Day trading in Canada

Hey guys, here's a somewhat disturbing thought that I don't believe anyone has touched on yet: what about the possibility that the Canadian regulators will reject the applications and refuse regulatory approval? I say this because I have a nagging feeling that the approval process has a distinctly political element to it, as opposed to being strictly concerned with the administrative and professional competency of the applicants.

Furthermore, some of the Canadian online direct access brokers are positively vindictive towards IB and the other, low cost American brokers (I know this because I've corresponded with a few about their absurdedly high commissions). They are no doubt very concerned about protecting their national monopoly and their vested interest in high commission charges. Call me paranoid, but really isn't IB's application the first attempt by a low cost American direct access broker to gain Canadian regulatory approval? It's a precedent-setting attempt in this sense, and I wouldn't be surprised if our oppressive, socialist-minded "big brothers" took a stern view towards letting Canadians experience the same financial freedom enjoyed by most of the rest of the Western World.

For those of you living outside of Canada and enjoying your accounts with IB, here's a bit of advice: don't move here.

Rushman
 
Don't forget that Etrade and Schwab are American brokers.

personally I don't think it's a political. This wasn't even an issue until Oct 2000 when the Canadian regulators decided to do what the Americans have been doing for years - demanding that Canandian brokers be registered in each State they accept U.S clients from.


This all harks back to the early 90's when some American hedge fund decided to sue their Canadian broker for losses because the Canadian broker was not registered in the hedge funds State. Since then 90% of Canadian brokers have refused to accept U.S accounts.


I heard Datek was also applying to Canada, but this was just last fall in the face of a market meltdown and therefore they may have reconsidered.

 
Babak,
could you please expand on opening account in the name of company instead of person. Do you have to have some kind of licence like CSC or Series 7 for that?
Thanks
 
Haven't been able to verify this 100% but the Cdn regulatory laws are supposed to protect those that don't know any better - individual investors (in my mind it is blatant and obscene protection for the bloated Cdn banks, who wouldn't survive 6 months agains the onslaught of US brokers like Datek. $29 against $9 you tell me!).

ok, ok I'll get off the soap box! Point being that if you are not an individual then the rules aren't really for you. If you are a Cdn company (corporation) then you can open an acct with a US brokerage. You just tell them that you are a (Italian, Cdn, Guyanese, whatever) company and go through the process necessary.

I'm trying to get the OSC to verify this in writing so it will be water tight but no luck yet.
 

I talked to a US brokerage about this once. They told me their only canadian clients were those that had companies registered in a country other than canada. They just opened a corporate account, not an individual account.

I once emailed 25 US daytrading firms all at once and asked them if they would deal with Canadians. Only a few told me they would, they are as follows:


1. JPR Capital (I am currently with them and recommend them)

2. AB Watley

3. Livestreet

4. Anpera

5. Tradeportal


The only one I have experience with is JPR, its great for Canadians, no problems at all. They told me as long as the CLEARING FIRM of the brokerage was registered to do business in Canada, the brokerage could offer their services to Canadians. JPR uses Southwest as their clearing firm.

The reason I went with JPR is that they had the lowest cost per share/trade ($10 per trade up to 2000 shares plus half a cent per share after that).


 
Securities regulators continue crackdown






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By KAREN HOWLETT
From Tuesday's Globe and Mail


Canadian securities regulators have targeted three of the largest on-line brokerage firms in the United States as part of their national crackdown on investors bypassing domestic firms.

TD Waterhouse Group Inc., Ameritrade Inc. and Datek Online Holdings Corp. all face allegations that they contravened securities laws by allowing thousands of Canadians to open trading accounts without the firms being registered to do business in this country.

The three firms have entered into settlement agreements with regulators in six provinces. They will appear at a regulatory hearing in Toronto this afternoon where a panel of commissioners will be asked to approve the settlements, negotiated by enforcement staff at the British Columbia Securities Commission on behalf of all the provinces.

