National Australia Bank Ltd (ASX: NAB) is aiming to knock Commonwealth Bank of Australia's (ASX: CBA) online stockbroker CommSec for six.
CommSec reportedly had a monster 50% of the online share trading market in 2011, with Australia and New Zealand Banking Group's (ASX: ANZ) E*Trade on 18%, Westpac Banking Corp (ASX: WBC) on 8%, with NAB on 7% and 5% with BellDirect.
NABTrade has seriously ramped up its offering in the past few years, firstly by lowering its brokerage rates, and more recently offering cheap rates to trade international shares. When Commsec makes trading international shares ridiculously expensive at $65 per trade, NABTrade is now offering access to international trading for free for an introductory period and then $19.95 for trades of up to $20,000 online.
NABTrade is also offering competitive brokerage rates for Australian shares, $19.95 for trades up to $20,000 – compared to $29.95 for CommSec and E*Trade, and $22.00 for Westpac.
Those aren't the only considerations though. Investors also need to consider other fees and charges, exchange rates used for conversion to foreign currencies, reporting for tax purposes, fees for email or SMS alerts as well as other account fees.
Better options than NABTrade?
But as much as NABTrade wants share market investors to use them for trading shares, there are a multitude of even cheaper options. CMC Markets offers online trading rates of as low as $11 for an order up $11,000, or $20 for a trade up to $20,000.
Interactive Brokers offers trades from as low as $6.00 while OptionsXpress charges from $14.95 per trade for up to 1,000 shares. Both platforms allow investors to trade international shares.
Why invest overseas?
With Australia's stock market representing less than 2% of the total global market capitalisation, it makes sense for investors to diversify and invest into international markets. Where else can you find giants like Amazon, Tesla Motors, Berkshire Hathaway, Google, Apple, Visa, Mastercard, McDonald's, Walt Disney and Netflix to name but a few?
To give another example, NABTrade offers access to more than 10,000 global equities and exchange traded funds on its platform.
The best time to invest offshore would have been when the Australian dollar was above parity with the US dollar in 2011 and 2012, but it still makes sense today, despite the Australian dollar buying around US 73 cents. Diversification, a huge choice of companies and protection from the Australian dollar falling further are all advantages of investing overseas.
Foolish takeaway
If NABTrade is making a play for Commsec's market share, the broker is going about it the right away. For too long Australian investors have had to put up with being ripped off to trade on international markets. Bring on the competition I say.
