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    Key points

    It’s a new month, and that means a scan of deals activity. That’s not all that’s new though, as it appears online brokerages are launching big features this summer – including the latest one from Questrade.

    With warmer weather around the corner, it looks like the Leafs may actually have some fans this summer after all. Couldn’t resist. Fortunately, it’s still spring and the theme of new beginnings and growth are very much in focus among Canadian online brokerages.

    In this edition of the Roundup, new is en vogue. First, we take a look at the newest online brokerage deals and promotions, including an interesting development at one already popular online broker that’s sure to spur others into action. Next, we highlight the latest new blockbuster feature being launched by an online brokerage this season. To cap things off, we provide chatter from the investor forums reacting to scary glitches and instant deposits.

    New Month, New Deals

    And just like that, summer is only a few weeks away. June is now upon us, and with the start of a new month comes a chance to check in on the status of the deals and promotions being offered at Canada’s online brokerages.

    This month, it’s a good news, bad news story for DIY investors on the hunt for a promotional bump. The good news is that there wasn’t a drop in the number of promotions, and there are signs that one of Canada’s increasingly popular online brokerages isn’t afraid to commit to promotions as a way to attract the attention of new clients. The not-so-great news for online investors is that after June, there are a pair of promotions that are scheduled to expire, which means that even though there is a good chance more deals are on their way, the exact timing isn’t clear.

    Starting first with a quick scan of the current promotional picture, BMO InvestorLine had a new cash back promotion that launched on June 2nd to replace its outgoing cash back offer that expired on June 1st.

    The new cash back promotion from BMO InvestorLine is very similar to the one that it replaced in that it’s a tiered promotion that offers increasing amounts of cash back bonuses as the amount deposited increases. The important difference with the new offer is that minimum deposit required to qualify for this promotion dropped from $25,000 to $15,000, a significantly lower amount.

    The latest BMO InvestorLine promotion runs until August 31st and features cash back amounts ranging from $50 (for deposits of $15,000 to $49,999) to $2,000 (for deposits of $1M+).

    Although not new this month, Wealthsimple Trade is now also part of the deals and promotions mix in a major way. In May they launched a “free stock” promotion for new cash account clients to receive a cash bonus in the equivalent amount of a stock chosen at random from a selection of eligible stocks.

    Marketed to online investors as a “free stock” promo, this offer has garnered quite a bit of attention online. It also appears that this promotional offer has been so successful through several trial runs that a recent note from Wealthsimple Trade about its referral promotion indicates that it too will be switching to a “free stock” compensation model.

    With Wealthsimple Trade joining in the deals and promotions pool at a time when most online brokerages are electing to stand on the sidelines, it appears to be open field for the newcomer online brokerage at a time when meme stock excitement has resurfaced.

    Contextually, this poses a challenge for two other online brokerages with commission-free trading offers that expire at the end of the month.

    National Bank Direct Brokerage’s massive 100 commission-free trade offer and HSBC InvestDirect’s 60 commission-free trade promotion are both set to expire by the end of June. National Bank Direct Brokerage has seen a boost to its publicity across Canada as it scored first place in a recent Surviscor ranking of online brokerages, as well as scoring first place in the J.D. Power Investor Satisfaction Study. Also, National Bank Direct Brokerage just launched their annual “Biggest Winner” ETF competition at the end of May, putting yet another spotlight onto this online broker.

    The challenge posed by the entry of Wealthsimple Trade into the deals and promotion mix is that those brokerages with existing commission-free trade offers may want to consider extending them, or replacing them with even more competitive cash back bonuses.

    Unlike the Big Five bank-owned online brokerages, National Bank Direct Brokerage and HSBC InvestDirect do not have the level of awareness or scale that their larger bank-owned brokerage competitors enjoy, despite being “bank owned.” Conversely, neither of these two bank-owned online brokerages are as well known as some of the “independent” brokerages known for lower cost trading – such as Questrade and Wealthsimple Trade.

    Thus, if promotional offers are a low-cost tool used to boost awareness, either extending or launching new offers may be a way to stay relevant and competitive across the summer. With meme stocks and cryptocurrency trading still bubbling away, younger investors are continuing to take note. And while that is generally good for all online brokerages, those online brokers with highly competitive offers will undoubtedly find themselves being considered and recommended for deep value for growth-minded investors.  

    Summer Blockbusters are Back

    Grab a meme stock and some free popcorn, because it looks like the summer of blockbuster announcements from online brokerages is here.

