker comparison tables and Interactive Brokers profile have been updated.

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Cheap(er) international data through Interactive Brokers Information Systems (IBIS)

Interactive Brokers have recently announced an interesting new data product called Interactive Brokers Information Systems (IBIS) that seems to be trying to fill the gap for investors and traders who want extensive data and analytics services without the Bloomberg and Reuters-level price tag.

IBIS is available as an add-on to its Trader Workstation for Interactive Brokers’ clients (US$39/month, discounted against commissions) or as a stand-alone product for non-clients (US$69/month for the first year, rising to US$89/month afterwards). That’s the platform fee – you need to pay the relevant exchange and provider fees for price and data feeds on top of that.

Existing clients can already get data through Interactive Brokers on the same terms, so the extra US$39/month value in IBIS is presumably supposed to be the convenience of its interface, portfolio analytics, screening tools and other software. Each trader will have their own view on whether this is worth the money or not.

For non-clients, this now seems to be the cheapest stand-alone way to subscribe to international price and fundamental data. With an IBIS platform subscription, you can then get Reuters Worldwide Fundamentals for US$7/month, for example.

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Saxo Bank now offering stock trading for Poland

Saxo Bank is shortly going to be offering cash equity trading on the Warsaw stock exchange (they already offer CFDs there). As far as I know, that makes them the only the second online broker outside Poland to do so, after Brokerjet.

Unlike most of Eastern Europe, Poland has a stock market that could probably attract wider international attention, with over 400 stocks at present. Many of the other former communist countries such as the Czech Republic and Hungary have just a handful.

The country came through the global crisis pretty well and its prospects are brighter than most of Europe. It should offer some good opportunities in the years ahead and it’s encouraging to see that international investors will finally have a low-cost way to access these.

Poland will be a bit more expensive than most of the Saxo Bank offering at 0.3%, with a minimum of 75 zloty (US$25, ¬£15). But that’s still very competitive compared to traditional broker rates for markets like these.

The list of international stock brokers has been updated to include the details.