Question about trading ASX shares

[bohdan]

Greetings,
A question regarding trading ASX shares... I've traded plenty on the NZX (via asb internet service) and apparently I can trade ASX using ASB also - but, is there anything else I need to setup in order to actually do so? E.g. I have a CSN / FIN in NZ, do I need something similar for Ozzy? That kind of thing.

Thanks
Kevin.

[tobo]

I trade on ASX with ASB Securities.

Yes, to make it practical you want to ask them to set up an Ausi Dollar account for you.

But the other thing you need is to sign up with ASB for them (or Commonwealth Securities actually) to be your "CHESS Sponsor".

Weird wording for a simple idea.
In Australia, instead of you just having one CSN-type number, you get a different number for each stock if you own them direct.
You avoid all that by ASB acting for you and they just give you one ID number for all your ASX stocks, called your HIN (Holder's ID No.).
Operating this way is mandatory with ASB if you want to trade on the internet.

So call them up and tell 'em you want to trade ASX and you want a AUD foreign Currency Account, and to set up the CHESS sponsorship agreement.

btw, they are a bit funny about precise wording of the AUD account. It is not a Cash Management Account in Ausi $, but is simply an AUD account. You replenish it by putting $ in your NZD Cash Management Account and then ringing them to do the exchange. I tend to leave $ in that account from when I sell, and then buy with that money, not transfering it back and forth NZD-AUD...
If you have insufficient AUD when a buy goes through it will still proceed if there in enough in your NZD CMM. They will ring you either then or when settlent is due and require an AUD purchase at the exchange rate relevant at that moment. They don't like doing it that way because you have no choice but to accept the FX rate. (As if you get any choice when you are buying AUD in advance. Their logic is that if the FX rate is realy bad, you could simply decide not to proceed, and not buy the shares you had your heart set on after all. I think this is bogus because I wouldn't be buying stocks if the make-or-break was so slim it depended on exchange rate being 'just so')

[Lego_Man]

What are the fees etc on having an AUD account?

Also what margin do they take on the FX deal?

[POSSUM THE CAT]

Lego Man if you go to Direct Broking's web site there is a reasonable explanation of settling in NZ dollar costs and if you use the Macquarie Cash Management Trust that is associated with Direct Broking there are advantages in dealing with Australian rights offers etc as most let you pay by B/Pay and this can be done up to the day before closing without the hassle of having to get foreign currency cheques or drafts and get them there by post by the appropiate date. You can also have an Austraian cheque book if you want it as well There are no fees for this except for cheque duty for the australian govt. if you take the cheque book offer pays reasonable interest as well

[tobo]

On the one hand -
Possum's suggestion including a cheque book certainay avoids $22 fee each time to get a AUD cheque for Rights Issues and the like
On the other hand -
most transactions are not Rights Issues but just trading through your (internet) broker.

Here is correspondence I had last week with Direct Broking, and their answers. It pretty much put me off them, as it seems easier to use ASB Securities which you can have an AUD account direct with.

1) In order to trade ASX equities, your website states I must have an AUD bank account in an AUSTRALIAN bank.

I currently have an AUD account with ASB which I use to trade with ASB Securities.
Direct Broking answer:
1) You do not need to have an AUD bank account to settle ASX trades. If you settle a trade in New Zealand currency, an FX conversion would take place – see http://www.directbroking.co.nz/direc...rates.aspx#Fm5 for the relevant charges regarding this.
[and I checked this - it says exchange rate is mid-rate less 1.5% , versus ASB more like under 1%)


2) Your FAQ further makes a statement about settlement transfers - that "These are costly for you"

It seems almost as if you are trying to warn applicants off using this approach.

Can I confirm that I have understood correctly that you are warning applicants that this approach is expensive, and that I should check all the banks in Australia to ensure I obtain the best rates. (Essentially you are brokers, not bankers, and have no involvement with the FX aspect of FCY payments.)
Direct Broking answer:
2) The statement regarding the costs of inter-bank settlements is to notify you that all charges incurred by Direct Broking for that process will be passed on, and the amount can vary between banks.

3) if I do not have an AUD account with you, how do you get paid when I make a purchase. That is, what do I do? (especially when I may not notice my trade has occured until you advise me, perhaps because of a low bid that I may have had in the queue for weeks). Eg. do I manually do an electronic cash transfer from my AUD account 3 days after the trade? Or, heaven forbid, write a physical cheque?
Direct Broking answer:
3) If you wish to settle trades in AUD, and do not wish to set up an AUD account with us, you would need to pay for the order in advance. You can do this by either mailing in a cheque, or crediting our account. The number is 013006 837770859 and the SWIFT is ANZBNZ22. You can contact Lynn Hassell at Direct Broking for more information on this.
[What, pay in ADVANCE? I may change my mind at the last minute an not buy something after all, or the price might be moving before my eyes, or I might put a order in that sits for 2 weeks before being traded]

Please confirm my understanding that I will not be able to use that for Direct Broking trades, and that an ASB account will not work for you, and that I will have to set up an AUD account not with ASB but with CBA or ANZ etc in Australia.
Direct Broking did not answer this. (I guess I made the mistake of not calling it 'question no. 4')

Being used to ASB systems, maybe I think Direct Broking sounds more complicated than it actually is, and it is just a perception thing. But something I do know is : if you having trouble understanding something, it's a good clue that you might not make a quality decision.

Just my interpretation, Tobo

[dragonz]

I use Dirct Broking for my NZ trades. For lowest fees ($30) it is best to set up a call account.

Australian trades are expensive and you really need to set up a Mcquarie Account with them otherwise your paying about $50 per $1000 in the NZ/AUS conversion per trade. Its a rip off really and an extra revenue stream for Direct Broking but ASB does it as well.

Far better to set up a seperate account with CMC for your Australian trades.
@ $20 per trade compared to $40 with Direct. As I make up to 10 trades a week I have found this to be the most cost efficient way.

I find Direct Broking an excellant broking firm but just a bit expensive for trading on the Australian exchange for a fledgling day trader such as myself.

[POSSUM THE CAT]

Dragonz how big are your trades as I only $29.00 and as for foreign exchange I get a better deal of them than a bank as a bank has a fee on top of the exchange rate margin.

[POSSUM THE CAT]

Tobo ASB would say exactly the same thing if you want to deal from another bank IE ANZ (Just that at the moment you have ASB accounts) Most on line brokers require you have enough money in your account to pay for the trade Or they charge you a different brokerage rate. Some have a minimum brokerage for this sort of Trade of $90.00

[dragonz]

see here for Direct Broking rates

https://www.directbroking.co.nz/Dire.../ourrates.aspx



and here for CMC rates


http://www.cmcmarkets.com.au/stockbr...fees/index.jsp

[POSSUM THE CAT]

Dragonz You want to compare Apples with Apples you are comparing The online CMC rates with the telephone rates from Direct Broking On line rates ffor DB are $29.00 up to $30000.00 Also Check the Possible Interest difference in the call accounts depending on the balances