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National Bank Direct Brokerage – Review of Pricing
(updated Feb 28/14)
Over the course of 2013, National Bank Direct Brokerage made a number of upgrades to its websites (mobile and main website), pricing and customer experience. In addition to the upgrades to its site, they were also the recipients of the J.D. Power Award for Investor Satisfaction for Canadian discount brokerages.
As with other bank-owned discount brokerages, National Bank Direct Brokerage (NBDB) offers the convenience of branch services as well as being able to manage other personal financial products with National Bank via the back end.
The product offering from NBDB includes registered and non-registered accounts in which clients can trade Canadian and US stocks, ETFs, mutual funds, bonds and options. The registered accounts offered include tax-free savings accounts (TFSAs), registered retirement savings plans (RRSPs) and registered education savings plans (RESPs). Unfortunately for clients, there are no US dollar versions of the registered accounts available so it is important to account for foreign exchange conversion costs when buying and selling stocks in US dollars. As with other brokerages, margin cannot be used with registered accounts. Options trading in registered accounts is limited to buying and selling options as well as covered calls. In the non-registered investment account category, clients can trade with cash and margin accounts. For clients who would like to “short sell” stocks, a margin account with short selling is required.
Now that NBDB has updated their standard commission pricing, how much a trade commission costs with NBDB depends on the activity level of the client. The standard equity trade commission at National Bank Direct Brokerage is now $9.95 for all clients regardless of account balance. For active traders (defined as those who trade at least 30 times per quarter) commission rates range between $6.95 per equity trade and $9.95 per trade. What active traders pay depends on the price of the share, with shares at $2.00 or less being charged 0.05% of the value of the transaction (to a maximum of $9.95/trade) and shares of $2.01 or more being charged at $0.01/share (to a maximum of $9.95/trade).
An important consideration for potential NBDB clients is the inactivity/administration fees. At the end of 2013, NBDB revised their administrative fees such that individuals with at least $20,000 in combined assets by May 31st of a given year or who make at least 5 commission-generating transactions (e.g. stock, ETF or options trading) between June 1st and May 31st can have their inactivity fees waived. For those who do not meet these criteria, a fee of $100 is charged.
The Bottom Line
With their recent price adjustment, National Bank Direct Brokerage is on par with other bank-owned discount brokerages in terms of standard commission pricing on equity and options pricing. While NBDB offers preferred pricing for active traders and the threshold to qualify for active status is low, trade commissions can still range from $6.95 to $9.95 per trade. In terms of additional fees, even though there are no minimums to open or maintain an account, there are fees associated with balances in registered accounts (like TFSAs, RESPs and RRSPs) and non-registered accounts that are below a combined value of $20,000. In addition, currency conversion fees levied when trading US dollar listed securities should be factored into the cost of trading through NBDB.
National Bank Website Links:
Here are some useful links to important information on National Bank’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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