International share trading: nabtrade vs CommSec

Which online share trading platform is the best choice when you need to buy and sell international shares: nabtrade or CommSec?

Online share trading is a very competitive market sector. With an array of trading platforms vying for your business, it can be quite difficult to decide which platform offers the most affordable and convenient way to buy and sell shares.

To help make the decision easier, let’s take a look at a case study of someone who wants to buy $1,000 of US shares on the New York Stock Exchange (NYSE). We’ll then compare the fees and features offered by two major online share trading platforms, nabtrade and CommSec, to find out which one offers the best value for money.

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As you can see, the comparison is far from straightforward due to a couple of key factors. The first cost that needs to be considered is the brokerage fee - CommSec’s fee is the higher of the two and is also charged in US Dollars instead of Australian Dollars.

However, nabtrade also charges a foreign exchange conversion fee of between 0.50% and 0.80% of the transaction value. So not only will the cost of your transaction vary depending on the percentage amount of the fee, but it will also depend on the value of your transaction and the exchange rate market at the time.

Taking current exchange rates into account at the time of writing (1 AUD = 0.75 USD - 26/07/2016), in the above example nabtrade offers the most cost-effective solution. However, as you will see in the case study below, that may not always be the case with larger transactions.

So if you’re wondering whether nabtrade or CommSec is the more affordable option when you need to trade shares on a US stock exchange, the answer is that it depends on the size of your transaction. For smaller trades, nabtrade will usually be the more cost-effective option, but if you need to place a large trade than CommSec will probably come out on top.

Foreign exchange conversion fees

You may have noticed in the above examples that nabtrade charges a foreign exchange conversion fee and CommSec does not. The reason for this discrepancy is quite simple.

Whenever you execute an international share trade with nabtrade, a foreign exchange transaction occurs - i.e., you need to convert the Australian Dollars in your trading account into US Dollars in order to buy shares on a US stock exchange. nabtrade charges a foreign exchange conversion spread of between 0.50% to 0.80% of the value of your trade.

But if you have a CommSec share trading account, you can take advantage of CommSec’s partnership with Pershing LLC, a subsidiary of the Bank of New York Mellon. Pershing automatically opens a US account for all CommSec International Securities Trading clients, allowing you to settle trades through this US account and avoid any foreign exchange fees when you buy US shares.

Brokerage fees

It’s also worth pointing out that the brokerage fees charged by nabtrade and CommSec vary depending on the size of your international trade. This can obviously have a huge bearing on the total cost of your transaction, so it’s worth examining the tiered fee structure of each provider when comparing nabtrade vs CommSec.

Other factors to consider when comparing online share trading platforms

Although the fees that apply to international share trading are undoubtedly an important factor when comparing share trading platforms, there are several other features to consider before you choose a platform. These include:

• Market data. How can you access market data through each platform? Are prices delayed or can you access live or dynamic data? Are there any additional costs attached?
• Research and analysis. Compare the analysis and insights you can access through the platform to help you make better trading decisions. This could include market news, in-depth analysis of individual stocks and buy and sell recommendations.
• Ongoing fees. Some share trading platforms trade an ongoing monthly or annual membership free, others are offered free of charge and fees only apply when you place a trade.
• Accessible markets. Compare the international stock exchanges and shares you can access through each trading platform. Can you also access other international investments, for example exchange traded funds (ETFs) or exchange traded options (ETOs)?
• Trading options. Check to see what sort of flexible trading options are available to help you take advantage of changing market conditions, for example stop loss orders and limit orders.
• Customer support. If you ever have a question about a trade or need assistance, how will you be able to access customer support? Does the provider have a good reputation for responding to enquiries quickly and helpfully?

CommSec and nabtrade are both well worth considering when you need to trade shares on international markets. Compare the fee structure and features of these two providers and other trading platforms so that you can find the most affordable and convenient way to buy and sell international shares.