Zero-commission trading is finally here, and it’s not exclusive to one particular broker. Canadian fintech, Mogo, announced its partnership with CI Investment Services Inc. to offer Canadians zero-commission trades. It is the second app and fourth financial service in Canada to take the leap. Why did they do it? To make investing more accessible to Canadians.
Hey! It impacts you, so pay attention; it’s time to stop saving your money. If you want to grow your wealth and achieve financial independence, you need to invest it. But until recently, pricey trading fees have prevented too many Canadians from entering the market.
Canadian fintechs, and now some of Canada’s name-brand banks and credit unions, are filling the void with creative and elegant financial solutions to help you make the most of, and keep more of, your bacon. Let’s take a look at who offers zero-commission trading in Canada, and things to consider before you hit that buy button.
MOGO just dropped a bombshell when it announced the launch of its zero-commission trading platform, MogoTrade. The zero commission trading feature isn’t available yet, but the MOGO trading platform is. In a phased rollout, Mogo members can now download the new trading app onto their smartphones and get instant access to stock prices. Once you download the app, you’ll be added to the waitlist for zero commission trading, which is scheduled to launch sometime in the first quarter of 2022.
MOGO isn’t the first company to launch an app-based free trading platform. But that doesn’t mean they haven’t been at the forefront of major financial change. MOGO is one of Canada’s unsung fintech heroes offering better financial solutions to Canadians. They’ve been providing short-term consumer loans for years, filling a critical need in the market for credit when you are rejected for a loan from a traditional financial institution.
Through the free MOGO app, members have access to tools and resources to help them take better control of their money and improve their finances. The MOGO Platinum Prepaid Visa card makes it easy to spend less, save more, and help the planet at the same time. MogoTrade includes their climate action initiative too; they’ll plant a tree for every trade. The card even offers 2% cash back in Bitcoin, and you can buy and sell Bitcoin in the app as well.
Not to be outdone, National Bank rocked the finance world when it announced the launch of zero commission trades on the National Bank Direct Brokerage platform. It was the first bank-owned brokerage to do this. In August of 2021, National Bank Direct Brokerage stopped charging a commission on equities trades, which are stocks and shares, as well as Exchange-Traded Funds (ETFs).
Historically, legacy banks have been slow to change, but National Bank recognized a serious disconnect. Status-quo financial services just weren’t meeting the needs spurred by a dramatically changing economy. Millions of Canadians were left feeling like the system was rigged against them. By eliminating trading fees, National Bank has shown Canadians it is with them, not against them.
When you open a National Bank Direct Brokerage account, you’ll get access to zero commission trades on Canadian and US Stocks, ETFs, Options, and Debentures which are a type of bond. While Options are commission-free, they do cost $1.25 per contract. They also offer zero-commission trading on most mutual funds, but conditions apply. There are no minimums on stock trades. Your trade account comes with an annual $100 administration fee, but that’s waived if certain conditions are met.
Wealthsimple Trade was the first investing platform in Canada to offer zero-commission trades on stocks and ETFs when it launched its trading app in 2019. It quickly planted itself in the hearts of Canadian self-directed investors and remains the #1 trading app in Canada. They continue to offer unlimited, commission-free trades for equities and ETFs, and there are no investment minimums. Today, Wealthsimple Trade serves 175,000 everyday investors like you across Canada, the US, and even the UK.
Wealthsimple began as a low fee robo-advisor but soon evolved into one of Canada’s most prolific fintech companies. They started with cutting-edge financial technology that used state-of-the-art software to craft a diversified ETF portfolio based on your risk appetite. But they didn’t stop there.
For the more experienced, hands-on investor, they launched Wealthsimple Trade. Soon after came Wealthsimple Crypto, the first federally regulated crypto trading platform in Canada. Today, they now offer Wealthsimple Cash, Canada’s answer to Venmo, and Wealthsimple Tax; an easy-to-use, low-cost tax filing service.
Furthermore, Wealthsimple is on a mission to empower Canadians to take total control of their money. On their website, you’ll find extensive financial education resources that demystify all things money from investing to budgeting. They even have an extensive video series, called Investing Masterclass, that deconstructs intimidating investing principles into bite-sized, easy-to-understand pieces. Wealthsimple doesn’t just make investing accessible with zero commission trading, they make sure you know what you’re doing before you even get started.
