The development in technology has revolutionized share trading. The online stock broking firms have grown in popularity and have reduced the need for phone brokers. More and more people are doing online share trading. In Australia, the two major online stock brokers are Commsec and Etrade. These platforms allow you to do participate in online share trading. It is important that you learn how to find the best online stock broker to make your trading experience better. Commsec is linked with the Commonwealth Bank of Australia while Etrade is linked with ANZ. This article only compares the cost differences between the two. The information below is correct as at October 2010. The two main trading activities discussed here are share and options trading.
Shares: Commsec vs Etrade
The Commsec online share trading facility offers a cheaper transaction fee to buy shares compared to Etrade. The rates start from as low as $19.95 for CHESS sponsored participants. You can be elect to be CHESS sponsored when you sign up for an account and settle your share purchases through a Commsec Cash Account or margin loan. It would make more sense to be CHESS sponsored than to pay an extra $10 to trade. This is a flat rate charge which is different from Etrade, who charges based on the amount of trades you make. For a new trader, being charged a flat rate might suit them more as they are just starting out to trade and are unlikely to make massive amounts of share trades each month. However, experienced traders would probably be indifferent between Commsec and Etrade as the cost is about the same if they are a regular trader. For phone trades, Commsec still offers a cheaper rate compared to Etrade.
Options: Commsec vs Etrade
Besides shares, both Commsec and Etrade offer option trading via their online options trading platform. The cost of options trading with Commsec is $34.95 if traded via internet. Compared with Etrade which charges $44.95, Commsec is a cheaper option if you trade little in a month. However, if you are a heavy trader, the cost of options trading in Etrade will rival the cost charged by Commsec. There is also Australian Clearing House fee of $1.43 and an exercise fee of $0.55 per option contract.
Both Commsec and Etrade offer upgrades of their platform. For an extra charge each month, you would be able to access live quotes, dynamic market data and advanced charting tools. This is more suited to regular traders who want to make use of live information to properly execute their share trading and options trading strategy. Both Commsec and Etrade give rebates for this service if you trade above a certain level each month.
Besides Commsec and Etrade, there are many other platforms in Australia which facilitate online shares and options trading. This includes Westpac Online Investing, Bell Direct, CMC markets, Direct Shares and many more. The fierce online competition has led each company to promote themselves by charging lower transaction costs or giving free brokerage to customers. Besides the commission costs of share and options, other aspects have to be considered before making a choice on which online share trading platform to choose. Things such as customer service, friendly online share trading platform user interface and reliability of service have to be considered.
The information presented in this article is solely for information purposes. The writer makes no reference as to which online share trading platform is superior. Before acting on this information, the reader should consult with an independent financial advisor.