CMC Markets vs. Bell Direct - New online trading a/c

[SaberX]

Hi all,

Firstly I'm new to the forum So hello.

Out of all the online investment community forums for Australia this is the only one I've seen with a dedicated broker section so I thought I'd use it as an opportunity to direct some broker related questions.

I recently started as a graduate in 2009 and so have been buying and selling shares for a good yr or so. I use westpac's online brokerage website as my parents were using that during my younger years. I've been putting it off for awhile but I"m looking to switch to cheaper brokerage ( I trade only shares by the way). At the moment the $29.95 for westpac for each buy or sell order really eats into margins. especially due to my savings and typically $2k-6k trades (it used to be 2-4k when i first started but as times gone buy I can afford bigger holdings).

I was always interested in the bell direct hearing it was $15 one way. But recently CMC markets has been advertising and I saw it was $9.90. So basically I wanted to hear your opinions on these brokerage websites. From what I gather if you're just merely buying/selling what broker you use doesn't matter? (Correct me if I'm wrong) or is there a substantial difference in services/platform/functionality between online brokers? As an accountant I've noticed commsec and some other brokers looking similar to westpacs online layout so I assume they base their operations of a generic platform (although I don't understand these technicalities well).

Amongst other considerations of Bell vs CmC I note the following questions:

1) The use of the term 'CHESS sponsorship'. WIth Westpac I was signed up to CHESS and got my own HIN. I assumed all brokerage websites now sign you up with a new CHESS (or is it HIN) when I join? Noting posts on these forums you may not be CHESS Sponsored correct?

Does CHESS Sponsorship indicate that legal ownership rests with me (as it is in my own CHESS number/name) as opposed to non chess sponsorship? I'm wary of recent financial collapses (there was one story i remember hearing about ANZ actually having people's shares as collateral, so when this brokerage firm collapsed client's were unaware that in actual fact the shares weren't theirs. Others may know just who /what case this was).

To me as a graduate this is quite important. Can someone explain the specifics of legal ownership in relation to bell or CMC defaulting? As their CHESS sponsored I assume I'm legally safe?

2) Westpac has always worked from debiting/crediting from my nominated account ( a Bankwest). I'm unfamiliar with how bell and CMC you open a bank account with them? Cash management account are they called?

I note that Bell Direct's registration indicates it's a non bank account and not covered by the bank deposit guarantee by the govt. Meanwhile CMC markets lists that they will open a CMC cash account in Bankwest for you?

Once again how are the legal ownerships work in these cases? Will the CMC bankwest account be legally in my name? Or in their name on my behalf? In cases of default will my money be safe, as next to question 1 about stock security, this would be most important?

I assume with Bell as it's not a bank account it references being secured to the balance sheet/debenture notes or something? So legally I'm screwed if anything happens?

3) If anyone has tried Westpac or has anythign to add regarding CMC vs bell or other brokerages that'd be great. To me I've only ever used the one broker so I have no idea how functionality can change that much.

On another note I hear bell now has live pricing (how does this differ to dynamic?) whereby it used to be pay to use. And CMC is $10/month.


Sorry for the extent and size of all these questions. I'm just hoping more experienced investors and those more versed in the legal side of things could offer some thoughts and opinions (legal facts would of course be preferred haha so I know it is 100% correct ).

That said, coming onto ASF I notice a heavy advertising presence of Interactive Brokers for $6 brokerage?! thoughts? each week i delay switching im paying $60 for buy and selling one stock with Westpac so I'd really hope not to complicate it with a 3rd contender?! Unless it's that great?

Thanks in advance for any help/opinions!

