Ridiculous fees charged by ASB securities

I'm relatively new to share trading, but i signed up to ASB securities and purchased about 10,500 worth of VTS on the ASX.

I then log into my account and find I have essentially been charged a margin of 3% for the currency conversion. How ridiculous is that?


On the rates and fees part of the website it says Aus trades cost 0.3% then down the bottom in small writing it says ASB MAY receive margin income on foreign exchange transactions - but gives no indication of the cost.

People trade currency all the time and pay like 2 pip or 3 dollarsish on a 10k transaction, no way in hell did i think i would incur a 300 dollar fee. Now this investment will have to outperform an NZ investment by 3% for me to get any worth from it.

Has anyone had a similar experience to this? How do you avoid these ridiculous fees if you wish to trade on international markets?

I have an AUD based FX account with them via ASB securities, only have to initially fund the account then can settle any buy/sell to the AUD account.
No matter who you are with, if you are transferring from NZ to AUD and back will cost you plenty, you are effectively trading the currency as well as the share to an extent

Make sure you don't pay again, probably you will hold the shares you bought for the long term, so in 10 years or more it won't look so bad.
If you do sell make sure the funds remain in $AU. The advice of KW sounds good to me. It is possible to arrange these things from here in NZ
, somewhere on the forum this has been discussed before. Don't believe anyone who says it can't, just find someone who knows how.
It does take a while with form filling in and certification.

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Originally Posted by KW

All banks charge ridiculous fees to convert currency. The only way to escape it is to use an Australian broker and open an Australian bank account. Then use OzForex or similar to transfer the funds into that bank account for settlement. Alternatively use a broker that has an FX platform where you can buy that currency first with a forex trade, then use the funds held on account to buy shares on an overseas market (eg. this is how you do it with Interactive Brokers). I keep telling people who wish to trade on the ASX to get on a plane and go to Australia to set up a brokerage and bank account - it would have cost you less for the flight than the $300 you just spent.

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Thanks for the response. Do you know of any brokers with an FX platform that charge reasonable fees? I've spent about half an hour on the phone with ASB securities arguing with them. Will definitely never use their service again. The website is far from transparent, the terms and conditions state you may be charged a margin on foreign currency transactions, but gives no indication of the charge.

I rung them two weeks ago inquiring about the fees of the currency conversion prior to investing and they said all I had to pay was brokerage. Then when I rung to complain they had the gall to say the margin is not a fee its a "margin". Surely such deceptive practices must be illegal (breach of Fair Trading Act, Negligent misstatement or something). I will definitely be sending in a written complaint

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Originally Posted by OldRider

Make sure you don't pay again, probably you will hold the shares you bought for the long term, so in 10 years or more it won't look so bad.
If you do sell make sure the funds remain in $AU. The advice of KW sounds good to me. It is possible to arrange these things from here in NZ
, somewhere on the forum this has been discussed before. Don't believe anyone who says it can't, just find someone who knows how.
It does take a while with form filling in and certification.

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Yeah i do intend to hold these funds for 10 years + so its not the end of the world. Still I'd rather know I was going to be charged 300 odd dollars before entering into the transaction. The lack of transparency and arrogance from the staff I spoke to have definitely left me fuming though. Hopefully others will see this thread and be warned of the cost before entering such transactions.

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Originally Posted by Jay

I have an AUD based FX account with them via ASB securities, only have to initially fund the account then can settle any buy/sell to the AUD account.

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Is it the same premise as opening a new fastsaver/on call savings account?

I've looked at opening one before but was unsure of what hoops I would have to jump through to open it.

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Originally Posted by Okebw

Is it the same premise as opening a new fastsaver/on call savings account?

I've looked at opening one before but was unsure of what hoops I would have to jump through to open it.

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If you already have an ASB Securities cash management account (NZD) then quite easy from memory.
Yes as KW says you will get stung the margin initially or when you want to tfr back, but generally if you are either holding for a longer period or trading in AUD then not too bad.

