Online Trading US Market

[Gaz]

Would appreciate some assistance on how to go about it.

Are there brokers in NZ who provide this facility?

Thanks.

[Steve]

Welcome to ST, Gaz.

I would recommend that you use the search function to find the applicable thread as this topic has been well covered...

[Mr_Market]

Cheaper to open an account with a US online broker such as TD-Ameritrade. You have to fill out a couple of simple forms for the US tax department but apart from that it's a breeze.

[Flying Goat]

quote:Originally posted by Mr_Market

Cheaper to open an account with a US online broker such as TD-Ameritrade. You have to fill out a couple of simple forms for the US tax department but apart from that it's a breeze.

Does anyone know how to get access to UK/JP shares via online DIY style broker?

Thanks
FG

[zyreon]

agree with aspex, CFDs are probably the easiest way to fo it, there are a few local providers now too so you don't have to worry about transfering cash overseas etc.

If you're afraid of the leverage factor or if you consider it not something you wish to include in your portfolio the simple solution is to structure your transactions so that the effective exposure is equivalent to using the cash in your trading account to buy the shares outright.

e.g.
XYZ shares trade at $50
you have 10,000
you want the equivalent of a cash position in XYZ
margin requirement = 10%

buy 10,000/50 = 200 shares(CFDs)
margin requirement = (10,000*0.10) = 1000

1% movement in share price = x% ROC
portfolio leverage factor = position value/account equity

=10,000/10,000 = 1
x% ROC = leverage factor * gross % change in price
=1*1% =1%
therefore goal is achieved.


ROC calculation for maximum purchase to illustrate:
max purchase = account equity/margin requirement
=10,000/0.10=100,000
leverage factor = position value/account equity
=100,000/10,000=10
ROC|1% price change = leverage factor * 1%
=10*1%=10%

Thus to illustrate the negative aspects, a 1% fall in price will only take 1% off of your account equity for the first portfolio, and will take 10% off your account equity in the portfolio with more leverage.

So in theory you can use CFDs for trading or investing.

[though this ignores costs, which would probably defeat the purpose, generally a long CFD position costs x% in interest e.g. about 5% +/- so you would have a hurdle rate of 5% (+ any other transaction costs), in terms of tax it should be deductable though... and the cost of carry might be reduced by dividends, if any]

[Steve]

Very well demonstrated, Zyreon

Has this helped you Gaz?

[Flying Goat]

quote:Originally posted by Mr_Market

Cheaper to open an account with a US online broker such as TD-Ameritrade. You have to fill out a couple of simple forms for the US tax department but apart from that it's a breeze.

Hi MrMarket,

Think things have changed recently as have just been in touch with TD Ameritrade and received this message from them:

Michael,

Please know that TD AMERITRADE is currently unable to open new accounts for clients with mailing and/or physical addresses in New Zealand. This is a result of a thorough legal review of established regulations in your country. Clients with existing accounts cannot open additional accounts but existing accounts are not affected. We appreciate your interest in opening an account and wish you the best in your investment needs.

Holly H.
New Accounts, TD AMERITRADE
Division of TD AMERITRADE, Inc.


Original Message Excluded:
------------------------

[Mr_Market]

That's an interesting turn of events FG. I wonder what they found in their 'legal review of established regulations'? Has the govt here done something to restrict foreign investment?

The only recent law changes I am aware of are around taxation of offshore investments, but I don't see how that would cause a foereign broker to get cold feet.

I will contact them to try and find out more details.

[Mr_Market]

FG, I got a prompt but terse reply from Ameritrade:

"Due to the change in federal policies, TD AMERITRADE no longer open accounts for residents of some countries. Existing clients are not affected by the change so this is why you did not receive a notification. This will not affect your ability to trade and request funds. Thanks."

Thats' a bit different to the reply you got which stated that it was due to OUR regulations. In fact it appears that New Zealand has been singled out by THEIR "federal policies"? Is this retaliation for something that our govt. has done?

This apparent snub of New Zealand investors by the US concerns me greatly. I will be investigating further.

[Mr_Market]

More from Ameritrade:

"This is a result of a thorough legal review of established regulations in your country. You may contact the agency that deals with foreign investment in your country to inquire on this issue. The Office of Foreign Assets Control (OFAC) under the Department of the Treasury is responsible for overseeing U.S. economic sanctions placed against countries and individuals. U.S. economic sanctions are unique to each country. As a company operating in the United States, TD AMERITRADE is also subject to these sanctions that limit our ability to do business with governments, entities and persons covered by the various sanctions."