 

[supermatt]

i have no idea about that chess stuff but as for the rest maybe i can give you something.

bell have a cash account , i duno what bank it is . anz or something. you get around 3.7 % interest in it.

live quotes for free? no bell doesnt you have to pay 10 bucks a month for their silver or gold service whatever they call it to get free quotes. Its not streaming no . its just like what a westpac or etrade have. update browser style. u can get iress live streaming for 70 odd a month, but iress is terrible.

makes sense to me if your trades are under 15grand to move over to a discount broker as it does make a big difference.

bell security? well i have money in there. my dad has a ****load in there. we have both been with them for over a year or 2 and have have no problems. I dont know the specifics on it ( ie them being as safe as a bank )

cmc - wouldnt touch with a 10 foot pole. everyone has horror stories about them

interactive brokers. well its only like 6 buck trades for under 8 grand in value. so its not as good as what you think. unless u like penny stocks $ 5 bucks for 15grand value might would be a better deal but it isnt. For all the hassle it is to get an account then wire money offshore ( to me is risky) its just not worth it when you have $15 buck trades available in australia. (yes its still way to pricey though) - am looking forward to chi x and what they offer )

just my opinions.

thanks

 

[titl4]

Hi all,

Firstly I'm new to the forum So hello.

Out of all the online investment community forums for Australia this is the only one I've seen with a dedicated broker section so I thought I'd use it as an opportunity to direct some broker related questions.
....................

I wouldn't pretend to have complete answers to your questions. I will list what I do and why in case it helps:

For overseas trades (USA only at present) I use Interactive Brokers (IB). I like their trading platform and particularly their conditional orders. It is ultra cheap - starting at US$1 for shares. It does need a little time to be comfortable with it. I don't trade Australian shares with IB only because they do not provide CHESS sponsorship and the dividend statements are not individual and make (IMO) imputation credits less easy to substantiate for audit (my SMSF is audited every year). Others on this forum do not share this concern.

For Australian shares I now use Bell. Over about 20 years I have used I think 6 brokers. I like Bell for their conditional orders, pricing, execution speed, confirmations, and now their annual reporting. A negative which I accept is the requirement to use their cash account rather than an external bank account - this is partly balanced by the ease and speed with which funds can be transferred between bank account and Bell cash account (so I can limit the balance in the cash account without affecting my trading much). I left Commsec as I was unsatisfied with the first 4 of the 5 'positives' above.

Cheers ........ Alan

 

[SaberX]

@supermatt

No worries with the CHESS stuff. titl4 touches on it so I"ll query it further down

As you said Bell has a cash account, but for our purposes are we considered as non-valid holders of the bank account? Hence why our cash is not technically held in a bank account guaranteed by the banking deposit guarantee? I did see some mumbo jumbo in the disclosure statements etc in signing up referring to loans and notes, basically all that accounting stuff whereby we have a stake on assets of the co in the event of default. Still nowhere near (in my mind) just having the legal certainty that the bank account and cash inside are mine.

Interest rate is fine, as usually I'm in positions anyway. Ahh i see, yes like westpac is what i mean? I assume live quotes referring to westpac style service of quotes, whereas streaming it auto updates trade by trade?

for your dad's and all of us I'll hope for the best too. But yeah would be good, rather than to follow the crowd in security wise to know that legally shares are all ours. I assume the CHESS or no CHESS sponsorship affects this? Hence still awaiting someone's clarification.

"cmc - wouldnt touch with a 10 foot pole. everyone has horror stories about them"

What are these horror stories? Besides customer service I mean i'd just be using it for effectively the $10 trades. If it's like westpac and i can go about my own trades, buy and sell, is the service or 'wont touch it with a 10 foot pole' still warranted? Anything I don't know?

as for IB i didn't know it's an offshore wired bank account. If so I'm out , maybe in the future

@titl4:

Like I said above if it's international accounts with IB i'll stay out for now. But $1 sounds great if I ever venture into US/overseas markets. I'll keep it in mind

" I don't trade Australian shares with IB only because they do not provide CHESS sponsorship and the dividend statements are not individual and make (IMO) imputation credits less easy to substantiate for audit (my SMSF is audited every year). Others on this forum do not share this concern."

Can you clarify what this CHESS sponsorship effectively does that it deters you from trading them? As per my above writing, does this basically justify the legal standing/ownership concept of the shares? Say Bell goes bust, being CHESS sponsored therefore means shares are held entirely in my own personal name via them, and ibasically can't be touched. In other words boom or bust for Bell I won't be losing a cent?


