Jon Chevreau broke the news that TD Waterhouse has announced that clients can sign up for a Global Trading account that will allow online access to 10 international markets and ability to hold up to 7 currencies. Clients can trade on stock exchanges in London, Sydney, Brussels, Paris, Frankfurt, Hong Kong, Milan, Amsterdam, Singapore and Madrid and hold cash balances and settle trades in Pound, Euro, Australian Dollar, Hong Kong Dollar, Singapore Dollar in addition to Canadian and U.S. dollars.

The ability to access these foreign stock exchanges comes at a steep price. Trading on the London stock exchange costs £29 ($45.82 at current exchange rates) and €29 ($38.28) on the European exchanges. If you think that’s steep, each trade on the Sydney exchange will cost you A$99 ($95.03). Add in higher fees for converting Canadian Dollars into Pounds, Euros and Aussie Dollars, stamp duties, levies and taxes and you are looking at forking out a substantial outlay in fees and taxes.

An investor can access every one of these markets through ETFs trading on the US exchanges with trades starting at $9.99. For instance, the iShares MSCI Australia Index (EWA) provides broad market access to Australian Equities. They can also access many of the stocks trading in foreign markets through American Depository Receipts. They can even save a bundle on converting Canadian dollars into US dollars (or back) with Norbert’s Gambit. The question is why would retail Canadian investors even bother with Global Trading? What do international markets offer that Canadian investors cannot already obtain for a much lower price?

This article has 19 comments

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  2. 2 works : Sex Appeal.

    “Hey.. i just picked up a 100 shares of Barclays on the London..”

    “Oooh how sexy! Didn’t that cost you an arm and a leg?”

    “umm ya..”

  3. Not everyone out there is an indexer (or closet indexer in my case ;)). I have always lamented that there were many international co.s without ADRs that I wanted to hold directly. However, given the fees, its very nlikely I’ll be interested. Cut those fees in half ($25-$50 range), and if forex fees were similar to CAD:USD, then I would seriously consider opening an account.

    TDW isn’t the first either. HSBC has been offering access to international markets, specifically the Hang Seng and the London Stock exchange for many years now.

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  5. Hopefully this is only a first step and competition will drive the cost down and improve access much as it has for the US and domestic markets.

  6. As some of the other posters pointed out, that is very cool and it would give us access to companies which aren’t ADRs in New York.

    One point that has been missed so far is the tax implications. There are already some real annoying withholding taxes on dividends paid out by, for example, European companies which are listed in New York as ADRs. I can imagine that taxation would get even more complicated for companies which are not ADRs…

  7. @Jon D.: Yes, we should never discount the role that vanity has in many investor portfolios. Just ask investors in Madoff.

    @Sampson: Fair enough. I agree that if fees were comparable, stock investors might like access to international markets. And now that you mention it, I recall HSBC Direct offering access to international markets. Do you have an example of a stock you were interested in that wasn’t listed as an ADR?

    @Stephen: It is possible that competition will bring costs down. I’m not holding my breath though. It took the banks more than 8 years to drop trading commissions and even today they charge $25 to $30 for smaller accounts.

    @Phil: Taxes are an important consideration. I recall owning Nokia in my RRSP and paying withholding tax on dividends. Investors should also check if there will be withholding taxes on capital gains on stocks purchased in these exchanges.

  8. This seems like it could be of interest to some would be day-traders… especially the kind hindered by the responsibilities of their day jobs. You could work a 9-5 job, and make it home just in time for the Australian stock market to open.

  9. @Chris… It’s funny you mention that because the TSX was previously tossing around the idea of either adding another shift or possibly going to 24 hr trading. But the idea didn’t go any further than some talking heads on TV discussing the possibility. I’d like to see it, obviously because I’m one of those people with a day job that you mention.

  10. @Chris: I think you forgot to add, “At least until you run out of capital, say in 2 years or so”.

    @Phil: I personally don’t see the appeal of extended trading hours. IMO, we, as a society, need to do less trading, not more of it.

  11. Interactive Brokers has been doing this for years now. They look to be much cheaper (after a quick glance at their site) and have access to over 80 markets. I’ve never used IB so I don’t know if they’re any good or not.

  12. Financial Uproar is right. I use IB and they are great. If you are a serious active trader you will have a Inteactive Brokers account. Plain and simple. I trade US/Canada and a little mostly equities and options with a little of futures and forex and IB is the best I’ve found in Canada. IB commissions are among the lowest I’ve found: £6 at IB versus £29 at TD for the UK. That is just one example. I’m glad the Canadian banks like TD are expanding their offerings — might be good for the business person who lives spends splits his time between HK and Vancouver and is not an active trader.

  13. I’m thinking east Asia, and even Australia. Only the largest of large co’s are listed on american exchanges. Access to HK markets also allows Canadians to hold Chinese companies directly, instead of being limited to the ETFs like FXI which I fell are not adequately diversified.

  14. Good for TD but I don’t think many people will bite this apple.

  15. Glad to see that TD joined the international trading bandwagon. However, the price is pretty steep.
    IB is still a better choice if you are an active trader/investor of international markets. Cheaper and offers way more trading options under one account (except one major downside of not offering registered accounts).

    Trading ADR means you will be trading once the foreign market is closed. I’m not sure if this is a good or bad thing?!?! 🙂

  16. CC,
    It will be interesting to see what happens with TD joining in international trading. The price is significant though, so I doubt many people will be jumping on this bandwagon.

  17. Well done TD Warehouse for making it to the global trading. I think that is challenge to all traders out there… to be able to hit the global trading is an accomplishment. For me hitting the global trading is an opportunity. Way to go TD Warehouse and good luck on your new endeavor.

  18. One of the reasons can be better familiarity with certain market and companies- other than CAN or US.
    On the other hand it’s sad, that world “global” is used for a couple of markets. These days stocks are probably traded in 95% of countries (except Cuba, North Korea etc.) so I don’t see reason why TD doesn’t give other options.

  19. Need to ask this : Is IB based in The USA or in Canada ? When I checked, it was based in The US. Please advise.