Stake lifts the bar for trading US stocks and ETFs

It was during a three-year stint in Chicago, working for market maker Optiver, that Matt Leibowitz realised Australians were getting gouged buying international equities through the brokerages owned by the big banks and the customer experience was woeful.

“During my years in the US I was amazed at the breadth of product offered to US investors at a compelling price,” said Mr Leibowitz, who was a lawyer at Allens before joining Optiver in 2007. “I was shocked at the breadth and costs in Australia: we paid more and got less.”

Returning to Australia four years ago, Mr Leibowitz started to sense an opportunity to start a fintech that would provide access to US equities and various exchange traded funds (ETFs) at a much lower cost and with an intuitive and accessible e-commerce style customer experience.

The culmination of his thinking is Stake, an online broker which allows customers to buy 2200 stocks or exchange traded funds (ETFs), including well-known names such as Tesla, Google, Apple, Amazon, Facebook, Alibaba, Netflix, Berkshire Hathaway, Atlassian and Twitter. The ETFs provide access to various commodities, currencies or trends such as market volatility. A further 900 stocks and ETFs will be added soon.

Creating a shop for international shares isn’t as simple as an Amazon or eBay given the complexities of financial services regulation. Yet Stake has cemented relationships with US broker-dealer DriveWealth, foreign exchange provider OFX (formerly OzForex) and Macquarie, which supplies Stake’s customers with cash management accounts to facilitate trading.

“We’ve partnered with like-minded companies and repackaged it back into one seamless platform which is a whole lot cheaper, end to end,” Mr Leibowitz said.

Fully digitised

Stake has also digitised the whole investment process, including the infamous W8BEN forms for the US tax office, which normally take days for clients to get through.

A trade through Stake costs a minimum of $US5.99 then US2¢ per share. It reckons a $US15,000 trade would cost $149.95 through National Australia Bank, $238 through ANZ or Westpac and $82 through CommSec – but $18.49 via Stake. The start-up is targeting the market of 30- to 45-year-olds as they start to think harder about their superannuation.

The high costs of trading international stocks through the banks reflects big fees and additional costs charged through the FX spread which can be between 0.5 per cent and 1 per cent of the dollar amount of each trade. OFX is providing Stake’s clients with a FX rate much closer to that provided to institutions.


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