I did notice that 'free conditional orders', although I have never used or know how these work. So for me I can't see the plus yet. As for execution speed I never really paid attention, is 2 secs guarantee that important? I guess for a begginer like me even 30 secs seems trivial haha. As for annual reporting I assume it comes out similar to those trust tax statements etc? So all your assessable gains and losses are easily input to your tax return? True it does seem simple to transfer your cash in and out, but the problem from what i can initially read from Bell's FAQ's, transferring out of the account takes a day if your transfer was done after 2:30pm, otherwise it'll be done that day. Similarly I assume transferring money in is subject to your own bank's transfer speed. Given markets only being open for the day I assume this could make a diff when you can't buy and sell as there's no money. ON a day or weekly basis though I understand this wouldn't do much however?

Alan did you or others share the same sentiments regarding not touching CMC's $9.90 brokerage service with a 10 foot pole? and if so reasons? As the $10 vs $15 trades might add Up I think. Of course being in either versus westpac's $30 is already a world's length of difference.

 

[stu192]

SaberX,

My opinion for what it is worth.

I am with Bell direct. From my experience it all works well. Yes you need to open a CMT(like a bank account) with them. You can transfer cash to/from this account overnight via internet banking. So no bother there (it also has a competitive interest rate).
I am chess sponsorship with them (you can be chess sponsored by more than one place...I am with 4).
Their prices are 20 mins delayed (westpac would be real time).

Here is what I would do if I were you.
Sign up for Bell or CMC. Transfer a little cash into their CMT and trade with it. Try out the platfrom etc. If it is bad...go back to westpac. If you find no difference....stick with them.

Personally, I watch the live data on my commsec account, and then trade through Bell. That way I know the live prices, but trade cheaply.

I just saw that CMC is now 9.90 brokerage. I have signed up with them...and will try it out. If it is horrible.....no worries, I'll just fold back to one of my other brokers.

Stu

 

[white_goodman]

i think the bad CMC press is related to their cfd trading and the amount of noobs that do cfd's...

say i invest through CMC(not cfd) and they are CHESS supported and CMC goes belly up, still means i own the shares correct?

 

[waza1960]

As far as I'm aware CMC only does CFDs if this is correct then you can't really compare brokerage as CFDs and Shares are totally different .As far as security and CFDs go check out the Sonray Thread.

 

[supermatt]

you legally own share with bell they are a genuine share broker. you get the letters from the company saying welcome etc so you dont have to worry.

yes cmc is cfds which are the most horrid things to trade and their reputation is beyond terrible for these.

yes quotes are like westpac. as in they wont auto update you need to refresh manually. but like i said. you need to pay 10 bucks a month to get live quotes with bell.

I really dont see the issue with bell not being a bank. If it does matter that much stay with a bank but you will be paying double in brokerage. Hey your money is still in Australia. Bell has a solid rep and they arent a cfd broker which basically means they are solid. anything with cfd in it stay away.

 

[white_goodman]

As far as I'm aware CMC only does CFDs if this is correct then you can't really compare brokerage as CFDs and Shares are totally different .As far as security and CFDs go check out the Sonray Thread.

you guys do realise CMC now does share trading not jsut cfds?

also should i bother holding off finding a broker till chi x comes in or will the reduced costs filter thru regardless?

 

[skyQuake]

you guys do realise CMC now does share trading not jsut cfds?

also should i bother holding off finding a broker till chi x comes in or will the reduced costs filter thru regardless?

Heard rumors that chi x wont be much cheaper than asx - one because the disc to asx isnt that big, two because our friendly friendly brokers actually wont pass on too much of the savings.

 

[skcots]

SaberX,
I am with Bell direct. From my experience it all works well. Yes you need to open a CMT(like a bank account) with them. You can transfer cash to/from this account overnight via internet banking. So no bother there (it also has a competitive interest rate).
I am chess sponsorship with them (you can be chess sponsored by more than one place...I am with 4).
Their prices are 20 mins delayed (westpac would be real time).

I am sure you know this but for the OP. Bell Direct offer live prices for $10 per month.

 

[glenn_r]

i think the bad CMC press is related to their cfd trading and the amount of noobs that do cfd's...

say i invest through CMC(not cfd) and they are CHESS supported and CMC goes belly up, still means i own the shares correct?

CMC Markets Stockbroking have nothing to do with OTC CFD's and are CHESS sponsors like most other Aussie brokers ( Commsec,Bell Direct etc) and they use Bank West not like Bell Directs internal "investment" account.

