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eToro launches zero brokerage share trading in Australia

Posted: 19 May 2020 9:05 am

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Australian users of the popular trading platform will be able to buy shares directly from this week for free (almost).

Update - June 1, 2020: This article initially said that Stake's FX fee was 0.7%, however this is incorrect. Stake's correct FX fee is US 70 cents per $AU100 transferred.

It's the news many trading enthusiasts have been waiting for – eToro is finally launching zero commission share trading in Australia starting from this week.

While the popular global online broker has long offered the feature overseas, it's the first time Australians will have the option of buying and selling stocks and ETFs directly via the app.

Until now, Aussie eToro users could only trade leveraged CFDs and forex – meaning they could speculate on price movements of stocks but not own them directly.

The finer details

Although the promise of any zero brokerage deal is big news in Australia, eToro's new share trading option has some limitations.

At this stage, eToro is only offering US stocks listed on the NYSE and NASDAQ, and there's no news yet about when (or if ) the ASX and other non-US stocks will be available on the platform.

Although common in the US, zero commission brokers are still rare in Australia and none yet offer the deal for ASX-listed stocks. eToro joins Stake, which first unleashed zero broker fees to Australia in 2017 with its US-only stock platform.

It's also important to note zero commissions only apply to direct share trading – CFD and forex traders will continue to be charged the usual spread/commission.

Yep, it's got fractional investing

Like some other US trading platforms, Australian users will have the option of trading fractional shares.

Fractional investing means that you can buy part of a stock instead of a whole portion. For example, instead of buying one Google stock for $1,300, you could buy 10% of a stock at $130.

Only a few online brokers currently offer the feature in Australia, with Interactive Brokers one of the latest to launch fractional stocks last year, joining Stake and Goodments

It's an attractive option for new traders, because you can skip the usual $500 minimum rule for ASX-listed stocks and invest as a little as a few dollars at a time.

Platforms with fractional investing in Australia

PlatformMinimum investmentBroker fee for US stocksFX fee
Interactive BrokersNone$0.0035 per share0.20%
Stake$10$0US 70 cents per AU$100
eToroUS$50$050 pips ($US0.50 for every AU$100 exchanged)

Similar to eToro, these platforms only offer zero or low brokerage fees on US stocks with various other fees instead.

What are the fees?

As always, nothing in investing is ever really free.

You don't need to worry about the commission fee with eToro, but there's still a currency conversion fee (FX fee), withdraw fee and an inactivity fee to think about.

The FX fee is the amount charged by the broker every time money is converted from AUD to another currency, in this case USD for US stocks.

According to eToro's global website, the FX fee is 50 pips, which is pretty middle of the barrel compared to other online brokers.

A monthly $10 inactivity fee is charged if you don't log in for 12 months and you'll need to pay $5 to withdraw any funds from your account.

Sorry, what's the deal with eToro?

There are plenty of online brokers available in Australia but eToro has made a name for itself thanks to its social trading feature that allows users to copy the actions of leading traders on the platform.

Shot of eToro's social trading feature

eToro's social trading feature. Past performance is not an indication of future results.

It's also a pretty big player globally, with around 13 million users and the largest social trading network in the world, meaning it's also one of the world's most popular trading platforms.

While it's not the first broker to launch commission-free trading with fractional stocks in Australia, it's still rare enough to be of notice.

Alongside stocks, users can trade stock market indices (e.g. the NASDAQ), cryptocurrencies, forex and commodities like gold or oil.

More details to come.

Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading CFDs and forex on leverage comes with a higher risk of losing money rapidly. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades.

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