Investors can save thousands through self-directed trading
Key points:
Investors can save thousands of dollars by using self-directed platforms, with some commissions as low as 0.5 per cent.
A $500,000 trade could cost $2,500 at 0.5 per cent, compared with $10,000 at a 2 per cent brokerage rate.
Lower fees come with more responsibility, so investors should also consider research tools, customer support, account requirements and risk.
INVESTORS may be able to save thousands of dollars in trading fees by using self-directed investment platforms. Recent commission schedules show some platforms charging as little as 0.5 per cent compared with traditional brokerage rates of up to 2.5 per cent.
Under the latest fee schedule, JN Fund Managers, Proven Wealth and Sagicor Investments charge 0.5 per cent through the Jamaica Stock Exchange’s JTraderPro platform, while NCB Capital Markets charges 0.75 per cent through its proprietary online platform, and JMMB Securities charges 0.7 per cent through its online service.
The lower fees could translate into meaningful savings for investors, particularly those who trade regularly or invest larger sums. For example, an investor purchasing $500,000 worth of shares could pay approximately $10,000 in commission at a 2 per cent brokerage rate compared with $2,500 at a 0.5 per cent self-directed rate, a difference of $7,500 on a single transaction. While on the upper end, at a 2.5 per cent commission rate, the same $500,000 transaction would cost $12,500 in fees.
Self-directed investing allows individuals to place trades themselves rather than relying on a broker to execute transactions on their behalf. Investors can access JTraderPro by opening an investment account with a participating brokerage house and linking their Jamaica Central Securities Depository (JCSD) account to the platform. Participating brokers include Barita Investments, GK Capital Management, NCB Capital Markets, Proven Wealth, Sagicor Investments, VM Wealth, JN Fund Managers and several others. Outside of JTraderPro, JMMB Securities offers one of the lowest commission rates among proprietary online trading platforms at 0.7 per cent. JMMB also allows investors to open accounts online, making it one of the more accessible options for first-time investors seeking both convenience and lower trading costs.
At the same time, opening an investment account has become increasingly convenient as several brokerage firms now offer digital onboarding options that allow clients to submit documents electronically and communicate with representatives online. For investors looking to open an account, the documentation requirements are generally similar across brokerage firms, as they are regulated by the Financial Services Commission. Required documents typically include a Tax Registration Number (TRN), proof of address, proof of income such as recent payslips and government-issued identification. Jamaicans living overseas may also be required to have documents notarised, while US-based applicants may need to complete a W-9 form. At Proven Wealth and Barita Investments, prospective clients can initiate the process via the company’s website or by email, after which a representative will contact them to guide them through onboarding.
“Once you’re in dialogue with a rep, that rep can speak with you and provide all the KYC documents that you will need to complete,” Imara Pinnock, senior portfolio manager at Proven Wealth, told the Jamaica Observer.
“They can express an interest through our website, Barita.com, and complete the questionnaire, which helps to anchor the conversation. We reach out to them, a licensed advisor who speaks to the person, and we arrange for the application to be sent to us,” said Sancia Thompson, vice-president, premium wealth & corporate solutions at Barita Wealth.
Once the documents are completed, clients can submit them electronically, provided the documents have been appropriately verified. The same applies to GK Capital Management; however, that broker has been increasing its use of digital communication tools to accommodate overseas clients.
“You don’t physically have to come because we’re taking steps to improve the process because we do recognise that it’s an opportunity, but for now we can send you the documents electronically, and you get them signed by a notary public and send them back,” said Tyshaun Lindo, head of business development at GK Capital.
While lower fees can help improve investment returns over time, industry experts encourage investors to also consider account minimums, research tools and customer support when selecting a brokerage provider.
