Updated May, 2022

Online trading platforms comparison

Frustrated with the important but hard-to-find information on low-cost online brokers and the biases of reviews when searching online, I decided to create an online trading platforms comparison.

Individual broker reviews:

Pearler Review
SelfWealth Review
Stake Review
Superhero Review

Important notes:

  1. With brokerage fees, it is the percentage that matters, not the dollar amount. $10 for each of two $1,000 trades is not better than being charged $20 for a $2,000 trade. The percentage is colour-coded, bolded, and in a much larger font to make this clear in the grid below.
  2. You should endeavour to avoid paying over 0.5% in total fees ($5 per $1,000) so that you are not losing too much of your investment on the way in. Ideally you want to get that down to about 0.3%.
  3. For ASX trading, with pretty much all the low-cost brokers (i.e. not the banks), you can see this is achieved with trade sizes of at least $2-3,000 (i.e. saving up and making a single purchase). With Stake’s $3 brokerage, you can achieve this with as little as $1,000, and with CMC Markets you can split your purchases into amounts of no more than $1000 and spread them throughout different days to take advantage of the free brokerage.
  4. For international trading, the defining factor in cost is not the trade fee, but the foreign currency (FX) conversion fee because for all brokers besides Interactive Brokers (IBKR), the FX fees are very high at between 0.5% and 1% of your transfer amount.
    Despite their advertising of free brokerage on US shares, your total cost, including converting the currency, is very high.
    These high fees are how most Australian brokers make their money on US trading.
    In addition, as explained in the annotated notes below, some brokers do an FX currency switch in their calculations, resulting in being much higher than what it appears.
    I have included both of these in the grid below, adjusted for any currency switch, and converted it to a percentage to make it clear.
BLUEmeans total feeBELOW 0.5%tick
Orangemeans total fee0.5-1.0%
REDmeans total feeOVER 1.0%cross

Online trading platforms comparison

CMC Markets Stake Pearler Pearler
PrePay [5]
SelfWealth Opentrader Commsec Superhero IBKR
ASX Trading
 
CHESS [1] tick tick tick tick tick tick tick cross cross
Fees (AUD) Max [$11 or 0.10%]
Free purchases up
to $1,000/day [2]
$3 $6.50 $5.50 $9.50 Max [$10 or 0.10%] $10 up to $1,000
$19.95 up to $10,000
$5
Free ETF
purchases [3]
Max of $6 or 0.08%
$1,000 0% 0.30% 0.65% 0.55% 0.95% 1.00% 1.00% 0.50% 0.60%
$0 $3 $6.50 $5.50 $9.50 $10 $10 $5 [$0] $6
$2,000 0.55% 0.15% 0.32% 0.27% 0.47% 0.50% 0.99% 0.25% 0.30%
$11 $3 $6.50 $5.50 $9.50 $10 $19.95 $5 [$0] $6
$3,000 0.36% 0.10% 0.21% 0.18% 0.31% 0.33% 0.66% 0.16% 0.20%
$11 $3 $6.50 $5.50 $9.50 $10 $19.95 $5 [$0] $6
$5,000 0.22% 0.06% 0.13% 0.11% 0.19% 0.20% 0.40% 0.10% 0.12%
$11 $3 $6.50 $5.50 $9.50 $10 $19.95 $5 [$0] $6
$10,000 0.11% 0.03% 0.06% 0.05% 0.09% 0.10% 0.20% 0.05% 0.08%
$11 $3 $6.50 $5.50 $9.50 $10 $19.95 $5 [$0] $8
$50,000 0.11% 0.01% 0.01% 0.01% 0.02% 0.10% 0.12% 0.01% 0.08%
$55 $3 $6.50 $5.50 $9.50 $50 $60 $5 [$0] $40
Ongoing fees [4] No [4] No No No No No No No No
 
CMC Markets Stake Pearler Pearler
PrePay [5]
SelfWealth Opentrader Commsec Superhero IBKR
US Trading
 