How do I know? I just opened an account with them to trade ASX stocks and warrants.

The account opening procedure was a breeze, I'll let you know how it goes when I start trading with them.

Free platform, free delayed data, $10 for live data and $41 for dynamic data, free very basic conditional orders.

I use IB to trade US stocks but feel I need to use a CHESS broker for ASX stocks and @ $9.90 they beat the other Aussie brokers.

DYOR

 

[lamclennan]

Hi I have a few rookie questions.

I understand that my money is not guaranteed with Bell Direct.

With CMC Markets you have a bank west account.

If CMC fell over tomorrow would my money be safe provided bank west was safe? (if yes. is this the case for all brokers who have CMA/CMT accounts attached from banks (assuming they are safe) rather than their own trust setup?).

Also are all shares in my name and not pledged(wrong word?) to bank or the broker itself? Does anything CHESS avoid such things from happening? Does using CHESS mean ones shares are safe should the collapse of a broker occur?

Finally. Does this apply much the same with options held?

Thanks

 

[lenny]

Yes i rang Bell direct a while ago and asked if their cma was covered by the banks 1 million dollar bank guarentee and the answer was NO, that was enough for me to stick clear.

As for CMC i have just been through the process of opening a trading account which was very easy, cma is with bank west which is coverded by
1 million dollar bank guarentee & is chess sponsored so looks safe.

As for how good the platform and service is i will update in a little while.

Lenny

 

[supermatt]

hmm that is a concern . re bell. i may think twice about having big money in there.

 

[titl4]

@supermatt

No worries with the CHESS stuff. titl4 touches on it so I"ll query it further down

.............
"Can you clarify what this CHESS sponsorship effectively does that it deters you from trading them? As per my above writing, does this basically justify the legal standing/ownership concept of the shares? Say Bell goes bust, being CHESS sponsored therefore means shares are held entirely in my own personal name via them, and ibasically can't be touched. In other words boom or bust for Bell I won't be losing a cent?"

In brief - yes. The other reason is imputation credits. When I claim credits in my tax return I can put anything but of course need to be able to support my claim in either an internal audit or a tax office audit. If the shares are CHESS registered I get a dividend statement from the company with my name and address on it as well as 'my' franking credit (all the evidence I need to support my claim). If not CHESS registered I get an advice from the broker or whoever holds the shares (just a 'round robin' not individually addressed) and some form of advice that a dividend has been paid to my account. I would then need to obtain franking information from the company or elsewhere and calculate the relevant amounts backwards from the dividend paid. Evidence to support the claim? Yes. Sufficient for a tax office audit? I don't know as I have seen opinions both ways. Is it worth the risk to me? No.


"I did notice that 'free conditional orders', although I have never used or know how these work. So for me I can't see the plus yet."

I use Bell's conditional orders mainly for stop-loss orders - for safety not as a usual exit. Bell's conditional orders are IMO as good or better than average and being free is a real bonus.

"As for execution speed I never really paid attention, is 2 secs guarantee that important? I guess for a begginer like me even 30 secs seems trivial haha."

Execution speed can be important but I would agree not often. My 'speed' concern is more with email notifications / confirmations relating to the trade. With Bell I receive these almost instantly. With both eTrade and Commsec I found these could take hours - even sometimes next day. Important particularly if I have consequential actions I want to take.

"As for annual reporting I assume it comes out similar to those trust tax statements etc? So all your assessable gains and losses are easily input to your tax return?"

Yes but in far more detail.

"True it does seem simple to transfer your cash in and out, but the problem from what i can initially read from Bell's FAQ's, transferring out of the account takes a day if your transfer was done after 2:30pm, otherwise it'll be done that day. Similarly I assume transferring money in is subject to your own bank's transfer speed. Given markets only being open for the day I assume this could make a diff when you can't buy and sell as there's no money."

As part of my trading plan I never place more than 2 'buys' on any one day. Actually in any one week except in defined circumstances. I am willing to leave enough for 2 trades in the cash account.

