Table Of Contents

    Key points

    Bulls will be bulls. On a day when grim news captured the headlines, the S&P 500 managed to put it all in the rear-view mirror and touch a new record high intraday. Despite what naysayers are nay-saying, the numbers on the tape tell a different story. For Canadian discount brokerages, the news cycle is relatively […]

    Bulls will be bulls. On a day when grim news captured the headlines, the S&P 500 managed to put it all in the rear-view mirror and touch a new record high intraday. Despite what naysayers are nay-saying, the numbers on the tape tell a different story. For Canadian discount brokerages, the news cycle is relatively quiet. The numbers coming out of brokerages, however, are doing most of the talking at least when it comes to deals and promotions and where brokerages are seeking out opportunities.

    In this week’s roundup we take a look at the latest deals that were revived after the Canada Day long weekend. From there we look at one online brokerage that is banking on innovation as the path to winning against bigger bank-owned competitors. From there we’ll take a look at what investors were chatting about on social media and in the investor forums. Saddle up.

    Guess Who’s Back?

    This past week saw a number of deals get a reboot from several Canadian discount brokerages.

    First, the refer-a-friend offers from both BMO InvestorLine and Scotia iTrade, which originally expired at the end of June were picked up again and renewed well into 2016. While BMO InvestorLine had updated their terms and conditions at the time of writing, Scotia iTrade had not (although they confirmed the referral offer is still active). Until the revival of these two offers, Questrade held the sole refer-a-friend promotion among Canadian discount brokerages heading into July. As we referenced previously however, it was unlikely that other brokerages would allow Questrade to remain unchallenged for too long.

    The third offer that was revived was Desjardins Online Brokerage’s $500 commission credit offer. Having been live for well over a year and a half, this deal is now active again through to the end of August.

    Currently, there are 24 advertised offers from Canadian brokerages across the four categories we track.

    Offers from Canadian Discount Brokerages (July 2016)

    What is interesting about the kinds of offers currently being advertised, however, is that contests and other promotions are nearly at the same levels as more popular cash back/commission credit or transfer fee promotions. Another interesting observation is that, Questrade now shares the title of brokerage with the most number of advertised offers with Scotia iTrade.  Surprisingly, Desjardins Online Brokerage is close behind, edging out other brokerages, including its cross-town rival National Bank Direct Brokerage.

    With such a close race between providers, there is certainly more of an opportunity for any of the Canadian brokerages to make a move to become a dominant player in the promotional space. Virtual Brokers has certainly been attempting to compete with other brokerages in the deals section by offering up new deals every month or so. Even with these efforts, however, they’re still lagging. That said, should Virtual Brokers decide to bring back their referral offer as a standing promotion as well as a standing transfer fee coverage offer, they would definitely win some of the spotlight that Questrade has given up in this space over the past few months.

    As competition heats up along with the summer weather, it will be interesting to see which offers currently scheduled to expire at the end of July will either get renewed or replaced and whether or not one brokerage reaches to claim top spot in the deals arena.

    Widening Circle

    One of the interesting side effects of the low interest rates on online brokerages in both the US and Canada is the squeeze on their revenues. Without lending generating substantial revenues, online brokerages are left to other streams like fees and commissions to keep the lights on and servers running. Of course, in order to make up for the shortfall in commission revenues from falling prices, brokerages, especially at the “discount” end of the commission spectrum (such as Questrade and Virtual Brokers) have turned to more creative endeavours to boost revenues.

    This past week, BBS Securities, parent of Virtual Brokers, announced that they have partnered with one of Canada’s newest stock exchanges, Aequitas Neo Exchange, in order to provide Platform Traded Funds (PTFs) to Virtual Brokers’ institutional clients. More importantly, however, Virtual Brokers is already signaling that they wish to become the first Canadian discount brokerage to offer PTFs.

    In a nutshell PTFs help to simplify the trading (and thus lower the cost) of mutual funds by integrating with securities trading platforms (for more background on PTFs check out this article from the Financial News). This makes it easier for advisors and dealers to process mutual fund orders which, in turn, can result in savings for investors. While it will likely take investors some time to untangle the difference between an ETF and a PTF, the bottom line is that innovation in how the financial services world delivers a very popular product (mutual fund) has resulted in lowered costs for investors.

    For Virtual Brokers, the headline and optics of embracing a “fintech” solution positions them as a firm that is continuously innovating – something that the Globe and Mail has pointed out about Virtual Brokers in several of its discount brokerage rankings. Interestingly, the fact that this solution is aimed at their advisor client base means that Virtual Brokers is continuing to diversify its opportunities, something it has already done in the robo-advisor space.

    The bigger picture indicates that the online brokerage space and “DIY investing” are clearly not enough to sustain most Canadian discount brokerages, so it is interesting to see how different firms are broadening their service offerings. It does beg the question, though, that if the ‘traditional’ discount brokerages are struggling to keep up with all of the changes in services and products, how can DIY investors do the same?

    Discount Brokerage Tweets of the Week

    Battling technology issues in the summer heat has made for some interesting feedback to brokerages. Mentioned this week are Questrade, Scotia iTRADE, TD Direct Investing and Virtual Brokers.

    From the Forums

    Bank to Bank

    Making the decision to switch to a bank-owned discount brokerage is a challenge for some DIY investors because banks are usually hard to distinguish from one another. In this post from’s investing forum, one user wants to find out which bank-owned brokerage is better: BMO InvestorLine or Scotia iTrade?

    Tipping Point

    Getting started with DIY investing is a challenge for many, mainly because there is a lot of trial and error. Hopefully for most investors, the errors aren’t too costly out of the gate. In this post from reddit’s Personal Finance Canada section, one user asks for any advice or tips for starting out using TD’s WebBroker.

    Into the Close

    That’s it for another edition of the roundup. This weekend is filled with all kinds of excitement (and investing metaphors) for the folks attending the Calgary Stampede. Regardless of which rodeo you follow, there are plenty of reasons to hold on to your hats and keeping your heads up going into next week. Have a great weekend!