Trading platform IG is dropping broker fees to $0 on global stocks
IG has launched a range of new broker fees and trading options, here's what you need to know.
Global online broker IG Markets has taken the brokerage pricing war up a notch by launching zero commission trading on all its international shares.
While eToro and Stake offer the deal for US stocks exclusively, IG will apparently be the first to offer it on multiple global exchanges, including stocks from the UK, Germany and Ireland.
Although we've yet to see broker fees drop to zero for Australian shares, IG's new offering certainly marks a pretty big shift within Australia's online share trading space.
What are the new fees?
IG soft-launched a range of new fees on its platform last week, adding $0 commissions on global stocks along with a lower starting fee for Australian shares.
Here are the key updates:
- Brokerage on global shares: $0
- Brokerage on Australian shares: $8 or $5 if you make 3 trades a month
- Currency conversion fee: 0.70%
- Subscription fee: Unchanged at $50 per quarter ($0 if you make 3+ trades a quarter)
The standard broker fee for ASX shares remains the same at $8. However, that fee now drops to $5 if you've made 3 or more trades in the previous calendar month. So if you make 3 trades in June, your new broker fee for July will be $5.
Meanwhile, the standard commission fee for US stocks has dropped from $10 to zero, although there's now a higher currency conversion (FX) fee of 0.70%, up from 0.50% previously.
The big downside here is the conversion rate is charged on every global trade you make, which can end up being pretty pricey if you're an active trader.
But you do have a second option here. You can choose to convert currencies using your own service (which hopefully offers a better rate) and upload to your multi-currency account.
If you choose to manually convert and hold multiple currencies, you can avoid the FX fee but must pay $10 commission on global stocks. The best option for you will depend on how much you typically trade – the more you trade, the better off you are sticking to the $10 commission option.
How does IG compare?
Zero commissions on stocks is great news, but there are always a few caveats.
Instead of paying stock broker fees, you're typically hit with higher FX fees, a subscription fee or commissions on other products such as CFDs.
Here's how IG compares to other zero (or near zero) commission brokers on the market:
|Platform||Broker fee (ASX stocks)||Broker fee (US stocks)||FX fee|
|Interactive Brokers||$5 or 0.8% (whichever is higher)||$0.0035 per share||0.20%|
|Stake||Not available||$0||US 70c per AUD$100 transferred|
|IG||$5 - $8||$0||0.70%|
The FX fee is key for global shares because it's what you pay to convert money from AUD to the currency of the stock you're trading.
It's typically charged as an additional percentage taken by the broker and can be charged when you transfer money on and off your account or on each trade you make.
Because IG charges 0.7% on every global trade, it's on the more expensive end of the scale among the other zero commission players.
That being said, IG still offers among the lowest broker fees on the market at almost every level, from global to ASX shares. This is especially true if you're a more active trader and can avoid the quarterly inactivity fee.
The new addition of zero commissions on UK, German and Irish shares is also a nice feature, and likely to cause a minor stir.