The Canadian brokerage industry has opted for conscientious objector status in the price war that drove stock-trading commissions to zero in the U.S. market.
Desjardins Online Brokerage recently took its flat commission rate down to $6.95 a trade from just below $10. Beyond that, well, there’s not much to report beyond the mildly rebooted commission schedule that National Bank Direct Brokerage announced before U.S. commissions tumbled last fall.
Price competition is not something Canadian online brokers are comfortable with. Many of them are bank-owned, and you know how that works for nimbleness and responsiveness to fast-emerging trends. The banker’s handbook advises a cautious response when confronted by a sudden outbreak of price or fee competition. Check back in a year or three to see whether these annoyances have passed.
Desjardins’ commission cut highlights the price tiering now evident in commissions at Canadian online brokers. The lowest tier of pricing can be found at Interactive Brokers, Questrade and Virtual Brokers, which generally charge 1 cent a share for Canadian stocks with a set minimum and maximum. You’ll generally end up paying less than with the next tier of brokers, which charge just below $7 flat, and the highest tier of firms at just under $10 flat.
To be fair to the banks, a couple of them currently offer commissions in the $7 range. There’s CIBC Investor’s Edge at $6.95 and HSBC InvestDirect at $6.88. But BMO InvestorLine, RBC Direct Investing, Scotia iTrade and TD Direct Investing are all just below $10.
National Bank Direct Brokerage has a regular price of $9.95 a trade, but will reduce that to $6.95 for National Bank clients who link a bank account to their investment account. NBDB also offers a break to investors age 30 or younger – they get 10 trades a year and then pay $4.95 for each transaction.
A few firms offer deals to young investors. CIBC offers $5.95 trades to students and waives the $100 annual fee for registered and non-registered accounts. Qtrade Investor offers investors aged 18 to 30 a commission rate of $7.75 – $1 off the regular rate – and no $25 quarterly administration fees. Virtual Brokers waives these fees for clients under 26.
Zero-commission stock trading does exist in Canada via Wealthsimple Trade’s app for mobile devices. But it’s a niche product for now that targets active stock traders. There’s not much there for investors who want tools for building and monitoring long-term portfolios.
Online stock trading commissions in Canada used to be $29 a pop, and more for large orders, so we have seen waves of price-cutting in the past. The next wave, the one that brings them to zero or close to it, doesn’t seem close at hand just yet.