One advantage of buying overseas is the absence of stamp duty in many markets. In the Irish market buyers pay one 1 per cent stamp duty on the cost of their shares. In the UK the stamp duty charge is just half a percentage point while in the US and in most European markets there is no stamp duty charge.
Commissions charged by brokers for buying overseas shares vary and customers should check before they place their orders. Charges will be higher where the broker offers an advice-based service rather than an execution-only service. To buy over the Internet, clients have to open an account with an Internet broker and most US and UK Internet brokers require clients need to have an address in the US or UK respectively in order to open an account.
On overseas markets execution-only Fexco only buys shares in the UK, US and Canada for clients. The brokers say they have not seen demand from Irish investors for other markets and that the cost of dealing in other markets would be significantly more expensive because of the different settlement systems.
To buy in the US market Fexco requires clients to spend a minimum of £3,000. It charges commission of 1 one per cent, or £30 on a £3,000 deal.
In addition the US broker or market carrying out the deal will levy a charge, usually between $50 and $75, according to Fexco. Charges are around the same for dealing in the Canadian market.
For deals in the UK market Fexco charges are the same as for dealing in Irish shares - one 1 per cent on the first £5,000 and 0.35 per cent on additional amounts with a minimum charge of £12.50. There is no minimum deal size for UK deals. In all its markets the brokers now have an administration charge: £6 on Irish deals, £6 sterling in UK deals and $6 on US deals. There is no custodian charge.
Advice-based brokers Dolmen Butler Briscoe applies the same charges for buying shares on the UK and on other overseas markets as it does for buying Irish shares. Its charges are 1.65 per cent on the first €12,500, 1 per cent on the next €12,000 and 0.5 per cent on the balance. It has a minimum commission change charge of €63.50 and an administration charge of €35 on European deals.
At Davy there is a minimum charge of £20 for share deals in the UK and the US markets. This rises to £30 if clients require a share certificate. The commission charge structure is 1.65 per cent on the first £10,000, 1 per cent on the next £10,000 and 0.5 per cent on the additional amount. In addition there is a 0.35 per cent overseas charge for deals in the New York Stock Exchange.
Commission on deals on European or Asian markets depends on the charges levied by brokers in those markets which Davy passes on to its clients.
Because in most share deals in overseas markets share certificates are not issued, there is a custodian system for holding share ownership details and operating the transfer of ownership. Clients will often face an extra charge for this service.
Fexco does not levy an extra change. Dolmen Butler Briscoe said this cost is absorbed in the pricing of the share deals. Davy has a €40 custodian charge for deals in all overseas markets.
