SelfWealth launches US stock trading – here’s how it compares

Posted: 14 December 2020 4:57 pm
News

The popular online broker is offering US shares for a flat $9.50 brokerage fee.

  • $9.50 flat commission on US and ASX stock trades
  • US and ASX shares are traded from the same account
  • Foreign exchange fee of 0.60% on US stocks
  • ASX shares are CHESS sponsored, US shares are custodian-managed

Australian online broker SelfWealth has officially opened its doors to US stock trading. From today, users of the app will be able to trade Australian and US shares from the one account.

Like Australian shares on SelfWealth, US stock trading comes with a flat brokerage fee of US$9.50 per trade plus a foreign exchange fee of 0.60%. There are no new account fees and no inactivity fees that come with the new feature.

How does it work?

Customers wishing to add US stock trading to their account need to apply for it, but once added you can access both markets using the same login.

To trade US shares from Australia, the local currency needs to be converted into US dollars, so when you sign up, you'll be registered with two cash accounts, one for AUD and one for USD.

When you convert money between the two to trade shares, you're charged a foreign exchange fee of 0.6% on top of brokerage.

Also worth mentioning is that while Australian shares purchased on SelfWealth are CHESS-sponsored, US shares are managed by a third-party custodian, global brokerage Phillip Capital.

If you're not already aware, CHESS is the register used by the Australian Securities Exchange (ASX) where stock ownership is recorded using investor holder identification numbers (HIN).

The alternative model to this in Australia is the "custody model" where ownership of the shares is managed by a third-party fund manager or broker. While both are common, some Australian investors prefer the CHESS model because ownership is clear even if the broker were to collapse.

However, CHESS is unique to Australia's market. To trade US stocks, your only real option is to have a custodian manage the ownership of your shares.

How does it compare?

SelfWealth isn't necessarily the cheapest broker on the market for Australian shares, but it does have a few features that stand out, such as its flat-fee structure.

Similarly, the costs to trade US stocks are fairly middle of the ground – not as low as the new range of zero brokerage apps such as Stake or eToro and not as high as the banking platforms like CommSec or nabtrade.

On the plus side, SelfWealth doesn't charge any account or inactivity fees, which tend to be common on global trading platforms. It's also rich in features, including tools to track your portfolio and weigh it against your peers.

But for some investors, CHESS-sponsored shares is a key factor. Among brokers offering both CHESS-sponsored Australian shares and US shares (see table below), SelfWealth stands out as one of the lowest-costing platforms along with CMC Markets.

Brokerage on trades of up to $1000

BROKERUS BROKERAGEASX BROKERAGE (CHESS/HIN-SPONSORED)FX FEE
SelfWealth$US9.50$9.500.60%
CommSec$US19.95$100.60%
Westpac Online Investing$US19.95$200.60%
CMC Markets$0$110.60%
Saxo Capital Markets$US9.90$14.900.75%
nabtrade$14.95$14.950.50% to 0.80%
ANZ Share Trading$59$19.950.60%
St.George Directshares$59$19.950.60%

If CHESS-sponsorship and the ability to trade both US and ASX stocks from the one account is less of a priority, there are cheaper options on the market.

For example, newcomer Superhero applies the custody model and offers a flat $5 brokerage on all ASX trades, while OpenTrader and Marketech also start commissions at $5, although none of these offer global shares.

Meanwhile, Stake, eToro, CMC Markets and IG offer $0 brokerage on US stocks along with other associated costs. Among these, CMC is the only other broker to offer ASX (CHESS sponsored) shares.

Ultimately, how much value you get out of any broker depends on how often you trade, which markets you prefer to trade and how much money you're investing.

To find out more about SelfWealth, you can check out our review here.

Looking for a low-cost online broker? Compare share trading platforms and fees to trade US stocks from Australia.

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