Stake challenges CommSec with A$3 brokerage service in Australia

Rick Steves

The retail trading platform offers access to more than 4,000 US stocks, with $0 brokerage as its way to attract new investors.

Stakeshop has announced the upcoming launch of a A$3 ($2) brokerage service in Australia as a direct challenge to Commonwealth Bank of Australia’s subsidiary CommSec, the country’s largest online and mobile broker.

Matt Leibowitz, Founder and Chief Executive Officer at Stakeeshop, commented: “I don’t think there’s been material change in the industry since brokerage went electronic in the late ’90s and early 2000s. So I think 25 years on, this is a big moment.”

The Tiger Global-backed trading company has been operating as Stake since 2017 and has made a name for itself as a commission-free retail broker for U.S.-listed stocks.

Stake, which operates in U.S. dollars and charges traders 0.7% on fund transfers between Australian and U.S. dollars, has approximately 360,000 customers trading on the app.

Trading volume has grown 100-fold to over $1 billion per month since its launch, according to Stake CEO Leibowitz. Finclear, a broker-dealer 16% owned by Magellan Financial Group, will power the brokerage for Australian-listed stocks.

Trading in stocks listed on the local ASX Ltd exchange will be CHESS-sponsored, meaning that it will be under the person’s own name, not a separate legal entity’s name, as is commonly done by low-cost brokers seeking to reduce costs.

Until year end, trading on Stakeshop will be comission-free. From 2022 onwards, the platform will charge A$3 per trade, which is quite competitive when compared to Australia’s online trading leader CommSec, who charges fees of A$10 to $29.95 for each trade worth up to A$1,000 to A$25,000, respectively.

CommSec’s share of the online brokerage market is estimated to be close to 40%, with the retail broker opening over 550,000 client accounts in fiscal 2021.

“I think this will accelerate us towards the top. We’ll hopefully be banging down the door of number one, that would be the goal.”

The Australian neobroker specialized in US shares has raised AU$40 million from Tiger Global and partners of DST Global in June 2021 to propel the expansion of its product as well as its global presence.

The funding round aimed to fuel the already rapid growth and global expansion that Stake has successfully printed in the past year: the neobroker grew its customer base more than six times over, and expanded beyond Australia, launching in New Zealand in April 2020 followed by the UK and Brazil.

The retail trading platform offers access to more than 4,000 US stocks, with $0 brokerage as its way to attract new investors. Fractional shares are in the order of the day and Stake allows precisely that: all shares, no matter the headline price, are accessible to retail investors.

Multiple advanced order types, instant trading – before funds have even settled – and analyst ratings and price targets from Wall St firms are other perks offered by the platform.

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