A Montreal online brokerage firm wants to give Canadian online trading enthusiasts more access to stocks, all for the low price of $19.95.
Disnat, the online brokerage division of Desjardins Securities, launched its direct-access brokerage service, DisnatDirect, only two weeks ago but is already making acquisitions to increase its market share. Yves Neron, VP & head of online trading division at Disnat, said Thursday that DisnatDirect has acquired the customer base of SwiftTrade Securities Inc.’s Internet division.
Neron said that the company decided to launch a new trading service despite of a less-than-favourable stock market climate because of a simple policy known to every trader: “”buy low, sell high.””
“”What we saw last year was a business opportunity. Even if the market was terrible we still would have invested because we know that markets are cyclical,”” Neron said. “”So while we don’t predict a market turnaround tomorrow, we fully expect it to come back.””
Neron said that the deal with SwiftTrade is not an acquisition of a business division. DisnatDirect has purchased SwiftTrade’s Internet customer base and now has to essentially convince them of the quality of its products. They’ll try to woo them with two software platforms developed exclusively for the Canadian trader, he said.
DDpro is a platform for the very active online trader. While Neron said DisnatDirect is generally looking for a trader who does more than one trade a week, the ideal DDpro customer performs over 125 transactions a month. At that level of trading activity access to the platform becomes free. The software allows for instant trades, streams up-to-the-minute market data and has a trailing stop orders feature. The trailing stop orders feature is meant to protect profits and curtail losses by allowing the user to set an automatic sell price, the software will automatically trade the stock should the market price fall below the sell price.
DDweb is the software platform for a less active trader. Web-based and offering a simple interface DDweb offers unlimited streaming quotes, news and portfolio, as well as technical analytical tools.
SwiftTrade president Peter Beck said the company decided to get out of Internet trading altogether a few months ago. SwiftTrade is best at servicing customers through working trade floors, he said, and while the online division brought in $1 million in annual revenues it was not enough to justify building the necessary support infrastructure around the division.
He said that while the world of Internet trading was not something SwiftTrade was interested at all anymore it doesn’t mean there’s no opportunity for success in that space.
“”What we decided was that it was best left in the hands of somebody who would be focused exclusively on online trading,”” he said. “” I think in the right hands that business can be quite successful. But those would not be our hands.””
What Neron his hoping SwiftTrade’s former clients will notice — other than the ease of use and the reliability of its software — will be the difference in the transaction prices on trades. Because DisnatDirect is an almost exclusively web-based business, Neron said they are able to significantly lower the transaction costs for their customers, being able to offer trades that would cost between $200 and $300 at $19.95.
“”It is precisely because we are not a typical telephone brokerage firm, we can cut a lot of costs out,”” he said. “”We do offer full telephone support for our clients if they require customer service. But the trade off is that if they’d like to place a trade over the phone there’s a $50 fee for that.””
The majority of SwiftTrade’s online customers are based in Ontario and British Columbia. The acquisition of the customer base is a strategic move for the Montreal-based company who aims to become a truly pan-Canadian company. DisnatDirect reports that so far its offerings have been received enthusiastically. In the first week of the company’s existence over 500 people downloaded its software.