Discount Brokerage Weekly Roundup – July 5, 2013

Even though we roll into July on a short trading week, the discount brokerage space managed to toss along several newsworthy items. In this week’s roundup, we look at the US discount brokerages pointing to signs of improved investor enthusiasm, some fine tuning of ETF offers at Canadian discount brokerages, and some extra summertime heat in the form of spirited debates on the forums.

Trading Improving at US Discount Brokerages

Interactive Brokers’ latest trading data came on the same week that discount brokerages Schwab, E*Trade, and TD Ameritrade hit new 52-week highs.  Trading data from Interactive Brokers showed an increase of 27% over trading volumes at this point last year and an increase of Daily Average Revenue Trades (DARTs) of 4% over May. The recent patch of market volatility likely gave a bit of a boost to trading numbers, however looking at the 12% y/y growth in customer accounts it seems that more data points to investors, at least in the US stepping back into the markets.

Refresh on Commission-Free ETFs

As part of an upcoming piece looking at commission-free ETF trading at Canadian discount brokerages, we took a deep dive into the actual offerings from Qtrade, Scotia iTrade and Virtual Brokers.  While looking at the 100 ETF long list on the Virtual Brokers website, a number of discrepancies were spotted included four ETFs listed that were no longer trading and one ETF that had been duplicated.  A few emails back and forth and Virtual Brokers refreshed their list making the following changes.

Gone from the list are:

  • DENT
  • HAG
  • HIF
  • XRO
  • XID (the duplicated one)

They’ve been replaced by:

  • First Asset Canadian Convertible Bond ETF  (CXF)
  • Horizons Alphapro Balanced ETF (HAA)
  • First Asset DEX Government Bond Barbell Index ETF (GXF)
  • First Asset DEX Corporate Bond Barbell Index ETF (KXF)
  • SPDR Barclays Short Term Treasury ETF (SST)

More Heat Coming Towards Questrade

One of the most interesting and popular threads to follow on RedFlagDeals is the “Stay Away From Questrade.” Be warned, however, this is not a place for the faint of heart. There is lots of CAPS LOCK screaming and it is generally the place where many come to vent their frustrations about their experience with Questrade or simply stir the pot about trading with a low-cost brokerage. Again, it’s not for the faint of heart, but one particular post this past week about a user’s experience with shorting a stock serves as an interesting reminder to those who short stocks generally.

Questrade Short Selling Rant

The lesson: a discount brokerage can recall a stock at any point for any reason.  How a discount broker goes about doing this is variable – some brokerages ask nicely, others less nicely.  To wade into the thorny forest that is this thread click here.

Cooler Heads Tackle a Potential DRIP-off

For those curious about Dividend Re-Investment Plans (DRIPs), there was a great exchange (pun intended)  in the Canadian Money Forum that highlighted exactly how detailed converting dividends from a US stock can get.  At issue: the time of day at which foreign exchange rates get used to calculate conversions of foreign currency dividends.  While it may be for the real dividend enthusiast, it is still an informative example of a) a more structured forum conversation that the forum mentioned above and b) how much homework DIY investors really do to find an answer. To read more click here.

That’s it for this week’s roundup. On the horizon for next week will be part 3 of the series on commission-free ETF trading as well as a review of a neat research tool for junior mining stocks.

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