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Neobank Xinja to launch zero commission share trading

Posted: 22 July 2020 11:28 am
News

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Xinja is set to be Australia’s first bank to offer $0 brokerage share trading. Here’s how it compares to the rest.

Digital bank Xinja has announced that it’s launching a new share trading platform that will offer free brokerage for US shares with a minimal investment requirement of $1.

It means that users will be able to trade just a few dollars at a time into US stocks without paying the usual broker commission fee on every trade.

The new platform named Dabble is due to land sometime in mid August, subject to regulatory approvals. Once launched, it will mark Australia’s first bank to offer zero commission share trading.

Other bank brokers such as CommSec typically charge around $19 - $60 brokerage to trade US stocks, plus foreign exchange fees.

Key costs

  • Zero brokerage
  • $8 monthly subscription
  • 1% currency conversion fee

Similar to other zero-commission brokers eToro and Stake, Dabble only offers US stocks and users will have the option to buy fractional shares.

Founder Eric Wilson told Finder he hoped the platform would open the stock markets to people wanting to grow their wealth over the long-term.

"Our main aim is to make the opportunity accessible and affordable for all Australian investors. We are providing an avenue for customers wanting to gain investment exposure to the US stock market and through this, enhance diversification in their investment portfolio, in a cost and capital effective way," Wilson said.

"In a low interest rate world, we want to deliver alternative options for customers wanting to make more out of their money, and Dabble represents an easy way for them to do that, and they can begin with very low levels of investment...This is partly because it offers fractionalised trading.”

Fractional investing lets you buy fractions of shares rather than whole shares. So instead of buying one Google stock at $1,300, you could invest in one-tenth of a share for $130.

While Dabble won’t be charging a brokerage fee, there’s an $8 monthly subscription fee for unlimited trading. It’s not yet clear whether there’ll be a fee for a limited number of trades. It also charges a foreign exchange fee of 1% to convert AUD to USD.

How does Dabble compare?

The main features offered by Dabble are similar to other players eToro, Stake and IG, which also charge zero commissions on US stocks. However, there are a few key differences.

Dabble’s main point of difference is the ability for Xinja bank customers to move easily between their transaction and savings accounts to their trading account.

Wilson said because Xinja’s app is integrated, buying shares is funded directly from that account and settled directly back to it instantly (once the US market opens). Typically, when you join a trading platform, an external bank account must be set up in your name, which can add an extra day to transfer funds.

Platforms with fractional investing in Australia

PlatformMinimum investmentBroker fee for US stocksFX fee
Dabble$1$01%
Interactive BrokersNone$0.0035 per share0.20%
Stake$10$0US 70 cents per AUD$100
Goodments$1$31%
eToroUS$50$00.50%

A handy additional feature is that customers will be able to monitor both individual stock price performance and the performance of their overall portfolio in both USD and AUD.

Dabble is also targeting long-term investors, rather than active traders, a key point of difference from eToro and IG.

As part of this, Xinja has said Dabble won’t permit “pattern-day trading”. Any user that trades the same stock every day consecutively within four days will have their account blocked.

Trading with borrowed funds (margin trading) and leveraged products such as options and leveraged ETFs are excluded, while weapons-related and tobacco companies are also filtered out.

Wilson told Finder that stage two is an automatic investment option that will invest small amounts of money at regular intervals, similar to micro-investment apps Raiz and Spaceship.

Xinja was launched in 2017 and gained its banking licence in September last year, becoming Australia’s first independent neobank with products in the market.

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