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Broking fees for global shares could hit zero

Brokerage fees charged to Australian investors for buying international equities were expected to come down significantly and could even become free in the next year, according to an industry executive.

“In terms of direct shares, it’s still super expensive for investors to buy global shares through any of the Australian brokers,” Stockspot founder and chief executive Chris Brycki told selfmanagedsuper.

“The cost of trading individual securities in overseas companies is too high for Australians and if you want to buy more than a couple, it adds up, so, for example, if you just want to buy Apple and Google, you might just pay a couple of brokerage charges, but that doesn’t give you a very diversified portfolio.

“So I think that’s why a lot of Australians haven’t [yet made the move into international equities] and probably won’t until overseas brokerage charges come down significantly in Australia.”

However, Brycki said he believed costs were likely to drop in the next year or so.

“There are a few global players that will be coming down to Australia who will offer free or very close to free brokerage for global shares,” he said, adding the average charge was currently in the vicinity of $50.

“I’ve never really understood why it’s so expensive still for Australians to trade overseas shares.”

He revealed he knew of one United States-based group that was able to charge minimal brokerage fees for US shares.

“They’re expected to launch in the Australian market early next year and the way they can offer it at a much better price is that they have used technology to deliver a solution that cuts out a lot of their head cost of operating and trading business, therefore they’re able to operate on much lower margins,” he said.

“I think in terms of an option for Australian investors looking to buy direct international shares, this will completely offer a great, new solution to them compared to buying them on the traditional broker platforms.”

He said for Australians looking to gain international exposure through a broker, it was still the obligation of investors to manage the administration, reporting and compliance work, including US tax forms and currency considerations.

“There are two different types of investors [emerging],” he said.

“People who want to do their own investing and trading are in one bucket and, at the moment, they’re only probably buying ASX-listed shares and not doing too much in international.

“[On the other hand] there are the type of people that we attract to Stockspot who don’t want to be actively managing their portfolio rebalancing, the admin, et cetera, on a day-to-day basis.”

Earlier this month, Saxo Capital Markets announced it had significantly reduced its cost to trade international shares by one-third via its new multi-asset SaxoTraderGo platform, which would assist in greater global share exposure, particularly for SMSFs.

US equities trades were now $9.90 per ticket for up to 990 shares on the platform and then 1 cent per share above that.

SaxoTrader, its preceding platform, offered US share trades to Australian investors at $15.

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