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Discount Brokerage Weekly Roundup – Oct. 5th 2012

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October 06, 2012

Published October 06, 2012 06:00 AM

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    Discount Brokerage Weekly Roundup: As we roll into October, the Canadian discount brokerage industry continues to show signs of competitive evolution.   First, the huge news released earlier this week that Questrade will transition into clearing its own trades via an in-house clearing division (currently pending regulatory approval).  By replacing their current clearing agent (Penson Financial […]

    Discount Brokerage Weekly Roundup:

    As we roll into October, the Canadian discount brokerage industry continues to show signs of competitive evolution.   First, the huge news released earlier this week that Questrade will transition into clearing its own trades via an in-house clearing division (currently pending regulatory approval).  By replacing their current clearing agent (Penson Financial Services Canada), Questrade believes they will be able to offer more timely settlement and record-keeping services to its clients – something that they had struggled with earlier this year around tax season.  While potentially helping to smooth things out on one side of their business, another reason why this move could prove to be important competitively for Questrade is that they will no longer be paying a clearing agent to deal with clearing and settlement. So what could they do with those extra dollars per trade they’ve been paying to their clearing agent? Depending on how much it costs Questrade to clear and settle their own trades (staff, technology, compliance etc), they might be in a position to lower their already low commission fees (i.e. pass along the savings instead of charging inactivity fees). This is a model that has proven to work well for Interactive Brokers. Alternatively, they might redeploy the extra cash into strengthening other aspects of their business as the competition amongst Canadian discount brokerages continues to heat up. Either way, this should be an interesting turn of events to watch unfold.

    The second big piece of Canadian discount brokerage news is from Jitneytrade. In addition to announcing a move into their new offices (coincidentally Jitneytrade and Penson Financial Services Canada are located in the same building), Jitneytrade also announced their move into currency exchange .  The new foreign-exchange component is a service  aimed at institutional clients, and is another bold move for Jitneytrade into the institutional arena.

    Best Canadian Discount Brokerage Tweet of the Week:

    This week’s favourite tweet comes from @Scotia_iTrade:What’s the #KISS Principle? Watch The Market Guys and avoid some of the most common investing/trading mistakes [vid], http://ow.ly/8h4dt  – great video!

    Event Horizon:

    The Small Cap Conference is rolling into Calgary next week (October 9th)  and should offer investors interested in some small cap companies the chance to mingle with management, get some market analysis and maybe win a cool door prize.  For more details click here.

    The People Have Spoken:

    When it comes to taking a shot or passing up the stock market, the Great One Wayne Gretzky would rather pass.  This prudent strategy seems to have served him well in real life however it is an interesting position for brand ambassador to TD Waterhouse to play.  In any case, there were quite a few interesting responses to Wayne Gretzky’s personal finance tips from his interview earlier in the week.

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