Trading Global Stocks Becomes Easy with E-Trade Global Trading

etrade global tradingBut not with a price, a very high price.

Back in February when I first heard that E-Trade is going to introduce a global trading service to allow investors to trade stocks listed in other markets directly, I signed up to receive notification when it becomes available. Yesterday, the email came, announcing that the new E-Trade Global Trading is up and running.

Of the six markets (Canada, Hong Kong, France, Germany, Japan, and UK) currently included in the Global Trading, I am mainly interested in Hong Kong Stock Exchange, which gets the most listings of companies from mainland China. The main reason, of course, is the tremendous growth of Chinese stocks. It’s very tempting. Also I know many of the companies choosing to list their shares on HKSE, instead of NYSE or NASDAQ. I know their businesses and their positions in their industries in China. In fact I wish the service were available sooner so I could buy stocks from companies such as Industrial and Commercial Bank of China (ICBC), which is now the world’s largest bank by market capital, surpassing Citi Bank last month thanks to the booming Chinese stock market.

While the service seems to be exciting, the reality can cool off any idea of active trading as investing in any of these markets with E-Trade’s global trading platform isn’t cheap, though E-Trade claims it’s a “low-cost” service. According to the fee schedule, the cost per trade for stocks listed on HKSE is HK$299.00. At the current exchange rate of $1 = HK$7.82, the commission itself will cost investors nearly $40. Plus, E-Trade also charges a whole range of fees, including

  • Fed Call Extensions: $25
  • Reorganizations: $20 for mandatory actions (e.g., mergers, reverse stock splits); $30 for voluntary actions (e.g., tender offers); $50 for actions reflected on physical certificates
  • Restricted Securities Custody: $150
  • Verification of Deposits (third parties): $20
  • Worthless Securities Processing: $5
  • Overnight Mail: $20
  • Account Transfers (outgoing): $25 for partial transfers
  • Stock Certificate Requests: $40 per certificate
  • Wire Transfers: $0 incoming $25 outgoing
  • Duplicate Account Statements or Tax Forms: $5 per statement

Since all transactions are made in local currencies, US investors will have to convert dollars into local money before trading any stocks. There’s another cost of $15 to $20 for each currency conversion.

Though I like the idea, the cost of trading is just too high. It’s impossible to trade in the same way as with US discount brokerages when each trading could cost me as much as $60. I have to think it through whether I want to get an account or not.

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7 Responses to “Trading Global Stocks Becomes Easy with E-Trade Global Trading”

  1. MoneyNing |  Aug 17, 2007 at 11:02 am

    Being an ETrade customer, I was pretty excited when I heard about this too. However, I’ve just been too busy to check it out when it came out a few days/weeks ago. I’m glad that you gave this summary since I now know that I’d rather open an overseas account if I want to trade in the Hang Sang :)

  2. Frankie |  Apr 30, 2008 at 5:47 pm

    Be careful, not only does e*trade charge very high commisions on both ends of the global trade, but they also charge an “exchange rate” that basically skims 1% off the top of your buy/sale. On top of this i’ve had a few global stocks with etrade over the past few months where I haven’t recieved the dividends.

    Say you have $3,000 to spend on global stock XYZ
    They charge you an exchange rate that is about 1% lower for buy and 1% higher for sells. than the real exchange rate so thats $2,970 right there. Once you place the trade it is 19.99EUR = about $30. Now you are at $2940. Say the stock stays flat and a year later you decide to sell and the currency is still the same. Once again they will charge you 19.99EUR = $30. $2,910. Problem is your money is still in foreign currency, if you want to switch it to dollars you’d have to submit to their bad exchange rate, so 1% of $2,910 is about $29.1, your left with about $2880. It costed you nearly 4% of the stocks value just to buy the stock and then sell it!!!!

    Total amount stolen from e*trade
    $29.1
    $30
    $30
    $30
    = $119.1 out of a $3000 sale to buy and sell a stock!!

    Did I also mention they “forget” to give you your dividends!

    Stay away from e*trade, i’m trying to get out myself.