Australia, $0 brokerage share trading is here

Alison Banney 16 August 2017

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You can't find Australian brokerage fees much cheaper than $0, that's for sure.

Sydney fintech startup Stake, the online shop for US shares, has just launched its much anticipated $0 brokerage in Australia. This means Australians can now buy US stocks with no broker fees. I don't think you can get a deal better than that, unless there's a local provider actually giving you money each time you trade, which I feel is unlikely to happen any time soon.

I wrote about Stake, which offers access to over 3,000 US stocks and Exchange Traded Funds (ETFs), back in June when it was just a newbie in the Australian market. The platform already had a lot going for it then, including a user experience akin to online shopping and the ability to "gift" shares to friends and family. But this new $0 brokerage takes the platform to a whole new level.

Stake says its new $0 brokerage offer is "the ultimate disruption in Australian brokerage", giving everyday Australians the opportunity to buy and sell shares in major US brands like Amazon and Facebook for free. Australian investors will no longer be limited to trading through the ASX alone, with Stake providing easy access to major US stocks through its user-friendly, simple online platform.

But how can Stake offer this? Well, founder Matthew Leibowitz says the answer is very simple. "In the US share market, brokerage costs are close to $0. We're just passing on these low costs of buying and selling US shares to our customers," he said in a recent blog post.

Stake does not make money when people trade stocks, but only when investors swap their Australian dollars for US dollars, or vice versa, by receiving a portion of the foreign exchange (FX) fee.

"So when you decide you're ready to move your money into your USD wallet (or out of it), we make a portion of the FX spread on that transfer. We do not make money when you trade. We don't charge you an FX spread every time you buy or sell shares. We don't make money on cash sitting in your accounts and we don't sell order flow to trading firms (like the big US brokers)," said Leibowitz.

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