Hello everyone!

 

In this article, I will show you what to consider in choosing the best securities account, bank or brokerage company.

It is important to note that I do not consider foreign currency or other derivative aspects. I only consider aspects of stock trading because SpEFEKTETO focuses on them.

 

The main aspects are:

 

• How safe is the company background?
Stable banking/financial background
Origin
Supervision/ financial penalty
• What kind of investor protection guarantee applies to your money?
• What is the cost of the securities account?
Account management fee
Inactivity fee
Withdrawal fee
Transaction costs
Dividend Credit fee
Transfer costs
• What kind of services are available through your account?
Minimum account size
Optional sub-accounts
Use of online interface
Customer service in your languages
• What kind of stock exchanges and stocks are available at the given provider?
• What is the number of products, stocks, and funds available?

 

How safe is the company background?

The first option you should definitely look at is your own bank, as you already have experience with them. You can also consider them as a benchmark, unless you have opened your account only 2 weeks ago. They must have a banking background or/and be present in several countries. The bigger the better.

It is important to check where the company is registered and what supervision oversees its operation. It’s best if it’s been registered in your own country. Not the best sign if it is in a tax haven. The older the company has been, the better. Check any of the company’s sanctions, financial penalties! Check the reputation!

 

What kind of investor protection guarantee applies to your money?

Investor protection is about: Investors are protected by the fact that the company they invest in cannot steal or misappropriate their money. Control is different in all countries, get information from reliable sources. In Hungary, BEVA and the MNB. In the USA, U.S. Securities and Exchange Commission (SEC), Securities Investor Protection Corporation (SIPC) created under the Securities Investor Protection Act (SIPA) of 1970.

Other insurances can range from a few hundred thousand dollars up to thirty million dollars. It is important that you thoroughly examine the numbers.

Because, for example, in Hungary, if the conditions for indemnification are met, BEVA pays compensation up to a maximum of one hundred thousand euros (about 30 million forints) per investor. The conversion of the Euro-denominated limit to the HUF shall be made at the MNB’s foreign exchange rate on the day of the liquidation. The amount of compensation is one hundred percent to one million forints, BUT over one million forints is one million forints and the ninety percent of the remaining amount.

 

What is the cost of the securities account?

Account management fee
The fee charged by the bank for account management, which is usually charged at fixed intervals (monthly, quarterly, yearly) regardless of the size of the account. Question is it worth it? The answer is yes, if other costs, such as transaction costs are lower than at other providers. You have to pay for using your money, I note this fee does not exist in countless countries, but in Hungary it does.

I have no precise information about the Far East and other markets, so if you are reading this article from China, find out and ask for information at the selected bank or brokerage firm. And do not forget about late charges in the case of a negative balance.

Inactivity fee
In fact, this is exactly the opposite of the above, which does not exist at Hungarian service providers. In my opinion, this is even less sympathetic. You have to pay because you do not use your account. It’s a bit absurd, isn’t it? For me, this is definitely the most disadvantageous in terms of my trading time and the number of transactions I have done in a year.

Withdrawal fee
The cost of withdrawing money. This is also an important factor because when time comes and you want to withdraw your money from the broker it’s matters how much you have to pay for withdrawing money. This cost is also completely variable, there are companies where you can withdraw your money for free once a month. It’s best if the brokerage firm can transfer your money to any of your accounts. The cost of transferring to the same currency accounts is lower.

Transaction costs
Costs arising from the purchase or sale of securities. If you carry out a significant number of transactions in a year, this is one of the most important aspects of your choice. For example, daily trading (day trade). The range is quite wide from 0% to 1%. This cost may vary depending on the stock market. In addition, there is also a minimum fee that determines the minimum amount you should invest.

Dividend Credit Fee
There is generally no fee for crediting dividends, but if it is, you should also look at the dividend payouts of foreign companies. There may be a fee for crediting dividends from a foreign company only.

Transfer and other costs
This includes costs other than the above. For example, transfer costs between two sub-accounts. Costs of other tradable products.

 

What kind of services are available through your account?

Minimum account size
It’s a less important thing, but it’s good if you know. The larger limit is often a positive sign, as many dubious brokerage firms usually entice customers by offering low or zero minimum investable amounts. The average is typically three to five thousand dollars.

Optional sub-accounts
Can I open a sub-account at my service provider? Unfortunately there are service providers where you can’t. For example, this is an important aspect to me because I keep swingtrade and longtrade amounts on a separate account.
There are service providers where everyone can have only one account. But there is a brokerage firm where you can have more than one sub-account, but this requires a bill of 100,000 euros.
The most common is that you can open a sub-account, but the brokerage firm will charge you an extra fee per account.

Use of online interface
It is a subjective thing. It is important that if you do the trading by yourself, then you must choose a system that is good to use, and easy to understand. Of course, it must have all the tools you need and the system must be stable.
Available on all platforms: Mac, iOS, PC, Android or just a web interface?

Real-time data
You typically have to pay for real-time data. Otherwise, you will see 15 minutes of delayed data.

Customer service in your languages
I think this doesn’t need to be explained. Exception if you speak English well.

 

What kind of stock exchanges and stocks are available at the given provider?

The answer is the simplest, the more the better. Listed below are the most important ones.

Australian Securities Exchange
Deutsche Börse (Frankfurt Floor)
Deutsche Börse (XETRA)
Euronext Amsterdam, Brussels, Lisbon, Paris
Hong Kong Exchanges
Johannesburg Stock Exchange
Kanada (TSE, TSX)
London Stock Exchange
Milan Stock Exchange
OMX Copenhagen
OMX Helsinki
OMX Stockholm
Oslo Stock Exchange
Prague Stock Exchange
SIX Swiss Exchange
USA (NASDAQ, NYSE, AMEX, ARCA)
Vienna Stock Exchange
Warsaw Stock Exchange

 

What is the number of products, stocks, and funds available?

The same thing. The more the better. For example, at my service provider There are a total of 27,000 products available on 29 stock exchanges, but this is not always enough!

Foreign Shares, Precious metals, Future markets, CFD trading, FX market, FX options, FX futures and forward, Investment funds, ETFs, Government securities.

 

Summary

Taking all of these into consideration, there is no perfect brokerage company for everyone. But taking into account the above qualities and features, everyone can choose the one that best suits them. Listed below are some of them.

• ERSTE (Austria)
• InteractiveBrokers (USA)
• Saxo Bank (Denmark)
• LYNX (Netherlands)
• robinhood (USA)

 

Choose wisely!
PS. Although I did not consider any foreign exchange trading aspects, please do not forget the following! Choose No Dealing Desk broker and variable spread.