Access Brokerage

Access Brokerage was an innovator that brought in lower commissions and higher standards of service for private investors. Other brokers were forced to lower fees to compete. So if Access does not survive - as seems likely - expect other brokers to raise their fees within the next 6-12 months.

Other Internet Brokers

There appear to be only three other firms offering internet discount broking in New Zealand National Bank (through First Capital), ASB Securities and Direct Broking

National Bank

This service is provide for the National Bank by NZX member First NZ Capital Securities.

Brokerage fees are $29.50 on trades worth up to $10,000 and 0.3% on larger trades. There is no mention of a separate "trade fee".

Your cash is secure as settlement for share purchases and sales will be from your personal "transaction account" (i.e. a separate, individual bank account) at the National Bank. What we don't like is that your shares will NOT be registered directly in your own name but held in a custodial (i.e. nominee) account at First Capital. Of course, we are sure that is perfectly safe - but not as safe as owning them directly!

ASB Securities

ASB Securities is an NZX member firm and a wholly owned subsidiary of a bank.

Brokerage fees are competitive up to trades worth $30,000 with a flat fee of $24.95 plus a $4.50 "trade" fee. Above $30,000 however they jump to 0.3% plus the trade fee. So a trade worth $29,999 will cost you $29.45 but on a trade worth $30,001 will jump to $94.50. The ASB confirms this is correct and suggests splitting such a trade in two and paying $58.90 (i.e. two times $29.45). Better yet we suggest, selling only $29,999 worth of shares (for $29.45) and forgetting about the other $2 worth!

Fees for Australian shares are the same, but in Australian currency and excluding the NZX trade fee.

Your cash is held in an ASB Cash Management account. Banks are fairly safe financial organisations and over the last 30 years major bank failures have happened on average about 6-8 per year worldwide- so your money is probably as safe here as anywhere.

ASB Securities is probably the best option for smaller investors but once we have helped you make your first couple of million you may find the higher fees of larger trades less attractive.

Direct Broking

Unlike other internet brokers that require you to have cash on deposit with them prior to buying shares, Direct Broking offers both a "Cash Rate" service and a "Credit Rate" service.

To get the lower "Cash Rate" you need to have money in a Dorchester cash management account. That is a related party - so we hear alarm bells ringing - but apparently this meets the NZX's "best practice" requirement. [Editor's Note Don't get me started on what I think of the NZX standards of "regulation".]

With the "Cash Rate" you pay $29.50 for a trade worth up to $15,000 and a very small 0.05% on the balance over $15,000. So a $30,000 trade would cost just $37.00. In Australia it is A$29.50 on the first $15,000 and 0.3% on the balance.

If you don't have money in the Dorchester account you can buy shares on the "Credit Rate" and then pay by cheque. This costs $29.50 plus 0.3% of the value. So a $10,000 trade will cost $59.50 and a $30,000 trade $119.50. In Australia the "Credit Rate" is 0.7%, with a minimum of A$40.

Direct Broking is the only internet broker that will open accounts for non-residents.

Direct Broking would also be more attractive for larger investors who regularly make trades in excess of $30,000. Our one concern would be the related party cash management account, so investors holding large amounts of cash should transfer it to a separate interest earning bank account.

Australian Brokers

Smaller investors will appreciate the added convenience of using one NZ broker for both NZ and Australian shares. Larger investors, however, should consider the added security - and significatly lower fees on larger trades - of using a separate Australian stockbroker. Many Australian stockbrokers will not open accounts for non-residents, but two brokers will accept NZ investors

E*Trade Australia

Brokerage rates are 0.11%, with a minimum of A$32.95. Cash is held in an ANZ Bank account.

Sanford Securities

Brokerage is 0.11%, with a minimum of A$29.95. For trades under $10,000 and if you had a minimum balance of $5000 in your cash management account (with Bankwest), then brokerage is just A$19.95.