Brokerage is something that most investors love to hate. Charging a fee per trade, brokerage adds to the 'frictional costs' of investing and financially punishes investors for trading – especially if an investor trades frequently. Well, some promising news might be heading these investors' way.
Stake is an Australian brokerage company that has made a name for itself by offering brokerage-free access to the US markets for ASX investors. Due to this lack of brokerage, Stake is often called 'Australia's Robinhood'. That's after the similarly-modelled US company. The Motley Fool has discussed Stake before, which you can read more about here.
Until now, Stake only competed against the other popular ASX brokerage platforms like Commonwealth Bank of Australia's (ASX: CBA) CommSec and National Australia Bank Ltd.'s (ASX: NAB) NABtrade for the trading of US shares. But it looks like this is about to change.
A Stake in the ASX?
According to the company's website, Stake is planning on allowing its customers to also trade and invest in ASX shares. That's in addition to the US shares it already offers. Here's some of what Stake said:
Soon, you'll be able to invest in all publicly traded stocks and ETFs on the ASX and Chi-X through Stake. But don't expect the same-old to what's already out there. We'll be redefining what brokerage looks like for the ASX, to provide you more control and greater transparency…
We'll be releasing full details about our offering in the coming months but expect a new ASX brokerage model that's fresh and exciting.
A report in today's Australian Financial Review (AFR) has some more details for us. The AFR reckons Stake will be opening ASX trading "in the fourth quarter of this year". It also tells us that three-quarters of its 340,000 users have an ASX trading account with another broker. That likely sums up the opportunity the company is seeing in front of it. The article also doesn't tell us what kind of pricing investors might be looking at to trade ASX shares on Stake. But the report stated that "it is understood they [Stake] will undercut incumbents substantially and push towards zero".
Stake CEO and founder Matt Leibowitz told the AFR the following:
We wouldn't do this if we didn't see there was a massive gap in the Australian market and a desire for more transparency and more control, giving a lot more back to customers rather than taking excessive margin.
Whoever your ASX broker is (or will be after Stake's ASX launch), it's fairly safe to say that more competition usually benefits the entire market. So from that perspective, this might be good news for ASX investors of all stripes.
