National Bank Direct Brokerage, owned by Canada’s sixth largest lender, is the latest company to join the race to the bottom. To stay competitive, the National Bank’s direct brokerage division is slashing its commission fees on stocks, options, and ETFs to zero.
In Canada, Toronto-based Wealthsimple was the first stock-trading mobile app and robo-advisor to launch zero-fee trading with no minimum account balance.
Previously, the Montreal-based bank charged $6.95 per stock trade, which goes down to $0.95 for active investors who made more than 100 transactions per quarter. It also dropped the commission for ETF transactions.
The majority of Canada’s online platforms charge between $3.95 to $9.99 a trade depending on the number of an investor’s monthly transactions. A handful of the country’s discount brokers offer zero-fee trades for exchange-traded funds.
The stock-trading business model of those financial giants now resembles Robinhood’s model, which makes money from interest on customer accounts, securities lending, and a small amount from payment for order flow.
“The self-directed investing sector is constantly evolving, and it’s important for us to keep innovating and not rely on the status quo, for the benefit of our clients and all investors across the country. That’s why we’re looking for new ways to equip and support Canadian investors, and this new $0 pricing is another step in our efforts,” said Claude-Frédéric Robert, president of National Bank’s direct brokerage group.
The company’s zero price tag for stock trading comes at a time when the competition for retail traders intensifies while regulators are pushing for heightened fee transparency.
National Bank said its offering will feature unlimited commission-free trades on thousands of Canadian and U.S. stocks and ETFs, a first for a direct brokerage linked to a Canadian bank.
No-fee trading has gained momentum as retail-trader focused platforms have made it more affordable for casual investors to trade frequently. They have also attracted a new breed of younger traders who were traditionally held back by expensive costs.
Nevertheless, the retail hype around stock trading was thrown into disarray earlier this year after investor groups on Reddit coordinated a massive attack on hedge funds who had shorted so-called ‘meme stocks’.