Davy and Goodbody to increase cost of online trading

Investors who trade infrequently will see the cost of holding an online trading account increase by as much as 150 per cent from next year, as both Davy and Goodbody Stockbrokers are set to raise their charges.

Davy, which operates the Davy Select platform, is streamlining how it charges fees to its execution-only customers who use the platform to hold investments and perform trades. The move will hit clients who have little or no transaction activity, as they will see the annual cost of holding an account rise from about €80 to about €200, an increase of some 150 per cent; conversely, those who trade frequently may end up paying less.

According to Davy, the increase in costs is being introduced “to better reflect the reporting and compliance costs that apply regardless of activity levels”.

“Clients with more than one transaction per quarter will likely benefit from a reduction, whereas clients who have little or no transaction activity on their accounts will likely incur an increase,” a spokesman said, adding that the changes will not affect advisory services, pension accounts or services delivered through intermediaries.

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Currently, execution-only users of the platform may pay an annual nominee fee of €45, or a quarterly fee of €20, in addition to transaction-based commission on trades.

Quarterly fee

From next year, however, Davy will replace both the nominee and quarterly fees with a standard execution service fee of €50 each quarter, or €200 a year, less any commission incurred by the customer for the quarter. This means, for example, that if the commission incurred on an account during the quarter is €50 or greater, then the execution service fee will not apply, and the customer will see a reduction.

If, however, the account holder for example doesn’t trade during the quarter, and pays commission of less than €50, then they will pay the €50 quarterly fee. Davy said the new execution service fee will be paid quarterly in arrears, will apply from January 7th, and will first be collected in April.

Based on a commission charge of 0.5 per cent on shares and exchange-traded funds (ETFs), the increase means that someone would need to trade €10,000 every three months to avoid the quarterly fee.

Davy is not the only broker to push up the cost of execution-only trading. It is understood that Goodbody Stockbrokers is also to increase its annual account charge by 67 per cent, up from €60 to €100.