According to a Reuters report on Monday, Stakeshop Pty Ltd will begin offering AUD$3 ($2) brokerage services in Australia. They are listing stocks on local exchanges. In the country’s industry, the arrival of a discounted broker may shake things up.
“There hasn’t been a major shift in the industry since brokerages began using electronic trading platforms in the late 1990s and early 2000s. I think this is an important moment 25 years later,” Matt Leibowitz, Stakeshop’s Founder and CEO, added.
The firm, supported by Tiger Global, has been chosen by broker-dealer Finclear. They will list Australian equities on the Australian Stock Exchange (ASX). Trading in ASX-listed securities will be CHESS-sponsored, which means traders will trade under their own name and receive stock delivery.
It will quickly become Australia’s most competitive broker. It has the lowest-cost brokerage services in the market with its discounted business plan.
For years, CommSec, a Commonwealth Bank of Australia affiliate, has controlled the Australian equity brokerage market.
The commission-free disrupter
Stakeshop already has a presence in Australia. In 2017, it began offering trading services for Australian and New Zealand investors on the US stock market.
It continued to provide brokerage services without charging commissions and made money by charging 0.7% when traders moved funds between the Australian and US dollars.
According to Leibowitz, the platform has 360,000 users and monthly trading volumes of $1 billion.
The firm will initially provide commission-free services until the end of this year for trading Australian dollars, after which it will charge a fee of $3 per transaction. This will be far cheaper than CommSec’s minimum charge of AUDS$10.
“I believe this model will propel us to the top,” said Leibowitz. In fact, this is a tried-and-true approach that startups like Robinhood, BUX, and FreeTrade are using to disrupt financial markets in the United States and Europe.