Discount/Online Broker Research Comparison

[JT]

I'm looking at adding another broker to get more (diverse) analyst and research reporting.

Found an interesting article, which provides some detail (at least more detail than G&M's annual online broker survey):
"Look for added value from online brokers", Larry MacDonald. The Globe and Mail. Toronto, Ont.: Feb 13, 2008.

Sorry, there is no link to it, but you can probably get it online or physical through your local library.

Rather than just ask what forum members think of their current brokers' research, I thought it might be more useful to do a detailed direct comparison. Categories for comparison would be something like:
(a) in-house analyst/research reports from the full-service brokerage side of the house (BMO, RBC, Scotia, CIBC, NatBank, TD, DJS etc.)
(b) U.S. and international research (in-house or third-party)
(c) other or third-party research (e.g. S&P)
(d) analyst estimates (e.g. First Call)
(e) stock financial information (revenue, balance sheet etc.) (e.g. GlobeInvestorGold)
(f) bond research and outlooks
(g) other client-only research or news (economic forecasts, interest rate forecasts etc.)
(h) mutual fund research
(i) ... ?

Focus is on research which is only available as a client, although it might be useful to summarize separately, publicly available info (e.g. economic forecasts, market outlooks etc.)

I'd like to recruit interested people who regularly use one of the "top 10" brokers ... 1-2 users for each ... to put together a comparison (maybe on Google Docs), and then we could open up the result to feedback from other forum members.

Volunteers ... ?
(PS I can cover BMO and Nat Bank as one user.)

fyi ... the top 10 brokers (according to recent "surveys") are:

1 Qtrade Investor
2 BMO InvestorLine
3 E*Trade Canada
4 TD Waterhouse
5 Credential Direct
6 RBC Direct Investing
7 CIBC Investor's Edge
8 Disnat
9 ScotiaMcLeaod Direct Investing
10 National Bank Direct Brokerage


1 Credential Direct
2 Qtrade
3 BMO InvestorLine
4 RBC Direct Investing
5 TD Waterhouse
6 E*Trade Canada
7 Questrade
8 National Bank Direct Brokerage
9 Disnat
10 TradeFreedom

PS Since ScotiaBank has acquired E*Trade Canada and TradeFreedom, this might be a bit tricky. Does anyone know if there is a final and "stable" iTrade offering or is it still in flux? It might be safest to include only users who have new accounts opened on iTrade, and then we can update the info in 6 months when Scotia has untangled what research will be dropped or added. Any thoughts?

Take Care.

[newguy]

It sounds like a well planned project that a lot of people might be interested in. However there are reasons why I'm not.

I've noticed that the stock market is much better at predicting analysts than vice versa so I'm not too interested in that aspect of it.

For financial information I go to sedar so individual brokers don't matter. At TDWH there are other reports full of ratios and numbers from the past that are meaningless to me, but I'm more interested in the future anyway so I read the companies websites for details on their plans and then watch news reports to see how well they follow them.

All the companies I buy are resource related so more important to me is the underlying product and general economy. I think the same can be said of any business.

So while I respect your idea it doesn't sound like my cup of tea. As you can see I have a rather low opinion of analysts and the usefullness of these brokerage reports.

newguy

ps. Actually I do think the reports are useful for employing analysts.

[shmenge]

All the companies I buy are resource related so more important to me is the underlying product and general economy

Do you buy junior resource co. or majors?

[newguy]

Do you buy junior resource co. or majors?

I buy both, probably more juniors in the past because they had the highest beta. Going forward if I want something to hold for a long time they will probably be more of the majors.

newguy

[JT]

newguy, definitely agree that analysts should be read with caution, ... my philosophy is at least they should be "seen but not heard".

To help convince others to this little project, some reasons to at least glance at analyst reports ...

