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Australian online brokers

Discussion in 'Brokers' started by Jouni, Nov 11, 2016.

  1. Jouni

    Jouni

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    Hi All
    I am new here at ASF and have been enjoying reading chatter which appears to be generally very informative and participants genially helpful.
    My strategy is to accumulate quality Australian stocks and Australian ETFs with medium to long term view and if possible write covered calls and puts against my holdings. So my question is does anyone can recommend online broker. I have looked all major banks but their fees appear to be expensive. I have also checked Interactive brokers but I am somewhat weary of my monies been held in overseas, are they regulated by ASIC and how safe my monies are and whether shares and ETFs purchased are owned by me or are they holding them in their name. Is this something to be of concerned?
    Any thoughts or quality brokers would be highly appreciated! Thank you!
     
  2. pixel

    pixel DIY Trader

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    https://www.youtube.com/watch?v=pMXzKrWxOh0
    https://www.youtube.com/watch?v=Te15lyNAj6A

    This guy could be right up your alley. Check him out.
    I follow his blogs and monthly analyses for macro-global overviews, and am not trading ETOs, so I'm not familiar with his cost structure etc, but you can find that out when you ask your questions directly.

    btw, I share your concerns about US institutions, especially since the emergence of a new Nationalism that is likely to relax regulation and governance, especially where non-US citizens are concerned. Better wait how the Trumpism plays out - maybe a year or five...
     
  3. minwa

    minwa

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    Interactive Brokers LLC (ARBN 091191141, AFSL 245574) is regulated by a number of regulators worldwide including the Australian Securities & Investments Commission, the US Securities and Exchange Commission and the Commodity Futures Trading Commission


    IB operates in many markets on many exchanges so they are actually regulated by many countries regulators as opposed to pure Aussie brokers being regulated by ASIC only. Not sure about the ownership concern.

    Only downside is money will be held overseas - advantage is you will probably only pay 10-20% the commissions as opposed to an Aussie broker.
     
  4. OmegaTrader

    OmegaTrader

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    I am an amateur still learning like you :)

    The best advice is DO YOUR OWN RESEARCH

    I am not an adviser or a professional

    However I will tell you what I think I know haha







    Based on what you have told me.


    You want

    To own shares in companies
    To write Options
    To Buy ETFs or similar vehicles





    Some options:

    Direct market/ Exchange

    1) BIG 4 Broker
    2) Other Brokers

    Over the counter

    3) Market makers/CFDs

    Other

    4)Managed investments



    1) BIG 4 Broker

    A broker owned by NAB WBC CBA or ANZ
    Is pretty much covered informally by the government....:rolleyes:
    During the GFC the government guaranteed deposits and they would unlikely go bankrupt as a broker and in which case would probably refund their clients because of the embarrassment.

    Nevertheless IF you own the shares then they are yours.
    If shares are registered in your name they are yours.

    A broker going bankrupt should not affect shares you own in your name

    It depends on the broker in the past some brokers have had the shares in their name on trust. Make sure they are in your name etc etc.

    You may however lose money held by the broker or cash management accounts depending in the structure.

    2) Other Brokers

    Other brokers are more likely to go bankrupt, but this is not an everyday occurrence.

    They do not have the informal backing of the government etc etc

    But once again If shares are registered in your name they are yours.

    These brokers 1) and 2) will go directly into the market and buy the shares on the exchange for you.

    With options, They can do this on the exchange as well with exchange traded options, although understand that there may be a spread in the market place with a different bid/buying and offer/selling price, especially with longer term exchange traded options like asx200 ETO, which don't have that much liquidity in the long term contracts apart from a few liquidity providers and also remember that some shares will not even have listed options.

    My experience is that big 4 brokers are not that expensive, around .1% for shares and .3+% for options.

    Remember that .1% one way is nothing, you or the company will pay a lot more in taxes and volatility. Plus by the sounds of it you are only buying passively so it is not like you are buying and selling shares every 10 seconds!!

    In the long term your analysis and due diligence is much more important than brokerage, but it is still essential to research your broker and get the best deal for your circumstances.


    For options you are controlling a massive amount, so say for example the asx200 is 5000 and the option price is 250 points equivalent, you are only paying .3+% on 250 not 5000, where as with the stock you are paying on the whole asset.

    With options all brokers are different but with Commsec you will have different levels.

    One level may only include buying options but higher levels allow you to write options into the market place. To write options you need a margin. This margin will be like a deposit and be marked to market which means that if the asset goes against you then more deposit is need to cover any loses and vice versa.So you need to understand this and any cash flow issues it may cause.

    3)Over the counter:

    With over the counter investments you have a contract with a company, you do not own anything.
    You do not own the futures contract and you do not own the stock. It is based on the market price.

    If the market maker/counterpart goes bankrupt you can lose everything.

    On the up side it is more flexible,can be more liquid ,can be lower cost and is easier to trade on margin.

    Very few actual brokers will be overseas and regulation by asic and being Incorporated in Australia inspires more confidence at least in my opinion.:2twocents

    However some OTC brokers will be overseas and very dodgy so beware.

    4)Other

    Managed investments can be bought directly form the company eg Vangaurd or bought on the exchange with a broker hence the name Exchange traded fund.
    The benefit of exchange traded means that you can sell the fund on the exchange ASX straight away and don't have to worry about hassles of getting your money back through redemption. In terms of cost then you will be charged for buying on the exchange and may also be charged for buying from the fund directly through a unit cost type scenario- the fund may take a spread for this. Also the fund will charge a management fee each year or 6 months etc etc.

    The whole idea of the fund is that they buy the shares for you. The shares will be held in a trust like a superannuation fund. I don't know what would happen in the case of a bankruptcy and it would depend on the specific structure of each fund. ANZ I think does an ETF so this should be safer given ANZ's standing. Best to do your research and ask a professional and the fund yourself.


    As a side note you could always do what the ETF does, which is to create your own portfolio by buying the shares yourself or through derivatives. That would save you the yearly management fee.





    I can't recommend any in particular, in your case though it sounds you are more passive so do your own research in terms of cost and quality of your broker.

    Look at other forums and research online.

    I have used Commsec about .1% on shares and .3+% on options.

    I think all the the big four will be similar and even some of the other brokers.

    I have also used some OTC brokers which are quite similar

    I know that some offer bonuses on new accounts such as some free brokerage.
     
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