    After a frothy start to markets this year, it seems that Canadian online brokerages are now the ones that are going to be in the spotlight when it comes to making big announcements.

    In April and May, there were some significant new features launched by RBC Direct Investing and Wealthsimple Trade. Two weeks ago, BMO InvestorLine announced it was launching commission-free ETF trading on a selection of more than 80 ETFs. 

    This past week it was Questrade’s turn.

    In what seems like a direct shot across the bow to Wealthsimple Trade’s account funding time, Questrade announced, courtesy of a partnership with fintech startup Zum, that clients can now fund their accounts instantly using Visa Debit, with up to $3,500. By comparison, Wealthsimple Trade enables users to deposit only $250 instantly, or for those willing to pay $3 per month for Wealthsimple Trade premium, the amount rises to $1,000.

    The blockbuster features haven’t been limited to Canada either. In the US online brokerage space, Robinhood announced in late May that it is launching a new feature enabling investors to participate in IPOs at the IPO price, rather than having to wait to purchase the security once it hits the open market. This is a huge development for retail investors who have typically been unable to tap into the massive gains that certain IPOs experience, because the investors were not connected to institutional investors or perhaps not wealthy enough to be given early access.

    The US online brokerage market is an important proxy for what the world of DIY investing looks like when commission rates all but fall to zero.

    What has been clear at online brokerages such as Robinhood, Schwab/Ameritrade, and others is that features and user experience tend to become areas of focus and innovation. Granted, how US online brokerages can monetize zero-commission trading is different than it is here in Canada. However, the likelihood that commissions stay at $9.95 as the standard price for much longer is low. In addition, even those online brokerages with lower commissions can’t stand still when it comes to innovation – they have to keep delivering better experiences to investors because other online brokerages will. (And new online brokerages are still coming to Canada, to boot.)

    We’ve already witnessed a number of online brokerages concede ground on charging commissions for trading ETFs, either in part or entirely. As the Globe and Mail’s Rob Carrick put it in a recent article, “We now have some real momentum in getting rid of ETF trading commissions… There are now at least eight online brokers and trading apps that have at least partly eliminated the cost of buying and selling ETFs.” Given how popular ETFs are with online investors, the writing is on the wall at the remaining online brokerages that do not at least match if not beat this new ETF pricing paradigm.

    And, as popular as ETFs are, Questrade’s launch of instant account funding clearly strikes at a nerve for DIY investors who want to be able to enjoy instantly jumping into opportunities. Friction, not change, is the new dirty word in technology conversations among financial services providers, and especially incumbent players in the online brokerage world. Instant account opening and funding are frontiers where too many Canadian online brokerages still fall short in the eyes of online investors. Based on Questrade’s latest push to enable instant funding of up to $3,500, they won’t be the last online broker to launch this feature. Several business days is an eternity when meme stock movements strike.

    The merits and wisdom of trading fast-moving stocks aside, the reality is that investor behaviour during COVID-19 has shown that certain categories of investors have a very different risk appetite for trading volatility. Online brokerages who can reduce the friction between getting started and participating in exciting stories are themselves going to become the exciting stories that online investors talk about. And that conversation is now worth its weight in digital gold.

    From the Forums

    Care to Share?

    It almost seems trivial, but expecting your online brokerage account view to display the correct information should be a given. Many clients of Wealthsimple Trade found out the hard way, however, that when it comes to online investing, just about anything can go wrong – including what should be the basic stuff. Check out what redditors had to say here and here about technical glitches that left clients scratching their heads at the data they were seeing in their account summaries.

    Instant Gratification

    One of the biggest stories to get online investors chatting this month (so far) was the launch of instant deposits at Questrade. Interestingly (and is usually the case), the discussions deviated from the new feature to cover issues with existing features, challenges other brokerages might face, and investor preferences when it comes to trading online. Read through the reactions here and here.

    Into the Close

    That’s a wrap on another semi-short week courtesy of a long weekend in the US. Of course, for Leafs fans it certainly felt a lot longer. Again, couldn’t resist. There’s still lots on the radar for online investors that we didn’t get a chance to dive into, so stay tuned for more updates on the DIY investor data-palooza coming next week, and updates on more new features we didn’t have a chance to discuss this go-around. With stock markets at or near new all time highs, meme stocks making a comeback, and crypto now in the doge-house with investors, there’s almost certainly a plot twist in the making coming soon. Have a profitable week ahead!