The Kiwi Wealth-owned Hatch is set to face some stiff competition as Australian-based discount US stock-trading platform Stake is poised to launch in NZ later this year.
Stake offers brokerage-free access to the US share market with foreign exchange fees as low as 30 basis points (bps); Hatch has per-trade fees between US$3 to US$8 and 50 bps on currency exchange.
Both Hatch and Stake use the same US broker, DriveWealth, to trade.
Stake founder, Matthew Leibowitz, said the NZ version would mark the company’s first formal foray outside of Australia, where it set up two years ago – although the group is also eyeing the UK for a launch next year.
Leibowitz said was beta-testing the platform with a group of about 35 investors ahead of a full-scale roll-out in the third quarter.
“We’ve had a lot of demand from NZ investors, which we’re responding to,” he said.
The NZ Stake platform would also be built on updated technology giving investors faster and more efficient access to US stocks, Leibowitz said.
“The NZ market will benefit from the two years of learnings we’ve had in Australia,” he said. “Investors can fund their accounts through an app after a digital sign-up process that takes only about five minutes – and start trading almost immediately.”
Since inception, Stake has transacted close to US$200 million on behalf of Australian investors.
However, Leibowitz said Stake was targeting experienced investors who wanted to invest directly in US stocks without incurring the “exorbitant” costs currently charged by traditional brokers.
“We’re built for investors who want to trade-up, not those looking to buy fractional shares in Tesla,” he said.
By contrast, Hatch launched last year as the first NZ provider to fractional share ownership.
Leibowitz previously worked in the US for Netherlands-based high-frequency trading firm, Optiver, with responsibilities covering the group’s index derivative products.
Australian and NZ direct investors have traditionally had to pay a high price to access the US share market, which remained the biggest and most important in the world.
“We just want to strip out the costs and give investors a good user experience,” he said.
Stake had engaged NZ law firm Minter Ellison Rudd Watts to scope out the firm’s local legal requirements.
According to Leibowitz, Stake would probably not have to sign up on the Financial Services Provider Register (FSPR) to operate in NZ.
He said Stake acts as the “facilitator” of the share transactions with no legal custodial responsibilities for investor money.
“We never actually touch investors money,” Leibowitz said. “If Stake were to go down, then investors would still have an account with DriveWealth.”
Stake is regulated by the Australian Financial Services Commission (ASIC) as an authorised representative of South African-headquartered wealth business, Sanlam. Sanlam holds an Australian Financial Services Licence.
Macquarie and its subsidiary, OFX, provide cash management and foreign exchange services, respectively, to Stake.
Last week local online fund distribution firm, Sharesies, also formally earned its NZ share broking credentials in a move flagged by the NZX in April. Sharesies is slated to open the broking shop in July in an offer that includes fractional share trading.
In April, the NZX also revealed Asian firm, Tiger Financial, was also on track to open a NZ share-brokerage
Mark Peterson, NZX chief, said at the time: “Sharesies is focused on a new area of the New Zealand retail investor market, and Tiger Financial has a large Asian retail investor client base.”