If you regularly trade outside of NZ then consider opening up an online multicurrency account with your broker. I left ASB Securities since like you chaps I was paying a lot for forex transactions on each trade both ways (buy then sell).

ANZ Securities offer OMC accounts for UK, USA, and Australia.

I made a single forex transaction when setting one up for trading on the asx, and will only need to make another when I withdraw or deposit more funds. Meanwhile I trade to my heart's content on both the asx and nzx without incurring a single forex fee.

Check it out.

0800 805777 option 3.


BC

Yes, I use Interactive Brokers for forex trading and have at times used them for CFDs and stock trading offshore. Their platform has good charting and allows short selling on some. At $6 per trade, it's much cheaper than the $29 per trade charged by ANZ, which if one is trading daily soon adds up.

I must look to use them again for trading stocks - thank you for the reminder and prompt, KW.

If you have an AUD FX account is it possible to have Aussie divies paid in to it or will they still automatically be converted into NZD in the CMA account?

With ASB securities the short answer is no, however you can receive the cheque and send it to them to place into your AUD CMA account.
Don't think you can with ANZ/Direct broking either.
I have accounts with both - 1 for trading and thoe for Long term under a trust.

You can easily use the various currencies via the ANZ OMC account.

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Originally Posted by Jay

With ASB securities the short answer is no, however you can receive the cheque and send it to them to place into your AUD CMA account.
Don't think you can with ANZ/Direct broking either.
I have accounts with both - 1 for trading and thoe for Long term under a trust.

You can easily use the various currencies via the ANZ OMC account.

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Just for the record, you can send your AUD denominated cheques to Direct Broking/ANZ and they deposit funds into your AUD denominated account.

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Originally Posted by Bobcat.

If you regularly trade outside of NZ then consider opening up an online multicurrency account with your broker. I left ASB Securities since like you chaps I was paying a lot for forex transactions on each trade both ways (buy then sell).

ANZ Securities offer OMC accounts for UK, USA, and Australia.

I made a single forex transaction when setting one up for trading on the asx, and will only need to make another when I withdraw or deposit more funds. Meanwhile I trade to my heart's content on both the asx and nzx without incurring a single forex fee.

Check it out.

0800 805777 option 3.


BC

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definitely agree with holding multi-currency accounts, but don't write ASB Securities off completely guys - they have accounts available in many currencies. No fees and they pay (some) interest

I have online accounts with both ASB and ANZ. I actually find ANZ online very slow to enter orders into both NZX and ASX, (up to 2 minutes at times), whereas ASB are virtually instantaneous consistently.

Slow entry cost me ~40 cents on one particular DIL trade a while back - was not happy

Slow entry can work the other way also and save you money when you bid and the price drops quickly like with Telecom because they haven't actioned your order you can drop your price accordingly.

Pretty stock answer from ASB when I asked for some transparency or guidance on how they charge or calculate margin rates. Effectively, they "May" charge anything if you read the small print, and until you get the confirmation note, you don't know what it is.

Dear Mr xxxxxx
"Thank you for your email.


When you trade on ASX market settling to your NZX Cash management account, at the time the order gets traded, the settlement amount is calculated with the FX rate at that time. Unfortunately, we are unable to provide you details on how our rates are calculated and what margins are charged on this.

There is an option to open a foreign currency account (FCA) available in our share trading account opening application. Should you wish to open a FCA, please call us on our broker line to enable us to identify you and get it set up for you. There are no accounts fees as such on the Foreign Currency Account except for International Money Transfer fee, Foreign Draft & cash withdrawal at a branch.

The procedure for transferring funds with a currency (FCA AUD to NZD) involved is to call us to enable us to identify you and as per your request, we will let you know what the indicative FX rate is (this changes every 30 seconds). If you are happy with the rate we can then proceed with the transfer. There are cut off times for FX currencies but we can lock the rate for the next business day. Alternatively, you can do an online FX transfer through internet banking.

