In our latest Finance Belgium article Marion Van Der Donkt reveals all the tricks of the trade on the Belgian Stock Exchange.
Following the example of many trading platforms on the Belgian market, Belfius recently launched its Re=Bel trading app, followed by ING and its Self Invest platform. The offer is expanding on the Belgian market, but how to choose the right app to take your first steps on the stock market?
Recently, the stock market has become the domain of eager young investors looking for a return for their money. They are well aware that with galloping inflation and the almost zero interest rates that banks offer for savings accounts, building their wealth must (partially) be filtered through investment. In reality, since the first confinement the number of new investors has increased sharply in Belgium.
According to figures from the FSMA (the Belgian financial market supervisory authority), 45,000 new investors took to the stock market in the first quarter of 2020. The start of 2021 was also marked by the arrival of 26,000 new budding traders. Compared to the first quarter of 2019, this is a remarkable increase of more than 50%. There remains the question of which bank to choose to start your journey on the stock market. For many investors – young and old – they have little or no taste for opening a traditional bank ‘classic securities account at a high price.
So, what exactly are they looking for? Put simply, the lowest possible transaction fees and a high-performance digital offer. In this context, it is not surprising to see the flourishing of trading apps from traditional players: KBC has had its Bolero trading platform for a long time, but was recently joined by Re=Bel from Belfius and more recently by Self Invest from ING.
These apps challenge pure online players such as Bux, DeGiro, Keytrade, Lynx, MeDirect and Saxo Bank (formerly BinckBank). But how do you sift through an increasingly varied offer? Comparing rates is of course the first thing to do, but, even at this early stage, the investor must know his profile. What is the size of the orders he wants to place? How often does he plan to trade? Is he a (hyper)active investor or does he prefer a buy and hold strategy? On which exchanges does he want to be active? Does he only want to buy European and American stocks or is he interested in exotic markets? Does he want to confine himself to equities and bonds, or is he interested in trackers, ETFs or more complex and more speculative products?
Next on the to-do list is to ask the question about the essential additional services – or not: real-time prices, financial information, collection of taxes at source, etc. It is important to make the right choice of platform from the start, because once a securities account has been opened, transferring its positions to another bank can represent a significant cost. For example, external transfer fees reach €150 per line at MeDirect and €42.35 at Keytrade, but at Lynx there are no transfer fees.
Regarding transaction fees, trading platforms apply different pricing systems. Some brokers operate by package and by tranches: for example Keytrade and Bolero charge €7.5 per order and per tranche of €2,500 on Euronext Brussels, whereas Re=Bel from Belfius asks for only €3 up to €2,500. ING has slashed prices with a percentage system (0.35%) and a minimum of €1 per order.
In reality, ING’s Self Invest and Belfius’ Re=Bel tend to attract mainly investors who place ‘small’ orders on the stock market. They do this because the higher the amount of the order, the less competitive these two platforms are. So, placing an order of €6,000 will cost €15 at Re=Bel (this is the flat rate for orders whose amount is between €2,500 and €10,000) and €21 at Self Invest (0.35%). At the competition for example, this identical order will cost €15 at Bolero and €12 at MeDirect. We should also mention creative offers such as the Zero Order system at Bux, which allows you to invest without commission. The broker claims that this type of order is and will remain free for all European stocks and ETFs. It is executed at the end of the trading day, between 5 p.m. and 6 p.m.
But the comparison work does not stop there. The investor should be aware of transaction costs on other markets. Keytrade charges almost $30 for the smallest transaction on the American markets. At ING Self Invest, the fee is 0.5% with a minimum of €1. It should be noted that to these transaction costs is added the Belgian Stock Exchange Tax, a tax collected on each purchase and sale of shares. The normal rate for shares is 0.35% of the amount of the transaction, with a ceiling of €1,600. Please note that at Bux, which is a Dutch broker, this tax is not currently levied. Bux prefers to send its Belgian resident customers an overview by e-mail of all the transactions carried out, the amount to be paid and the procedure for paying the tax.
Attention, Belgian residents who hold a securities account with a foreign broker must report, in his tax return, the holding of an account abroad. Unlike traditional banks, online brokers do not normally charge custody fees. ING Self Invest is an exception in the trading landscape, with custody fees, per line and per month, of 0.0242% (€0.3025 minimum). Very recently, MeDirect updated its platform and now provides free access to real-time quotes for stocks and ETFs. In addition to transaction prices, access to stock market prices is definitely an element to be taken into consideration. They are generally available free of charge with a 15-minute time lag.
But for some investors, it is already too late! At Keytrade and Saxo Bank, real-time quotes are paid for, while the other platforms generally offer this service free of charge for Euronext, or even for the American markets. Paid extensions are available (individually or in packs) for specific markets.