The Commonwealth Bank has set the scene for a online trading battle, after drop-ping the price for share trades via Commonwealth Securities (ComSec) to less than twenty dollars.
The Commonwealth Bank has set the scene for a online trading battle, after drop-ping the price for share trades via Commonwealth Securities (ComSec) to less than twenty dollars.
The new price will be set at $19.95, for trades below $10,000 but will be applicable only to those customers who nominate ComSec as their broker sponsor within the Chess system. Customers will also need to settle transactions through a specified account to take advantage of the cheaper rate and to be able to trade all stocks.
Those customers who chose not to use this method will still pay the previous rate of $29, while phone trades will remain at $50.
Hours after the announcement Quicken also announced it would drop its rate for trades to $19.90 effective today while ComSec’s new rate will come in from April 3.
Commonwealth Bank head of institutional banking Michael Katz says the reason behind the drop was the size of ComSec’s market.
“We have been able to translate scale in to value for our clients resulting in a sig-nificant price benefit. The size of our client base and the efficiency of the Internet provides the scale to offer this price,” Katz says.
Katz says there is room to drop prices further based on the increase in size and scale of ComSec’s operations and this was part of its strategy to increase share ownership among Australians.
“ComSec sees 18,000 trades a day, at the average size of $5000. The consistently highest trades are blue chips and we encourage investors to see this as a medium to long term idea,” Katz says.
The dropping of the trades price has also started a war of words with E*Trade group chief executive officer Kerry Roxburgh warning on-line investors they should look closely at the restrictions which apply to low-cost trading fees.
Investors needed to look at the total cost of the trade and the qualifying require-ments, not just the headline brokerage rate, Roxburgh says.