Fees (brokerage) USD 0-5k USD 19.95 US 0.5c/share
= ~28.50 AUD [min $1 max 1%]
$9.50 USD USD 5-10k USD 29.95 = AUD 0.7c/share
$0 $0 $6.50 AUD $5.50 = ~$13.57 AUD [11] No US Trading = ~42.78 AUD [11] $0 [min $1.4 max 1%] [11]
Fees (FX) 70bps 60bps 70bps 0.2bps
0.60% = ~1.00% [10] 0.50% 0.50% = ~0.85% [10] 0.60% = ~1.00% [10] = 0.002% [12]
 
$1,000 0.60% 1.00% 1.15% 1.05% 2.21% 3.45% 1.00% 0.14%
$6 $10 $11.50 $10.50 $22.14 $34.50 $10 $1.42
(BR 0 + FX 6) (BR 0 + FX 10) (BR 6.50 + FX 5) (BR 5.50 + FX 5) (BR 13.57 + FX 8.57) (BR 28.5 + FX 6) (BR 0 + FX 10) (BR 1.4 + FX 0.02) [12,13]
$2,000 0.60% 1.00% 0.83% 0.77% 1.53% 2.03% 1.00% 0.07%
$12 $20 $16.50 $15.50 $30.71 $40.50 $20 $1.44
(BR 0 + FX 12) (BR 0 + FX 20) (BR 6.50 + FX 10) (BR 5.50 + FX 10) (BR 13.57 + FX 17.14) (BR 28.5 + FX 12) (BR 0 + FX 20) (BR 1.4 + FX 0.04) [12,13]
$3,000 0.60% 1.00% 0.71% 0.68% 1.30% 1.55% 1.00% 0.05%
$18 $30 $21.50 $20.50 $39.07 $46.50 $30 $1.46
(BR 0 + FX 18) (BR 0 + FX 30) (BR 6.50 + FX 15) (BR 5.50 + FX 15) (BR 13.57 + FX 25.50) (BR 28.5 + FX 18) (BR 0 + FX 30) (BR 1.4 + FX 0.06) [12,13]
$5,000 0.60% 1.00% 0.63% 0.61% 1.13% 1.17% 1.00% 0.03%
$30 $50 $31.50 $30.50 $56.42 $58.50 $50 $1.50
(BR 0 + FX 30) (BR 0 + FX 50) (BR 6.50 + FX 25) (BR 5.50 + FX 25) (BR 13.57 + FX 42.85) (BR 28.5 + FX 30) (BR 0 + FX 50) (BR 1.4 + FX 0.1) [12,13]
$10,000 0.60% 1.00% 0.56% 0.55% 0.99% 1.03% 1.00% 0.03%
$60 $100 $56.50 $55.50 $99.28 $102.78 $100 $3
(BR 0 + FX 60) (BR 0 + FX 100) (BR 6.50 + FX 50) (BR 5.50 + FX 50) (BR 13.57 + FX 85.71) (BR 42.78 + FX 60) (BR 0 + FX 100) (BR 2.8 + FX 0.2) [12,13]
$50,000 0.60% 1.00% 0.51% 0.51% 0.87% 0.91% 1.00% 0.03%
$300 $500 $256.50 $255.50 $438.57 $455 $500 $15
(BR 0 + FX 300) (BR 0 + FX 500) (BR 6.50 + FX 250) (BR 5.50 + FX 250) (BR 13.57 + FX 425) (BR 155 + FX 300) (BR 0 + FX 500) (BR 14 + FX 1) [12,13]
Ongoing fees [4] No [4] No No No No No No No No
Beware of No USD acct [15] FX currency
switch [10]
FX currency
switch [10]
FX currency
switch [10]
 
CMC Markets Stake Pearler Pearler
PrePay [5]
SelfWealth Opentrader Commsec Superhero IBKR
Features
 