If the value of your transaction is over NZD 100k, please call us to do the FX transfer. We have to call our Dealers to provide us a rate and we are able to shave the margin for you.

Please also note under our ASB Securities Terms & Conditions, section 12.3 its states that “ ASB Securities may at its absolute discretion charge you a commission or margin on all foreign exchange dealings” Also when you placing the order there is print stating “You should be aware that investment in securities involves risk including (but not limited to) currency and market fluctuation. ASB Securities is not liable for any loss or expense incurred as a result of any investment decision made.”


Should you have any further queries, please do not hesitate to contact us. "

You can transfer from an ASB A/c direct to your ASB FCA online no phoning required. Very simple.

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Originally Posted by KW

All banks charge ridiculous fees to convert currency. The only way to escape it is to use an Australian broker and open an Australian bank account. Then use OzForex or similar to transfer the funds into that bank account for settlement. Alternatively use a broker that has an FX platform where you can buy that currency first with a forex trade, then use the funds held on account to buy shares on an overseas market (eg. this is how you do it with Interactive Brokers). I keep telling people who wish to trade on the ASX to get on a plane and go to Australia to set up a brokerage and bank account - it would have cost you less for the flight than the $300 you just spent.

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Yep best advice. A little more paperwork but it could save you $100s. A must is the FX account next to your normal broker account. Just ask your securities broker for the facility.

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Originally Posted by KW

You will still get hit with the 3% fee in the initial transfer, plus any time you want to get the money out of the account. Also an ASB account doesnt help you when you want to use BPAY to pay for your SPP and rights issues in Australia. An Aussie bank account and broker is definitely the best way to go. Also the Comsec platform has much better features than ASB (which is quite appalling and totally useless) - I think access to the Comsec information, financials, analysis and stock screening tools is worth more than the cost of the flight alone. Well worth doing.

There are $99 one way fares on special at the moment. I usually manage to get a Melb-Chch return flight for $150 during one of the super special offers. Just sign up to the Jetstar and Air NZ emails and wait until a good offer comes along, then pop over for a few days.

OzForex is the best way to transfer funds between international banks, costs nothing if over $10,000 (or just $15 if under) and the forex rate is pretty darn close to wholesale.

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Commsec mobile and web based stuff is light years ahead of NZ. I dont know of any NZ based broker that can compare. The mobile app is great because it is so fast to check up on the market.

You need a Commsec account to access this so jump on a plane.

Forex rates in NZ need some political spotlight... when I first started banking AUD dividend cheques in the late 1990's or early 2000's, it was possible to do so at a spread of 0.8% at the National Bank (although other banks were more expensive). It has gradually crept up and the typical spread is now 3% (according to the averages on interest.co.nz). Given the frequency with which NZer's now purchase directly from overseas, this has to be silently costing NZ a lot of money.

I guess, given his history, John Key must be aware of the problem. But until it gets some real spotlight, there is no reason for banks to change their ways. Deserves a media-fest or some posturing in parliament to get a decent deal for the average NZer on forex imo.

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Originally Posted by Lizard

Forex rates in NZ need some political spotlight... when I first started banking AUD dividend cheques in the late 1990's or early 2000's, it was possible to do so at a spread of 0.8% at the National Bank (although other banks were more expensive). It has gradually crept up and the typical spread is now 3% (according to the averages on interest.co.nz). Given the frequency with which NZer's now purchase directly from overseas, this has to be silently costing NZ a lot of money.

I guess, given his history, John Key must be aware of the problem. But until it gets some real spotlight, there is no reason for banks to change their ways. Deserves a media-fest or some posturing in parliament to get a decent deal for the average NZer on forex imo.

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Maybe John Key helped cause the problem ????!!!!!
Well that's where he made his miillions after all.!!!!!

