National Bank Direct Brokerage: A Guide

National Bank Direct Brokerage is an online, DIY discount brokerage operated by National Ban, which is the sixth largest bank in Canada with 2.4 million clients and is based out of Montreal. It offers trading of equities and fixed income and a robo-advisory service called InvestCube.

What is National Bank Direct Brokerage?

National Bank Direct Brokerage offers an ntuitive and user-friendly web-based trading platform but does not currently have an app.

It also offers a wide range of educational resources such as free tutorials, webinars, and seminars along with a monthly newsletter dedicated to self-directed investing.

It offers free access to the Recognia suite of investment-research tools for technical insight and value investing metrics. You can set up alerts, check the past performance of your investment strategy and compare it to a given index as well as look up key company data.

You can also stream market prices in real time with Market-Q software, which is free for active investors and otherwise subscription-based.

To open a trading account you will have to fill out the application online or by mail. It’s a simple application with your identity details, a government issued photo-ID, and a void cheque to link your bank account for funding. Once all the information is verified it should take less than a day to set-up the account.

What is InvestCube?

InvestCube is essentially a robo-advisor run by National Bank. It offers portfolios holding various ETFs weighted across five asset classes and are rebalanced automatically. You can choose the ETFs you want to hold based on risk tolerance. You must make a minimum investment of $10,000 and the management fees cost up to 0.50%, plus the fees of the ETF holdings which usually average around 0.20%. Automated portfolios like these are a great way to diversify to reduce risk and build wealth over time. They require minimum time to manage and you don’t need any prior investment experience. They’re perfect for busy novice investors or those who want to hold hundreds of stocks in a single portfolio without paying a huge chunk in commission.

What products does National Bank Direct Brokerage offer?

The brokerage allows trading for a wide variety of securities that will suit the needs of almost all investors. The only notable security unavailable to trade is commodities.

You can buy and sell:

• Stocks

• ETFs

• Options

• Mutual funds

• Bonds

• GICs

• Exchange-traded debentures

• Linked notes

You can hold these investments in a huge range of accounts, both registered and non-registered. National Bank Direct offers specialized accounts for corporations, investment clubs and trusts.

Here’s the full list of available accounts:

• TFSA

• RRSP

• RESP

• RRIF

• Spousal RRSP/RRIF

• LIRA

• LRSP

• LIF

• IPP

• Cash

• Margin

• Short selling

• Company account

• Sole proprietorship account

• Partnership account

• Association account

• Trust account

• Estate account

• Investment club account

• In trust account

What are National Bank Direct Brokerage fees?

National Bank Direct Brokerage offers competitive fees compared to its peers. Its commissions are far cheaper than the other major banks and on par with most independent discount brokerages.

It has a six-tier fee system:

Active investors

Active investors who make more than 100 trades per quarter can trade stocks at just $0.95 and options at $0.95 plus a flat fee of $1.25 per contract with a minimum fee of $8.20. The annual administration fee is waived and they get free access to Market-Q data.

Young investors

Investors 30 years old or younger get 10 free trades annually after which trading stocks is just just $4.95. Options are $0.95 plus a flat fee of $1.25 per contract with a minimum fee of $8.20. Annual administration fees are waived.

Professionals, students and newcomers

If you are a newcomer, a professional or a student in engineering, healthcare, legal, business or accounting you may qualify for special commission pricing. Trading stocks is $5.95 and options are $5.95 plus $1.25 with a minimum of $8.20 per contract. Administration fees are waived.

ETF trading fees

You can trade Canadian and US ETFs for free if you buy at least 100 shares and sign-up to receive all your documents electronically. ETFs are also free for professionals, students, and newcomers. Otherwise regular pricing for trading stocks applies.

National Bank clients

National Bank clients who already have a chequing or savings account pay $6.95 a stock trade with options at $6.95 plus a flat fee of $1.25 per contract. There is a $100 annual administration fee. You can get this fee waived if you hold assets under $20,000, have an InvestCube account or manage to get another kind of promotion.

Other clients

If you don’t fall under any of these categories then the commissions are similar as most other major banks. Trading stocks is $9.95 with options at $9.95 plus a flat fee of $1.25 per contract. There is a $100 annual administration fee. You can get this fee waived if you hold assets under $20,000, have an InvestCube account, or manage to get another kind of promotion.

How does National Bank fees compare to competitors?

National Bank Direct Brokerage fees for stocks and ETF trading holds up well when you compare them to its peers. For a major bank it offers surprisingly competitive rates, especially if you fall into one of its specialized groups. It even beats out some independent brokerages like QTrade. If you’re an active ETF trader it may also beat out Questrade where it’s free to buy ETFs, but it costs to sell.

It's not the cheapest option, though. Check out the exact rates at some of its peers:

• TD Direct Investing charges $9.95 for stock and ETF trading

• RBC Direct Investing charges $9.95 to trade stocks and ETFs

• QTrade charges $8.95 to trade stocks and a large selection of free ETFs to trade with a minimum order of $1,000

• CIBC Investor’s Edge charges $6.95 to trade stocks and ETFs

• Questrade charges a $0.01/share starting at $4.95 and maxing out at $9.95. ETFs are free to buy and it costs the same price as stocks to sell.

• Wealthsimple charges $0 trading fees for stocks and ETFs