Free ASX purchaes Up to $1,000/day/
stock [2]
cross 45 ETFs [6] 45 ETFs [6] cross cross cross All ETFs [3] cross
Markets Global Aus/US Aus/US Aus/US Aus/US Aus Global Aus/US Global
Free real-time prices tick cross cross cross tick tick tick tick [14]tick[14]
Free research reports tick cross cross cross tick tick tick tick cross
Tax reporting tick tick tick tick tick cross tick tick tick
Autoinvest cross cross tick tick cross cross cross cross cross
Support Phone
email
Email only
Phone
email
Phone
email
Livechat
email
Phone
email
livechat
Phone
email
Livechat only Phone
livechat
email
Kids accounts tick cross tick tick tick tick tick tick cross
Allows non-residents [*] cross [*] [*] cross [*] [*] tick [*] [*] tick [*] [*] cross [*] [*] tick [*] cross [*] cross [*] tick
ASX min initial /
subseq purchase
500 / 0 500 / 0 500 / 0 500 / 0 500 / 0 500 / 0 500 / 0 100 / 100 500 / 0
 

[1] What is CHESS sponsorship?

Australia has an electronic system called CHESS, where the ASX keeps a list of who owns what shares. If a broker is CHESS sponsored, it means that when you buy or sell shares through that broker, there is a record of those shares being owned directly by you and in your name (via your own personal HIN — Holder Identification Number). This means you can view your ownership independently of your broker via the share registry to verify that you own it, providing an unmatched layer of transparency.

The alternative is the custodian model, which is where the broker appoints a separate company — a custodian — to hold the shares under trust on your behalf. The custodian holds the legal title for you, meaning they are the legal owner and you are the beneficial owner. So you receive the benefits of the asset without legal ownership.

CHESS sponsorship is only available for ASX shares, so even if a broker is CHESS-sponsored for ASX shares, if you buy shares from other exchanges through them, it will be through the custodian model.

A more in-depth explanation can be found here: What is CHESS sponsorship?

[2] CMC Markets brokerage-free ASX purchases

CMC Markets offers free brokerage for ASX purchases up to one trade per day per share for a maximum of $1,000 each. This means you can buy up to $1,000 each of multiple different stocks or ETFs for free on any given day.

Subsequent purchase trades of the same stock on the same day, sale trades, and trades over $1,000 attract their standard ASX trade fee.

CMC Markets ASX trading is CHESS sponsored.

[3] Superhero brokerage-free ASX ETF purchases

Superhero offers free brokerage for ASX ETF purchases.

Sale trades and trades of individual shares attract their standard ASX trade fee.

Also, if you sell or transfer to another broker within 12 months, they claw back the $5 fee.

Superhero’s ASX trading is custodian-based and is not CHESS sponsored with your own HIN.

[4] CMC Markets ongoing fees

CMC markets have an inactivity fee. If there has been no trading activity for 12 months, you will be charged AUD $15 per month. If you do not have any funds in your account, your account will not go negative (see the previous link).

For ASX trading, a broker-to-broker transfer should be free, so in this case, it should be relatively easy to move to another broker. For trading on other exchanges, there may be fees.

[5] Pearler PrePay

Pearler offers you the option to PrePay $55 worth of credit and get an additional $10 for your buys for both Australian and US share trading. If they drop their prices, you continue to get the advantage of your remaining credit going towards even more trades at the new lower price.

This applies to trades on both Australian and US shares but does not apply to the FX fee for US trading.

[6] Pearler brokerage-free ASX purchases on 45 ETFs

Pearler has partnered with three fund managers — VanEck, ETF Securities and eInvest — to offer free brokerage when you purchase their ASX listed ETFs and hold it for longer than one year.

How it works:

  • You pay zero fees when you buy.
  • If you sell after a year, you only pay the trade fee for selling.
  • If you sell some or all within the first year, you pay their standard trade fee for buying and again for selling.

* If you request to transfer your HIN to another broker before 12 months is up, it will be treated as if you sold the asset and charged the standard fee for buying.

Which ETFs are free on Pearler?

There are over 45 ETFs and counting to choose from.

[10] FX currency switch

A number of brokers do an FX currency switch which results in much higher fees than what it appears to be.

Stake, Superhero, and SelfWealth do this.

Let’s use Stake as an example.

They advertise their currency conversion (FX) fees as 70bps (pronounced 70 basis points). A basis point means one-ten-thousandth, and 70 basis points is 0.70%, so you would presume it is 0.70% of how much you are transferring, but this is not the case.

