Commission-free ETFs a Gateway to Self-reliant Investors?

The Toronto-based independent online/discount brokerage (ODB) firm Questrade has announced that it will offer buy-side commission-free ETF trading on all North American-listed ETFs. The offer is available to clients using the firm’s IQ trading platform. Questrade becomes the fourth Canadian online/discount broker to offer commission-free trading on ETFs and the first in Canada to include a full stable of North American-listed ETFs. The lone caveat is that the ETFs will be commission-free exclusively on the buy-side, while peer firms like Scotia iTRADE, Qtrade, and Virtual brokers offer round-trip commission-free trading, albeit on a select group of ETFs.

The ETF trading pricing concessions signal that online/discount brokerage firms are keen to capitalize on the vehicles’ growing popularity among do-it-yourself (DIY) investors. In recent years ETFs have been among the fastest-growing investment vehicles on the online/discount brokerage platforms. Preliminary data from the final quarter of 2012 suggests that this trend remains in place.

On a partially unrelated note, and bucking the trend set in the second and third quarters of 2012, ODB trading volumes in the closing frame of the year were once again on the rise. Growth was partially driven by the pre-RRSP season ramp-up. Despite the bump, early indications are that transaction levels will remain near four-year lows. Stay tuned over the coming weeks for a fourth quarter wrap-up for both the online/discount and full-service brokerage channels. 

For more information and up-to-date statistics on retail brokerage channels, please refer to the upcoming edition of our Retail Brokerage and Distribution Advisory Service For more information on ETFs, please refer to the upcoming edition of our ETF and Index Funds Report Posted by Matthew Goldstein