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Originally Posted by percy

Maybe John Key helped cause the problem ????!!!!!
Well that's where he made his miillions after all.!!!!!

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Percy I know that is tongue in cheek , he never worked in NZ with a bank that had retail customers/ FX trades, he was good enough not to have to rely on the travellers cheques coming through to turn a profit for the day .....
I doubt the govt would do much Liz this is a pretty competitive industry with many players in it .
If you are looking at doing a currency transfer I have dealt with this company . Rates very close to spot.

http://www.directfx.co.nz/About+Us/Contact+Us.html

Cheers S/L.

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Originally Posted by stoploss

Percy I know that is tongue in cheek , he never worked in NZ with a bank that had retail customers/ FX trades, he was good enough not to have to rely on the travellers cheques coming through to turn a profit for the day .....
I doubt the govt would do much Liz this is a pretty competitive industry with many players in it .
If you are looking at doing a currency transfer I have dealt with this company . Rates very close to spot.

http://www.directfx.co.nz/About+Us/Contact+Us.html

Cheers S/L.

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Hi Stoploss

Thanks for that. Does it end up cheaper overall than using ASB securities? Even if you convert with directfx, asb securities charges 1% to deposit foreign currency into your foreign currency account.

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Originally Posted by stoploss

Percy I know that is tongue in cheek , he never worked in NZ with a bank that had retail customers/ FX trades, he was good enough not to have to rely on the travellers cheques coming through to turn a profit for the day .....
I doubt the govt would do much Liz this is a pretty competitive industry with many players in it .
If you are looking at doing a currency transfer I have dealt with this company . Rates very close to spot.

http://www.directfx.co.nz/About+Us/Contact+Us.html

Cheers S/L.

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Caught out yet again.I can't get away with anything now days.!!!!!!!!!!!!! lol.

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Originally Posted by zb3

Hi Stoploss

Thanks for that. Does it end up cheaper overall than using ASB securities? Even if you convert with directfx, asb securities charges 1% to deposit foreign currency into your foreign currency account.

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Banks charging you money to deposit funds with them ....look at all the advertising for mortgages
at the moment , change bank bring your mortgage and they pay YOU upto 3K . I think the simplist thing to do
as mentioned by others set up a OMCA ac . Leave the Aud as Aud then you only get hit when you do the original trade .

Helpful thread thanks. I recently opened an account with ASB for shorter term trading and wasn't aware re FX fees;and have now added an $A account to solve this expense; took a couple of days but staff were helpful.

If opening Oz bank and CommSec accounts what do they require in terms of proof of residence? No Oz utility bills etc?

Sounds reasonable KW - I was able to set-up an HSBC account in the UK before arriving there. Could transfer funds but I seem to remember I had to get hold of the cash card from the branch (pre Internet banking days). Like the sound of a cheap trip across the Tasman but wouldn't want to go 2200kms and get blanked at the help desk on a technicality :p .

A year or two back, you could open an Australian bank account from NZ for investment purposes - either the CBA (via ASB securities) or the ANZ. Actually, from memory, the ANZ could be applied for on-line via anz.com (australian web-site) and then the ANZ in NZ would help with verification of identity. ANZ securities (or Direct Broking as it was then) would help with set-up.

The account from the ANZ comes with a $5/month charge. The account that ASB were arranging with CBA was free from all accounts. I got an eft-pos card with my ANZ account and I think, could have requested a cheque-book or visa (could be handy!) if I'd wanted one. The account works fine for getting Australian dividends deposited, although posting them in to ANZ securities is okay too, as they don't charge for banking.

The only reason all my divs aren't going to the ANZ account is that I buy on scrip and have found that the different purchases often don't end up linked up at the registry, so I the multiplicity of registry on-line log-ins needed and trying to locate share purchases via them all to re-direct just got a bit troublesome. I should probably go back and try again at some stage.

I also am not certain if it gets more difficult to set up an overseas company under a trust/company structure.