"Alan did you or others share the same sentiments regarding not touching CMC's $9.90 brokerage service with a 10 foot pole? and if so reasons? As the $10 vs $15 trades might add Up I think. Of course being in either versus westpac's $30 is already a world's length of difference."

Not really. Like many others I don't like CFD's but that's not the issue. Is their service as good as Bell? I don't know. Are their conditional orders as good? I don't know but have heard no. Is it worth a $5 a side saving to me? Not at this time.

 

[supermatt]

just had a look at cmc, as mentioned earlier by someone they now offer a stockbroking service with chess and what not which is far better than their cfd offerings.

from my previous experience with cmc they have their own platform and offering delayed data in charting for free is pretty good and live data (not streaming) for only 10er is also good.

I dont even look twice at bells charts as they are pretty much useless. It would be a nice addition if they could enhance that aspect of their business.

both bell and cmc have extremely basic conditional orders so i dont believe there is much to compare there.

Apart from questioning how safe your money is, the major question i would probably be asking myself is......

am i going to only trade under $8000 ? if so then you will get charged 10 bucks and if ur an active trader saving 10bucks per side every trade will probably be handy.

but if you are going to trade above 8 but less than 15k then bells pretty much idendical, and like i said i feel my money is safe with them. I have the confidence as i have been with them for over a year.

 

[SaberX]

@stu192: so basically free pricing is 20 min delayed, when it's referred to as 'live pricing' its the click to refresh updated pricing? Real time pricing from what I gather, it updates itself? Sorta as if it was moving around on it's own in front of you?

DO try CMC and let me know now that you've signed up. I've finally gotten some inertia out of the way and signed up with Bell, waiting for the first few $ to hit the account, will see if I can pick up something tomorrow. Although from what I remember the futures looks like it's doing well, so looks like another strong day tomorrow

@wazza9160: any specific things I should be looking for in the Sonray thread for security?

@supermatt:

So it appears the majority of pplz who are new and posting are pretty caught up in the whole CHESS sponsorship and legal ownership issue.

From what you say, besides the fact that you get the company letters etc, is Chess sponsorship in itself a sign of legal ownership? Basically as someone put it, the mere fact that it is registered under CHESS does that indicate it's safe if anything goes belly up? Or does it more specifically have to be held under your name e.g. HIN, or any other little fine legal details?

I know it's a one in a million chance. but it'd be good to know these sorta things. I understand CFD's may put the provider at greater chance of going belly up, so with Bell direct not touching CFD's it's more soothing.. but still, best to know what you can get yourself into right?!

@glenn_r : do let us know how CMC's brokerage services, trades, security/general feeling you get from it over these next few days

@lamclennan - lam basically sums up what I just said above regarding CHESS and therefore the fact that ur sponsored ie. are under CHESS means that there is no pledge or other owner of ur shares by yourself.

That said I'm definitely certain (as you guys confirmed) that Bell's is not covered by the $1m banking guarantee. CMC is. One plus I'd say (on top of the $9.90 brokerage). That said the share's ownership was more important to me, I mean usually I"d say most pplz wealth would be tied in to shares at one time. YOu'd have to be really unlucky for most to be in cash at the wrong time!

On another side note, so Bell and CMC both offer options? And CFD's is offered by CMC but not Bell?

Otherwise what providers do most pplz go for when it comes to options (australia) as a workmate was asking for some website referrals (not my domain as I only deal with shares) for trading options. Anything lowcost like bell/CMC with a decent platform, reliability/security etc when it comes to options?

What do you all use + your experiences?

 

[SaberX]

Oh and on a side note I must say I'm quite liking the free reports you get for most stock codes. I've typed in a few today to be pleasantly surprised by the analyst reports on the side, usually from buy/sell signals. Westpac never had this, but then again I never paid for research there (nor am I with Bell). Are any of the research/pay packages worth it/provide that much more indepth info?

@titl4: only just realised you replied above inside the quote box. Totally missed it so I might have doubled up in some posts in my last reply. It's getting late so I"ll have to read/reply another time Thanks anyway

 

[glenn_r]

The ASX page re: CHESS

http://203.15.147.66/products/shares/how/how_settlement_works.htm

There was talk that IB will be able to offer CHESS sponsorship on ASX equities by the end of this year.