Online stockbroking platforms in Australia: Here’s everything you need to know
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Buying and selling ASX stocks is a core investment strategy for thousands of Australian investors.
And as many Stockhead readers would be aware, investing in ASX-listed small caps rarely offers a dull moment.
A positive earnings update or key discovery can see prices double or even triple in a single day — something you’ll rarely see at the big end of town.
Of course, the reverse also holds true. But there’s an allure in that volatility — one shared by both professional small-cap investment funds and retail investors alike.
Researching investment themes, keeping watch-lists and monitoring the price charts is a fun intellectual pursuit for many.
But before you can play the game, you’ll need to choose a broking platform to trade on.
And for local small-cap investors, there’s now quite a bit of choice when it comes to which online broker they use to buy and sell shares.
This primer provides a breakdown of the pre-eminent online brokerages in the Australian market: Who are they, what services do they offer and how much do they cost? Here’s everything you need to know.
Before those questions, we posed one of our own: What are the most popular online brokers for retail investors in the Australian market?
For starters, we did what any self-respecting financial publication would do and turned to our readers; by way of a Facebook poll over on Stockhead’s ASX Small and Micro Cap Chat page.
With a growing list of engaged readers — most of who identify as investors — consulting the Stockhead readership is actually a pretty good way to gauge user rates in the local market.
Here are the results:
A comfortable win for Commsec, and also a microcosm of the platform’s fairly dominant position in the Australian market for online share trading.
Here’s the full breakdown of the survey:
Commsec – 68 votes
CMC Markets – 17 votes
NABTrade – 13 votes
SelfWealth – 6 votes
IG Markets – 5 votes
Interactive Brokers – 3 votes
Bell Direct – 2 votes
FP Markets – 2 votes
ASB New Zealand – 1 vote
The next question to ask when choosing an online broker is pretty clear: what do they cost?
In the Australian market it’s not a simple apples-to-apples comparison, as each platform uses slightly different metrics to calculate charges.
Commsec and NABTrade have tranches where the fee increases based on trade size, while CMC derives its broker fee from the number of trades made per month.
For the top five platforms in our Facebook poll, we’ve brought together all the transaction fees and their relevant designations:
$10.00 – up to and including $1,000
$19.95 – over $1,000 up to $10,000 (inclusive)
$29.95 – over $10,000 up to $25,000 (inclusive)
0.12% – over $25,000.
<11 trades per month – $11 or 0.1%, whichever is greater 11-30 trades per month – $9.90 or 0.08%, whichever is greater >30 trades per month – $9.90 or 0.075%, whichever is greater.
$14.95 up to $5,000
$19.95 for $5,000.01 to $20,000
0.11% for over $20,000 of trade value.
Flat fee of $9.50 per trade.
$8 per trade or 0.1% of transaction value, whichever is greater.
At a flat $9.50 per trade, SelfWealth offers the cheapest service, taking out the Money Magazine award for cheapest online broker in 2018 and 2019.
When comparing the different online brokers, it’s also important to assess the full service offering of each platform and how that suits your investment needs.
Key factors to consider include what exposure (if any) each online broker provides for different asset classes, and the quality of in-house research tools.
This primer is focused on buying and selling ASX-listed shares, but it’s possible that different brokers are more suitable depending on a given investors’ requirements.
Other simple investments offered to retail investors across the platforms include exposure to international shares and exchange traded funds (ETFs).
For example, while SelfWealth offers the cheapest flat rate for ASX investments, it doesn’t offer brokerage services to buy international shares.
For more sophisticated investors, the choice of platform will be influenced by the inclusion of more advanced investment offerings such as margin loans and contracts for difference (CFD).
CFD’s are a financial derivative that allows investors to speculate on price movements across multiple asset classes, without going through the full brokerage process to buy and sell the underlying securities.
Across the full suite of broker services, CMC Markets won the 2019 award for best overall platform in the annual review carried out by stockbrokers.com this month, while Commsec was awarded best share-trading platform.