Tuesday, November 9, 2010

Brokerages Lowering their Commissions

There is a wave of fees reductions at Canadian brokerages going on right now. Many of them have announced a lowering of the minimum account value needed to get reduced commissions on purchases and sales.

I currently have 2 brokerage accounts, one with TD Waterhouse (for my TFSA) and one with Disnat (my RRSP). Both have announced a reduction of fees.

TD Waterhouse: "We are pleased to announce that effective November 4, 2010, clients with $50,000 or more in household assets, invested through TD Waterhouse Discount Brokerage, will now be eligible to trade Canadian or U.S. equities for $9.99 flat when using our online or automated telephone Electronic Brokerage Services. Canadian and U.S. option trades will be subject to the same $9.99 base rate plus $1.25 per contract. Clients with less than $100,000 in household assets must also register their account(s) for eServices to qualify."

That's good, but it will be some time before I reach $50K with only my TFSA. I might get there sooner if I were to consolidate accounts, but right now I get a service with Disnat that TDW does not provide: Medallion signature guarantees. I find those really useful to exchange shares directly with other investors, as part of my DRiP strategy.

There are also rumors that TDW may soon offer USD currency within their RRSP. *That* might make it worthwhile for me to consolidate some RRSP money to reach the treshold, as I hold a lot of US stocks in my RRSP. I'd have to bring at least $25K in the RRSP to avoid paying annual fees.

Disnat: "We are pleased to announce that as of November 1, 2010 you will be able to take advantage of our flat-rate commissions of $9.95 per transaction when you complete a minimum of 10 monthly transactions via our Disnat Classic website! This new flat fee will also apply to accounts with a minimum net worth of $100,000."

Not as good as what TDW offers. Disnat has not changed its treshold; it's just telling investors that if they trade more, they'll get a better deal. As I don't do a lot of transactions (and don't plan on doing much more in the future), this change has no benefit for me.

The major reason for me to keep this account with Disnat is the Medallion signature guarantee service and the fact that the brokerage has an office here in Quebec City. So I can just drop by to get my signature guaranteed (for securities transfers) at no cost. Although TDW also has such a service, they do not use the Medallion stamp, which I need for US transfers.

So in the end, the fees reduction wave has had little effect on me. But it will make it easier for me to reach the reduced treshold in the future.

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