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(Boursier.com) — Online transactions involve fees that are not always easy to identify… However, the trader has every interest in finding out about these additional costs. This allows him to choose the broker best suited to his profile and his investments.
1/ Brokerage fees
The commissions charged on the purchase and sale of securities are generally clearly displayed on the broker’s website. However, you must carefully read the details of the broker’s pricing conditions to avoid unpleasant surprises:
-Commissions may be a percentage per order applied to a minimum amount.
-Some brokers charge a commission including the purchase and sale (“round up”) while others charge the two operations separately…
-The same broker can be very competitive on one market (like Euronext Paris), but expensive on others (New York, London, etc.).
2/ Spreads
The “spread” constitutes the gap between buyers and sellers. This is a cost specific to the operation of the stock exchanges. Concerning over-the-counter (OTC) transactions, the spread may be the intermediary’s only remuneration. The latter can display “zero commission”, but a high spread. This must be taken into account in your comparisons…
3/ Custody rights
These rights are most often non-existent or capped like PEA and PEA-PME accounts. However, it is necessary to verify their amount. There may also be custody rights applying to certain types of products such as UCITS.
4/ Foreign exchange costs
Buying and selling securities listed in a currency other than your account currency will incur foreign exchange fees and costs. They are not always clearly displayed in the pricing documentation. They can represent a percentage between 0.2% and 2% depending on the brokers. This rate is not neutral if you wish to speculate on markets outside the euro zone…
5/ Management fees integrated into the courses
This concerns in particular ETFs and UCITS. These fees reduce the actual performance of the product. The only way to know the amount is to consult the DICI (key investor information document).
6/ Securities transfer fees
If you wish to change intermediary, online brokers can charge quite high fees (around 15 euros to 30 euros per line). However, some brokers can reimburse you if you transfer your securities to them…
7/ Other examples of hidden costs
It is difficult to give an exhaustive list of fees charged in online trading…
Here are a few :
-Expenses paid in the context of an inheritance.
-Fees on payment of dividends on unlisted securities.
-Live quotation fees at certain brokers who only broadcast delayed quotations free of charge.
-Fees for access to platforms more elaborate than the basic interface.
-Inactivity fees if you do not trade for a certain period of time. They penalize “buy and hold” traders who buy securities to hold them for the long term.
Therefore, taking the time to learn about hidden costs is essential before engaging in online trading in order to prevent these costs from significantly affecting the profitability of your investments!
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