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HSBC InvestDirect – Review of Pricing
(updated Sept. 24/13)
InvestDirect by HSBC (short for Hongkong and Shanghai Banking Corporation) is one of a very small number of discount brokerages that lets you trade on North American exchanges as well as on the Hong Kong exchange.
The accounts you can hold with HSBC InvestDirect can either be registered, such as the tax-free savings account (TFSA), registered retirement savings plan account (RRSP) or the registered education savings plan (RESP) or non-registered (“personal investment”) such as the cash and/or margin accounts. For registered accounts you cannot use margin or short stocks. Options trading in registered accounts is limited to buying and selling options and there is no writing of options allowed in these accounts. In the non-registered investment account category, clients advanced options trades can be made and stocks may also be shorted.
Recently HSBC InvestDirect has lowered their prices and requirements for qualification for best commission rates. They recently replaced their Prestige program which had 3 tiers (Prestige Elite, Prestige Plus and Prestige) into three main categories of pricing: “HSBC Premier”, “HSBC Advance” and “standard”
For the HSBC Premier account commissions for trading stocks are $6.88 flat. To qualify for this commission rate you have to have either $500 000 in assets or greater than 100 trades in the quarter.
The HSBC Advanced account charges $9.88 flat per equity trade and to qualify for this rate you have to have between $50 000 and $499 999 in assets or trade between 30 and 99 times per quarter.
If you don’t meet the criteria for either the HSBC Premier or HSBC Advanced, you’re going to pay at least the minimum HSBC “standard” rate for trades of $28.88. The actual price you pay per trade at the standard rate depends on two factors: the stock price and the amount of shares purchased. If you are purchasing a stock priced between $0 and $2.00, you can expect to pay 1.5% of the value of the trade (with a minimum charge of $28.88). If you are buying 1000 shares or less of a stock priced $2.01 or more, you will be charged the flat fee of $28.88. If, however, you are buying 1001 or more shares of a stock priced at $2.01 or higher, you will be charged $0.03 per share (with no maximum on the charge).
The Bottom Line
HSBC InvestDirect is an interesting option for individuals looking to do overseas stock trading as well as trade on North American markets. One thing that has to be factored in for pricing is the foreign exchange rates as InvestDirect doesn’t offer US dollar registered accounts (TFSAs, RRSPs and RESPs). The pricing and account balance and trading volume requirements for best commission pricing have been lowered to be more competitive with the other Canadian online discount brokers. There are some inactivity fees that are levied if either your account balance falls below $5000 on non-registered accounts and/or if your trading activity is less than twice a year. That said, from pricing perspective, if you are an active trader that wants the flexibility of international trading, you may want to consider HSBC. If you are not as active a trader, you may want to understand what your investing/trading requirements will be on a monthly basis to see if HSBC InvestDirect is the most cost-effective option.
HSBC InvestDirect Website Links:
Here are some useful links to important information on HSBC InvestDirect’s website.
Discount Broker Customer Survey Ratings by J.D. Power:
Link to 2013 online broker ratings by the Globe and Mail:
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