Australian (ASX) Stock Market Forum

Bank not broker

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Hi everyone,

I'm new to the world of trading, and still reading all the threads in this forum. I have a confusion here and hope someone can help me with this.

I learnt from ASX that we HAVE to have a broker before we can trade, but I was told by my friend saying that I don't necessarily need a broker because they will charge me fees. I can use bank, eg ANZ and Macquarie, all I need is just to set up an account for free and as long as I leave a certain amount of money sitting there, I can trade, and they only charge when I trade, let's say $30 per trade. I read many other threads mentioning Westpac and Comsec, and they are also banks, but they are referred as brokers... ???
 
Hi everyone,

I'm new to the world of trading, and still reading all the threads in this forum. I have a confusion here and hope someone can help me with this.

I learnt from ASX that we HAVE to have a broker before we can trade, but I was told by my friend saying that I don't necessarily need a broker because they will charge me fees. I can use bank, eg ANZ and Macquarie, all I need is just to set up an account for free and as long as I leave a certain amount of money sitting there, I can trade, and they only charge when I trade, let's say $30 per trade. I read many other threads mentioning Westpac and Comsec, and they are also banks, but they are referred as brokers... ???

You need a broker to trade and some brokers are under the banks. In fact, just about every big bank has a broker arm. Comsec is the brokerage arm of Commonwealth bank.

There are also broker firms who are not banks. E.g. Interactive Brokers (not endorsing them in any way, just the first name that popped into my head).
 
Skc has answered the question. If you look at the website of any of the banks you'll almost certainly find a link to their broking arm.

I wonder if perhaps you might be getting confused about online brokers (e.g. those attached to the banks) and full service brokers.

The latter are stockbroking/analyst firms, not connected with banks, which purport to offer you specialised advice in return for charging you megabucks in fees. The quality of the advice can be, um, dubious at best.
 
The latter are stockbroking/analyst firms, not connected with banks, which purport to offer you specialised advice in return for charging you megabucks in fees. The quality of the advice can be, um, dubious at best.

Dubious may be too strong a word. But quality of advice certainly highly variable amongst different brokers.

There are benefits with full service brokers compared with online discount brokers. Recommendations (despite the quality), priority access to IPOs and capital raising (if you are a sophisticated investor by ASIC definition), free xmas hamper etc. They may or may not offset the higher commission that you pay.
 
Thank you SKC and Julia.

Just to clarify, so does that mean (almost) all banks provide online broker's service, therefore there is no other charges other than only when we trade? And other online broker like Interactive broker, will they charge a certain fee just to open an account with them as well as maintaining the account?
 
Thank you SKC and Julia.

Just to clarify, so does that mean (almost) all banks provide online broker's service, therefore there is no other charges other than only when we trade? And other online broker like Interactive broker, will they charge a certain fee just to open an account with them as well as maintaining the account?
A broker is a business which offers their services to the public so as to enable you to buy or sell shares in companies listed on the ASX.

The broker is a middleman - you are buying or selling shares in an actual company listed on the ASX, the broker is simply there to facilitate the transaction. In return for providing this service, the broker will charge a fee. Usually, this is a fee charged on each trade (buying or selling shares) that you make.

It's a bit like how a travel agent will book flights, accommodation and tours for you. In return for doing that, they will charge you a fee either directly or through some form of commission on the services booked. You aren't booking a holiday with the travel agent, the agent is just a middleman helping you book services provided by others.

So, a broker will facilitate you buying or selling shares. In return for doing so, they will charge a fee, usually a fee is charged each time you buy or sell shares.

Banks? The major banks do also run brokerage businesses in addition to their role of banking. Likewise they also sell insurance and may offer other services as well. Commsec, the brokerage arm of the Commonwealth Bank, is probably the best known example but the other big banks have similar brokerage divisions too.

As with insurance, there are alternatives to the big banks if you prefer. You could insure your house and car through one of the major banks since they also offer insurance. Or you could instead go to a non-bank insurance company and take out insurance with them instead.

Likewise, you could open a brokerage account with the brokerage arm of one of the major banks. Or you could instead go to a non-bank broker and open an account with them instead. The choice is yours.

Fees vary so I would check with individual brokers before making a decision.:)
 
Thank you Smurf! That's really very well explained!! Now I can explain to my friend about what I've learnt from you guys, thank you very much!! :)
 
Smurf, such a clear and helpful reply to the OP. It's so easy to assume that 'everybody knows' about brokers. Of course they don't.

Your response should be included in Sir O's thread for beginners.
 
It is possible to transfer shares without a broker. Most companies allow shares to be held either Issuer Sponsored or Broker (Chess) Sponsored, and transferred back, forth and between - Internaxx act for both Aussie (dual citizens and complex holders), International and ex-pat holders. For foreign holders and in some cases expats they may change their method of holding stock directly rather than through nominees (some nominees split holdings to save having to give a list of holders of stock); the latter disguises who holds the stock - in most cases foreign holders are denied voting rights and many disputes have occurred. So all transactions in broker sponsored shares must show up on the ASX, for stocks trading there, but not Issuer Sponsored shares.
 
you dont need a personal stock broker and i dont think one would even take u up until u trade over 100k, I think u should be going for an online broker, if ur new to stocks i suggest u use www.comsec.com.au, they provide lots of free tools such as live data feed for free! for bigger trades i there is www.e-trade.com.au, and i think CM markets are quit cheap too.

i suggest u start off with comsec as its free, i think e-trade cost money if u have less than 10k
 
Hey guys,

in spite of some excellent explanations and suggestions provided, my greatest concern about teohh's question is: As a raw noob, he (she?) should be discouraged to even open any broker account before studying the issue of shares: investing, trading, analysing, calculating expected return, cashflow...

Some of us will have a fair understanding of those issues, therefore are capable of making up their mind, what to buy, when to sell, and how to include dividends as additional income, brokerage and other running costs as costs of doing business. Those may well look for the cheapest (though still reliable and reputable) online broker. But if you have as limited knowledge of share trading as you appear to have about broking, it is highly likely that you end up buying and holding a share that costs you far more money in the long run than saving a percentage point in trade commissions.

Just my honest opinion.
 
Pixel, you are correct, but we are just answering the question he asked of us, also he maybe only be newbie to practical trading, and knows the theory very well.
 
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