The direct-from-NZ US share-trading market is set to become an increasingly-crowded space as two new providers line up to compete with Kiwi Wealth-owned Hatch.
Both Australian firm, Stake, and local youth-oriented fund platform, Sharesies, have flagged the launch of US share-trading services for NZ investors in the near term.
Following a regulatory hiccup, Stake, which was planning to open in NZ last year should be up-and-running here in weeks. Stake – registered as the NZ company Stakeshop – ran afoul of Financial Markets Authority (FMA) for implying in website disclosures that it was regulated in NZ.
In a release, the FMA says it “was aware of potentially misleading statements on Stakeshop’s website regarding the extent of its regulation in New Zealand. Last week the FMA raised its concerns with Stakeshop and we understand its website has since been updated”.
“The FMA has sought further information from Stakeshop about its operations to understand how the New Zealand regulatory framework might apply, including the potential need for the firm to be registered on the FSPR and licensed. We note that Stakeshop is not based in New Zealand and that its model is not something we have seen before.”
Stake has since amended website wording for NZ investors, clarifying any published information is “not intended to constitute financial advice for the purposes of the Financial Advisers Act 2008 or the Financial Markets Conduct Act 2013, or an invitation or an offer to buy or sell any financial product or security”.
Last year, Stake founder, Matt Leibowitz, told Investment News NZ that the firm probably wouldn’t have to sign up on the Financial Services Provider Register (FSPR) to operate in NZ.
Leibowitz 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 at the time. “If Stake were to go down, then investors would still have an account with [US broker] 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.
Meanwhile, Sharesies, which added NZ share broking last year on top of its original fund-selling services, also told members last week of plans to add US equities to its product suite.
“While we can’t give you an exact launch date just yet, we’ll be sharing more details with you as we go, and we’re really keen to get your feedback along the way,” the Sharesies website says.
The platform, part-owned by TradeMe, is understood to be seeking further capital following an equity-raising late last year.
Sharesies claims 150,000 members, up from 60,000 last year.
Hatch has also seen huge growth over the last few months, according to general manager, Kristen Lunman.
Lunman said Hatch now has about 36,000 investors using the platform, which pioneered the direct US share trading route in NZ, significantly undercutting traditional broker fees.
She said trading had exploded over March and April as market volatility hit record highs.
“It came as a bit of a surprise to us,” Lunman said.
The rise in trading volume – about double normal levels in March – has seen Hatch staff numbers swell to 20 with four new employees added in one day last week.
Hatch also lowered its fees slightly earlier in April after negotiating better rates from underlying suppliers (which include DriveWealth) based on higher volumes.