Rather than being charged 70c per $100 where both the 70c and $100 are in the same currency, you are charged 70c USD per $100 AUD.

So, depending on the AUD/USD rate, it comes out to approximately 1%, which is much higher than the 0.70% most people assume.

To calculate the percentage at any given time, Google ‘AUD/USD’ and divide 0.7% by that number. E.g., AUD/USD of 0.73 would cost 0.7%/0.73 = 0.96%.

For the purposes of putting down figures in the table at the top of the article, I have assumed an exchange rate of 0.70c USD for all calculations.

Three brokers do the FX currency switch — Stake, Superhero, and SelfWealth.

[11] Converting USD to AUD

Everything is shown in AUD to make it comparable, and since the exchange rate is constantly in flux, I have assumed an exchange rate of 0.70c USD for all calculations.

[12] Interactive Brokers (IBKR) FX fees

FX fees are 0.002% or $0.20 per $10,000.

There is a minimum $2 fee for converting from AUD to USD — however, if you place a trade without converting first, they’ll auto exchange your AUD into USD without the minimum fx fee.

However, there have been a couple of mentions on forums of people who are charged the minimum. I wonder if it may be where:

  • they converted their account to a margin account. In that case, I wonder if they may just end up with an ongoing margin loan in USD that is accruing interest without the auto conversation being done.
  • they signed up to the IBKR LLC (the US arm of IBKR) rather than IBKR AU (the Australian arm of IBKR). Although in 2017, Australian clients were forced to move to IB AU under Australian law.

[13] Interactive Brokers (IBKR) brokerage fees

Interactive brokers have a fixed fee structure and a tiered structure.
We are using the more expensive fixed fee structure for simplicity, which is half a US cent per share, with a minimum of USD $1 and a maximum of 1%.

For most commonly available index ETFs and amounts up to $10,000 brokerage will be $1 as we will explain now.

The smallest share price (resulting in the most brokerage) to reach that $1 minimum for various trades comes to:

$1,000 — $5/share and up will cost no more than $1 in brokerage
$2,000 — $10/share and up will cost no more than $1 in brokerage
$3,000 — $15/share and up will cost no more than $1 in brokerage
$5,000 — $25/share and up will cost no more than $1 in brokerage
$10,000 — $50/share and up will cost no more than $1 in brokerage

If you are going with penny stocks, the maximum 1% rule will apply. Also, as a passive investing website, this probably isn’t something my readers are likely to be interested in. So I will go with a stock price that is as low as $25 for my calculations to err on the side of the most expensive fees.

$1,000 $1 in brokerage
$2,000 $1 in brokerage
$3,000 $1 in brokerage
$5,000 $1 in brokerage
$10,000 $2 in brokerage

For reference, here is a range of the most well-known index funds, along with a couple of the most well known individual stocks. None of them even come close to the $25 mark (the higher it is, the fewer shares you would purchase for the same dollar amount, resulting in lower trade fees as per their rule of half a US cent per share):

VTI USD $225 IJR USD $104
VEU USD $57 AVDV USD $62
VT USD $100 AVUV USD $77
IVV USD $450 AAPL USD $170
VOO USD $411 GOOG USD $2680
SPY USD $447 MSFT USD $296
QQQ USD $350 TSLA USD $1025

[14] Real-time prices on Interactive Brokers (IBKR)

On IBKR, real-time quotes cost US 1c per price quote for US trades and USD 3c per price quote for ASX trades.
However, you get USD $1 of snapshot quotes free of charge each month.

More information here.

[15] CMC Markets has no USD currency account

CMC Markets does not maintain a USD currency account. If you sell one US security to buy another, the sale carries two FX conversion fees — to convert to AUD and again to convert back to USD, so that is 1.2% of your trade amount paid unnecessarily. In contrast, with other brokers, there would be neither of these FX conversion fees until you decided to convert from your USD account back to your AUD account. In addition, your dividend payments would suffer the same fate.

More information here.

International shares with NAB Trade suffers the same problem.