(a) professional money managers and traders do it. In many interviews of very succesful money managers many of them say "I start the day and read newspapers and analyst reports, but I use the information/viewpoints to draw my own conclusions." There's a nice ~1986 PBS video of Paul Tudor Jones torrenting right now that shows how he starts his day; he doesn't read analyst reports per se, but he gets on the phone and calls analysts and asks for their current views on stocks and bonds. Different viewpoints are always useful.
(b) if you're contrarian, you need to know what the mainstream is saying. Analyst upgrade/downgrades can signal good contrarian entry/exit points
(d) sometimes provides important insight into a sector (e.g. a report on suncor gives you a feel for what might drive juniors and services companies)
(e) provides additional information for confirming your own macro analysis (e.g. does all the natural gas comanies selling significant production forward say something? does COS.UN forescasting $30 oil say something about the dollar?). Of course, all the info is public, but who has time to read all the press releases and webcasts and investor conferences etc.

Take care, JT

[GlennC]

I think this is the way to lose money.

For example, if they are trying to generate investment banking fees, they may suck up to companies (by issuing favorable reports on them) and try to get retail investors to drive up that stock.

2- A lot of analysts have no idea what goes on at the companies they analyze or how the industries work. (And I don't either.) They may know just enough to be dangerous.

[Norbert Schlenker]

Carrick's annual list of good to bad to ugly discounters

QTrade
Credential Direct
BMOIL
Scotia iTrade
RBCDI
TDWH
Disnat Classic
(and from here on, the comments go to bad and ugly)
NBDB
CIBCIE
Questrade
SMDI
HSBCID

[deaddog]

Carrick's annual list of good to bad to ugly discounters

No IB
No TradeFreedom

[Peculiar_Investor]

Carrick's list has been updated, The 12th annual online broker rankings - The Globe and Mail. There has been some share-up in the top ranks.

Rank Broker
1 Qtrade Investor
2 RBC Direct Investing
3 BMO InvestorLine
4 TD Waterhouse
5 Credential Direct
6 Scotia iTrade
7 Questrade
8 CIBC Investor's Edge
9 Disnat (Classic)
10 National Bank Direct Brokerage
11 ScotiaMcLeod Direct Investing
12 HSBC InvestDirect
13 Virtual Brokers

[CROCKD]

Qtrade keeps its lock on No. 1 in Globe’s annual survey

[RobK]

I would be careful with QTrade.

Unlike the discount brokers run by the big banks, it would appear that Qtrade does not provide investors with ANY insurance against their online account being hacked.

The only type of insurance that QTrade mentions on its website is insurance against the company going insolvent.

The discount brokers run by the big banks (e.g RBC, TD Waterhouse etc) will reimburse investors for the WHOLE LOSS that was the result of unauthorized access to your online brokerage account. It looks like Qtrade will not.

I asked Qtrade about "computer hacking" insurance and they avoided the question. They just told me to use a good password etc.
I am not impressed.

[RobK]

Here is some info that is NOT mentioned in the Globe's article "Qtrade keeps its lock on No. 1 in Globe’s annual survey"

Qtrade apparently does not have insurance to reimburse investors for losses caused by computer hacking (ie unauthorized access to investor's online accounts).

iTrade charges a HEFTY $30 Quarterly for its US RRSP Account. And it looks like Scotia Trade will not waive this fee even if you have a large account.
iTrade does NOT offer a US TFSA.
It does offer a US RRSP (but it charges a HEFTY $30 Quarterly fee for this privilege).
iTrade does NOT charge any fees for the Canadian RRSP Account of any size!!
iTrade offers commission free trading on some ETF's
iTrade will allow the writing of naked puts in its regular margin account (but you must make a special request and you need at least $25,000 in assets).
Poor Account Analysis Reporting Tools.

BMO charges a lot more than anyone else for OPTIONS trading.
BMO offers US RRSP Accounts
BMO offers US TFSA Accounts. No fees involved.
BMO charges a $100 fee for RRSP accounts with assets less than $25,000.
BMO does NOT offer commission free trading on ETF's
RBC will allow the writing of naked puts in its regular margin account (but you must make a special request and there may be margin requirements)
Good Account Analysis Reporting Tools.

RBC offers US RRSP Accounts
RBC offers US TFSA Accounts. No fees involved.
RBC charges a $75 fee for RRSP accounts with assets less than $25,000.
RBC does NOT offer commission free trading on ETF's
RBC will allow the writing of naked puts in its regular margin account (but you must make a special request and I believe you need at least $100,000 in assets).
Good Account Analysis Reporting Tools.