Desjardins Online Brokerage (Disnat)
Non-bank fintechs aren’t the only ones fueling change. Desjardins Group is the largest group of credit unions in Canada; credit unions are called caisse populaires in Quebec. The Desjardins Online Brokerage, called Disnat, is the only other financial institution-owned trading platform to offer zero-commission trades on equities and ETFs. Currently, free trading is offered through the Disnat Classic platform, designed especially for novice investors with a user-friendly interface and easy-to-use research tools.
While equities and ETFs are free to trade, options are technically zero commission but do cost $1.25 per contract. Most mutual funds are free to trade as well but conditions apply. If you are between the ages of 18 and 30, certain costs like inactivity and administration fees are waived if other criteria are met. However, the minimum investment amount to get started is $1,000, which can be prohibitive if you are brand new and don’t have a lot of cash on hand.
Unlike the major chartered banks, credit unions are collectively owned by their membership rather than private shareholders. When you open an account with a credit union, you become part-owner and share in the profits. Historically, credit unions have been the first to implement new financial technology and initiate change.
Credit unions are often ahead of the curve. They were the first to offer Canadians debit cards, online banking, and creative lending solutions like Home Equity Lines of Credit called the HELOC. They are also committed to social change, reinvesting their profits into the local community at five times the rate of traditional banks. And they were the first to lend to women without a male co-signer; a huge leap forward in women’s rights and their financial independence.
With TD Easy Trade, users still enjoy the same unlimited free trades on TD ETFs and one click ETF portfolios the old app had to offer. But the new app now also includes 50 free stock trades per year, a U.S. dollar account to help curtail conversion fees on U.S stock trades, up to the minute quotes and market data, as well as access to licensed investment professionals for additional support. The TD Easy Trade app is designed with the new investor in mind.
TD Easy Trade even includes extensive educational material, like live masterclasses and webinars, and the ability to create a customized investing plan to meet any goal. They don't just bring the market to you, they set you up for success with all the resources you need to get started. And with no account minimums, TD Easy Trade gives Canadians even more control of their money. As the move towards self-directed investing gains momentum, low cost brokerages help put wealth back where it belongs; in the hands of the people who earned it.
Is zero commission trading in Canada really free?
There is nothing perfect under the sun. Financial tools are no exception. While your trades might be free, there are other costs to consider.
You still pay for your trades
With more brokerages moving to zero-commission trading, how do they make their money? One of the less transparent ways brokerages profit from your trade is through something called the spread. The spread is the difference between the price at which they buy the asset and the price at which they sell it to investors. You almost never pay the true market value thanks to the spread. That’s because the brokerage sells it to you at a slightly higher price than they paid for it, and buys it back at a slightly lower price than the true market value when you sell it.
Other considerations about zero-commission trades in Canada
There are other, less obvious drawbacks to consider when it comes to zero commission trading. It can influence your trading behaviour in ways that affect more than just your portfolio. Day trading comes with tax implications that some novice investors may not be aware of. Every time you realize a gain, such as when you sell an asset for a profit, that trade is subject to investment-related tax. The more trades you make that generate a profit, the more tax you have to pay. While zero commission trades are a huge win for Canadian investors, make sure you understand the tax implications of frequent, short-term trades.
Also, day trading does not actually help the economy. When you day trade, or swing trade, you’re making a quick profit rather than investing in companies you believe in. Investing long-term helps businesses grow, create jobs, and add value to their local economy and the greater Canadian economy as well. That’s not to discount how growing your own wealth has a positive ripple effect, but it is something to consider before you engage in frequent trades.
Do you get what you pay for?
The short answer is yes. National Bank and Disnat offer a lot more than a simple, bare interface. They also offer clients research and education. Wealthsimple offers financial education as well as its award-winning technology, and MOGO will likely impress as well. Zero-commission trading does not mean bare-bones service. It means that investors that felt excluded or hesitant to take on so many fees, can feel more confident investing their money.
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About The Author: Heidi Unrau
Heidi Unrau is the senior Finance Journalist at Hardbacon. She studied Economics at the University of Winnipeg, where she fell in love with all-things-finance. At 25, she got her first bank job as an entry-level teller. She moved up the ranks to Credit Analyst, Loans Officer, and now a Personal Finance Writer. In her spare time, you'll find her hiding in the car listening to Freakonomics podcasts, or binge-watching financial crime documentaries with a pint of Häagen-Dazs. When she's not chasing after her two little boys, she's in the hot tub or arguing with her husband over which cash back card to use for date night. She’s addicted to coffee, crypto, and obsessively checking her credit score on Borrowell.
Fun Fact: Heidi has lived in five different provinces across Canada, loves her free Tangerine bank account, and will never cut back on Starbucks. Like ever.
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