Opened E-Trade Global Trading Account

I have been considering an E-Trade Global Trading account for quite some time. I thought it’s a good idea to invest directly into foreign markets, in addition to buying ADRs that are listed on US markets. What held me back is the high cost of trading foreign stocks.

However, I still want to try that program to buy Chinese stocks listed on Hong Kong Stock Exchange. Not many (I can’t afford to buy many anyway), just one at the beginning to see how it goes. So I went ahead and opened an account late last month and funded the account with $1,000 (it did take me five business days to complete the ACH fund transfer). The following is screenshot of the Global Trading platform.

The stock that I am interested in is Industrial and Commercial Bank of China (ICBC), world’s largest bank. Before making any trade, the US dollars in my account had to be converted to HK dollars first. It cost me about $11 to convert my $1,000 into HK$7,717. So even before buying any stock, I already lost $11. After th conversion, I used their real-time quote system to get the price of HK.1398. What I have noticed was that there’s no Market order and only Limit order can be placed.

For stocks listed on HKSE, they have a limit on the increments of the shares one can purchase (called board lot size), anywhere from 50 shares to 10,000 shares. For the stock I wanted to buy, the lot size is 1,000, meaning I can only buy shares in the multiples of 1,000 shares. The money I transferred was more than enough for 1,000 shares, but short for 2,000. If I found out this information before the currency conversion, I probably would transfer a little more to buy 2,000 shares. However, since I already paid the conversion fee, I decided to buy only 1,000 shares.

Immediately after I submitted my order and limited buy price to HK$5, I received the following error message:

The market was closed when we received your order. It has been entered into our system and will be reviewed prior to market open on the next regular trading day. After market open, please check to make sure your order was accepted.

It’s kind of ridiculous that they use EST (10:00 pm) instead of local time (HK time) to determine the time the order is received. Are we trading US stocks or foreign stocks? Anyway, the next morning when I called them to ask why I got the error message, they told me the order has already been executed, but gave no reason about the error.

Right now, the stock I bought at HK$5.00 is traded at HK$5.12. To break even, the stock price has to go to nearly HK$5.40 to cover both the currency conversion fee and commissions, equivalent to a gain of 8.00%.

In addition to the above mentioned fees, E-Trade also charges the so called Account Service Fee (ASF) of $40 every quarter if the account balance is less than $10,000. Fortunately, that fee is exempted for accounts opened less than 12 months. Therefore, I will give myself a trail period of 12 months to see how the stock performs. If the growth meets my speculative expectation, I will consider using other ways (such as getting a money market account from them as well) to avoid the ASF; otherwise, just get my money back and forget about it.

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