TD Waterhouse does NOT offer US RRSP Accounts.
TD Waterhouse does NOT offer US TFSA Accounts.
TD Waterhouse charges a $100 fee for RRSP accounts with assets less than $25,000.
TD Waterhouse does NOT offer commission free trading on ETF's
TD Waterhouse will allow investor to write naked puts etc. Looks like the best of the banks for options trading.
Poor Account Analysis Reporting Tools.

Here is how I rate the brokers:

For RRSP's Accounts, RBC and BMO look like the best brokers.
(BMO might have a slight edge with better web site navigation).

For TFSA Accounts, RBC and BMO look like the best brokers (with both Canadian and US TFSA accounts).
(BMO might have a slight edge with better web site navigation).

For regular trading and Options trading, TD Waterhouse looks like the best broker.
(BMO is too expensive for Options trading. And you need a lot of $ in RBC for naked put writing).

Qtrade is in LAST place since it appears it lacks any insurance against computer hacking. Too risky in my view.

[adrian2]

TD Waterhouse does NOT offer US RRSP Accounts.
TD Waterhouse does NOT offer US TFSA Accounts.
TD Waterhouse charges a $100 fee for RRSP accounts with assets less than $25,000.

Automatic wash trades and sweeping into US$ MMF comes close enough.
There is no fee if your RRSP account is over $25k.

[RobK]

Yes, if you make a special request to TD Waterhouse, TD will set up automatic wash trades for your account.
But TD Waterhouse will not wash dividend payments. I wish they did because it would alleviate the demands for a REAL US Dollar RRSP account.
(And holding US Stocks that pay good dividends in your RRSP makes a lot of sense since there are no US Withholding taxes).

I do not know why TD Waterhouse does not offer true US RRSP Accounts and US TFSA Accounts (like RBC and BMO). It cannot be that hard.
And I wish TD Waterhouse had better Account Analysis Reporting Tools.
If TD Waterhouse did these simple things, it would be the NUMBER 1 discount broker in my books for all types of Accounts.

P.S. I should have noted that iTrade does NOT offer a true US RRSP Account. It is a US Friendly RRSP Account. (i.e. iTrade uses a really good exchange rate - the mid-rate. But you pay $30 a quarter for this privilege).

[RobK]

I asked both TD and RBC about their option trading.

RBC responded:

"Please note that RBC Directing does not support Option Spreads.

We require a minimum of $100,000 in account equity before we'll allow naked put writing. Each account approved for naked put writing must have and maintain the minimum equity requirement within the account. You must contact us by telephone to discuss applying for Naked Puts.

Because of the inherent risk that is related to naked put writing, a higher minimum is required. When investors write naked put options, they are exposing themselves to the risk of being assigned at any moment (for American style put options), which would require an immediate outlay of cash. By writing a naked put option, you are giving someone the right to force you to buy equities (possibly in very large amounts) at a moment's notice. "

TD responded:

"Please note that the account must be approved for option trading during the account opening process where TD Waterhouse determines what level of option trading suits your account details; there are no guarantees. We do calls, puts, spreads, naked calls and puts. In regards to margin requirements for naked option trading, the account itself must have a minimum equity of $10k either in cash or holdings."

Scotia iTrade at least publishes its option trading margin requirements at https://www.scotiaitrade.com/helpcentre/lcmtoor1.shtml :

There are five levels of option trading authorized at Scotia iTRADE . Before you can start trading options your account must first be approved for the type of trading you propose to do.

Level 1: Covered Writes (no minimum)

Level 2: Purchases (calls & puts) - no minimum

Level 3: Spreads (not permitted for registered accounts) - $10k minimum

Level 4: Naked Puts (not permitted for registered accounts) - $25k minimum

Level 5: Naked Calls (not permitted for registered accounts) $100k/$500k min. for equities/indicies

Please note: A margin account is required for all non-RSP option trades.

If you want to trade in options using one of the big banks as brokers, it looks like TD Waterhouse or Scotia iTrade are MUCH better choices than RBC.
With RBC, you cannot even do spreads and the margin requirements are a lot higher for Naked Puts etc.