What the regulators want to do is enforce a rule that requires U.S. on-line firms to register here if they want to serve Canadian clients, said an industry source. The settlement will likely include a requirement that they register in this country, he added.

The registration process in Ontario and some other provinces normally involves opening an office in Canada. But regulators had been looking at the possibility of letting U.S. brokers register here while exempting them from the requirement to set up an office.

TD Waterhouse, an arm of Toronto-Dominion Bank, has operations in Canada and the United States - many Canadians have opened accounts through its U.S. subsidiary.

Canadian investors are drawn to these U.S. firms by cheaper commissions and access to different investment products. These firms charge trading commissions of roughly $7 (U.S.) per transaction, compared with about $24 (Canadian) to $33 in Canada.

Several U.S. firms have set up accounts for Canadians, regardless of the registration rules. Based on polling done last spring by research firm Hart & Associates, about 6 per cent of the 1.4 million Canadians with an on-line brokerage account do business with a U.S. broker.

 
Ameritrade, Datek to set up Canadian shops
Settlement deal: U.S. online brokers pay $800,000 fines
Garry Marr
Financial Post
Datek Online Brokerage Services Inc. and Ameritrade Inc. will be seeking registration to do business in Canada as part of a settlement with securities regulators across the country.

The two U.S. online brokerages, along with TD Waterhouse Investors Services Inc. (US), will each pay an $800,000 fine for allowing Canadian investors to open accounts despite the fact the brokerages were not registered to do business in Canada.

Under an agreement with the Canadian Securities Administrators, an umbrella group for 13 securities regulators in the provinces and territories, Datek and Ameritrade will now seek registration with the Investment Dealers Association of Canada. TD Waterhouse had already transferred its Canadian clients to its operations in Canada.

"We want to ensure Canadian residents have the protection of the law," said Sasha Angus, chief enforcement counsel with British Columbia Securities Commission, which negotiated the settlement on behalf of the CSA.

Datek and Ameritrade have both been granted exemptions to continue making trades on behalf of existing clients until Sept. 30 while they apply for registrations.

The Financial Post first reported in November that Datek had applied to the IDA for registration.

In a joint submission from securities commissions from Ontario, Quebec, Manitoba, Nova Scotia, British Columbia and Alberta, it was agreed that three firms had been making trades on behalf of residents in Canada since January, 1999, without being registered to do so -- a violation of securities legislation in all of the jurisdictions.

The Ontario Securities Commission called the conduct "contrary to the public interest" but many Canadians have been opting for the U.S.-based accounts because of the lower brokerage fees and the investment products that are otherwise not available in Canada.

Mr. Angus said the regulators were not trying to punish Canadian investors but instead wanted to make sure they were protected by local laws.

"The Internet is just another medium of trading, it's no different that using a telephone," he said.

Regulators say there are other brokerages from outside the country currently offering to trade securities to Canadians without being registered and they will track them down.

"We are able to track them through various methods," said Mr. Angus, noting firms are forced to advertise when they open for business.
 
Brand spanking new EDAT firm in Canada:


http://www.questrade.com

( a little cheesy but....)

Commission schedule follows:


The commission rates will consist of the following monthly per share charges (all amounts in US dollars):

- $0.10 per share up to 200,000 shares
- $0.025 per share from 200,001 to 400,000 shares
- $0.020 per share from 400,001 to 1,000,000 shares
- $0.016 per share from 1,000,001 to 2,000,000 shares
- $0.012 per share from 2,000,001 to 6,000,000 shares
- $0.008 per share over 6,000,001 shares.

Fees will be credited back to a trader at the end of each trading month. Introductory offers are available upon request.

Remote traders’ per share commissions will commence at $0.025 per share up to 400,000 shares, with a minimum of US$7 per trade.

All ECN, exchange charges, cancellation and pass-through fees, etc., are charged in addition to these fees.

I personally have no ties to them
 
Beautiful. Would IB accept accounts in July if this happens? or is there a further process to complete?

Would this mean Canadians would have to deal with the Canadian office only, for customer support? How does it work in other countries?

Thanks
 
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