I did not ask BMO about their policies since their commissions on options trading is TOO high in my view.

Out of the big banks, it looks like TD Watehouse or Scota iTrade are the way to go for Options trading.

But since Scotia iTrade has MUCH HIGHER margin requirements than TD Waterhouse (and some may not like the platform or service form Scotia iTrade as much), TD Waterhouse will likely be the best choice for many options traders choosing to use one of the big banks for their broker.

I hope this helps others trying to figure out which broker to use. It took me awhile to gather all the info on the polices, prices and margin requirements that the big banks have for options trading.

[squid]

I did not ask BMO about their policies since their commissions on options trading is TOO high in my view.

From BMO commission schedule:
*Flat Fee Pricing $9.95 Terms and Conditions

Electronic option trades are charged at $9.95, plus $1.25 per contract.

Is that really bad? What does TDW charge?

[shanti]

Here is some info that is NOT mentioned in the Globe's article "Qtrade keeps its lock on No. 1 in Globe’s annual survey"

Qtrade apparently does not have insurance to reimburse investors for losses caused by computer hacking (ie unauthorized access to investor's online accounts).

Qtrade is in LAST place since it appears it lacks any insurance against computer hacking. Too risky in my view.

I'm a bit confused about Qtrade not covering the losses due to unauthorized access. I found this in their web site. Isn't this essentially the same as what TDW puts on their web site?

Internet Security
Qtrade Investor Internet Security Guarantee
We value your business and the trust you have placed in Qtrade Investor. We take security very seriously and use a variety of measures to protect your personal information and accounts. As part of our ongoing commitment to you, we're proud to offer our Qtrade Investor Internet Security Guarantee:
You will receive 100% reimbursement for any losses in your account from unauthorized online brokerage activity*.

[RobK]

Thanks Shanti.

I could not find that on the Qtrade website. And when I EMAILED Qtrade and asked what protection it offered, they just told me to use a good password.

Rob

[RobK]

I don't see this lower price quoted anywhere on BMO's website.

I looked at the BMO Commission schedule at http://www.bmoinvestorline.com/Commissi ... re_Dec.pdf

And it states 20% off the regular commission for options trades. The regular commission is quoted $35 + a varying amount for the number of contracts.
So 20% off would be $28 PLUS.

Please provide the URL for this lower commission for options trades. I must be going blind

[adrian2]

*Flat Fee Pricing $9.95 Terms and Conditions

Electronic option trades are charged at $9.95, plus $1.25 per contract.

Is that really bad? What does TDW charge?

That's essentially the same as TDW (presuming one qualifies for flat fee pricing, too -- minimum $50k across family accounts).

For an active trader, commission is $7 plus $1.25 per contract.

BTW, I do all kinds of options on my TDW accounts, including writing naked puts.

[RobK]

I have updated my comparison using info received from EMAILS from the brokers.

Since Qtrade wil reimburse account holders if thier accounts are hacked, I did a more thorough analysis.
The big drawbacks for QTrade is the extra $4 it charges for limit orders. And the $50 fee for US RRSP Accounts (but at least it has US RRSPs).

RBC also told me that it does not allow Option Spreads. So in my view, RBC is not a good choice for options traders.

Here is the updated comparison:

Qtrade charges an extra $4 commission per transaction for non-market orders - only applied to the Equities (1,000 shares or less)
Qtrade offers US RRSP Accounts
Qtrade does NOT offer US TFSA Accounts.
Qtrade charges a $50 RRSP fee for Canadian RRSP accounts with assets less than $15,000. (Nothing if over $15,000)
Qtrade charges a $50 RRSP fee for all US RRSP accounts of any size
QTrade offers commission free trading on some ETF's
QTrade allows option spreads (but it is PROBABLY not allowed in registered accounts due to Canadian law)
QTrade will allow the writing of naked puts (and naked calls) in its regular margin account (but there are likely margin requirements)
Good Account Analysis Reporting Tools

iTrade charges a HEFTY $30 Quarterly for its US RRSP Account. And it looks like Scotia Trade will not waive this fee even if you have a large account.
iTrade does NOT offer a US TFSA.
iTrade does offer a US Friendly RRSP with low FOREX Exchange Rates (but it charges a HEFTY $30 Quarterly fee for this privilege of not being gouged).
iTrade does NOT charge any fees for the Canadian RRSP Account of any size!!
iTrade offers commission free trading on some ETF's
iTrade allows option spreads (but not in registered accounts)
iTrade will allow the writing of naked puts in its regular margin account (but you must make a special request and you need at least $25,000 in assets).
iTrade will allow the writing of naked calls in its regular margin account (but you must make a special request and you need at least $100k / $500k min. for equities/indicies ).
Poor Account Analysis Reporting Tools.

BMO charges a lot more than anyone else for OPTIONS trading. (20% off the regular commission -- i.e. $28 PLUS). (I have sent an EMAIL to BMO requesting verification)
BMO offers US RRSP Accounts
BMO offers US TFSA Accounts. No fees involved.
BMO charges a $100 fee for RRSP accounts with assets less than $25,000. (Nothing if over $25,000)
BMO does NOT offer commission free trading on ETF's
Don't know if options spreads are allowed. (but it is PROBABLY not allowed in registered accounts due to Canadian law)
BMO will allow the writing of naked puts in its regular margin account (but you must make a special request and there margin requirements are likely)
Good Account Analysis Reporting Tools.

RBC offers US RRSP Accounts
RBC offers US TFSA Accounts. No fees involved.
RBC charges a $75 fee for RRSP accounts with assets less than $25,000. (Nothing if over $25,000)
RBC does NOT offer commission free trading on ETF's
RBC does NOT allow option spreads in ANY Account
RBC will allow the writing of naked puts in its regular margin account (but you must make a special request and I believe you need at least $100,000 in assets).
Good Account Analysis Reporting Tools.

TD Waterhouse does NOT offer US RRSP Accounts.
TD Waterhouse does NOT offer US TFSA Accounts.
TD Waterhouse charges a $100 fee for RRSP accounts with assets less than $25,000. (Nothing if over $25,000)
TD Waterhouse does NOT offer commission free trading on ETF's
TD Waterhouse allows option spreads (but it is PROBABLY not allowed in registered accounts due to Canadian law)
TD Waterhouse will allow investor to write naked puts (but you must make a special request and you need at least $10,000 in assets).
Poor Account Analysis Reporting Tools.

Here is how I rate the brokers:

For RRSP's Accounts, RBC and BMO are the best brokers (since they both offer US and Canadian RRSPs Accounts with no annual fees once your account is over $25,000).
(BMO might have a slight edge with better web site navigation). My third choice would be Qtrade.

For TFSA Accounts, RBC and BMO are the best brokers (with both Canadian and US TFSA accounts).
(BMO might have a slight edge with better web site navigation). My third choice would be Qtrade.

For regular trading and Options trading, Qtrade is the the best broker (with its better Account Analysis Reporting Tools). TD Waterhouse comes in a close second.

[squid]

From https://www9.bmoinvestorline.com/Commissions/Default.html#9

clink the link that says: *Flat fee pricing terms and conditions

[RobK]

Thanks. I found the BMO Commission Schedule very confusing!

Above, in its own BOX and in more prominent BOLD print, it states that the commission for options trading is "20% off our regular Commissions for Options Trading". And then provides VERY expensive commission rates.

It looks like the devil is in the details. And they do offer electronic options trading at $9.95 plus $1.25 per contract.

Thank you for pointing that out.

[squid]

Thanks. I found the BMO Commission Schedule very confusing!

+1

[Mikouli]

I have updated my comparison using info received from EMAILS from the brokers....

Hi RobK

Thanks for reviewing all those brokers..

Do U have the Exchange/Rate for those brokers ?

I Know that IB (InteractiveBroker ) are around 0.5% over Bank of Canada exchange Rate, Disnat 2% over...

Also I try to find which broker accept premarket and after-market order at reasonable fees ?

And also which one offer "Stop Trailling Orders" ?
(Disnat do that but HSBC and National Bank DON'T offer "Trailing Stop")

Regards