Online Trading: Differences Between Swiss Brokers

Recent years have seen a trend towards direct online trading by investors in Switzerland. But many investors use securities brokers which are not the best match for their investment needs.

Here, moneyland.ch provides useful information about important differences between individual Swiss online trading platforms run by licensed Swiss banks.

1. Brokerage and custody costs

Costs vary broadly between Swiss online trading platforms – with some brokers charging up to ten times as much as others for certain services. Costs which have a significant impact on investment include the brokerage fees charged when you buy or sell stocks, ETFs, funds, bonds and other securities, and custodial fees charged for the maintenance of your securities. Brokerage fees are only charged when you make trades. Custodial fees are charged if you hold securities, whether or not you make trades.

Tip: Compare all relevant costs based on your specific trading needs. The interactive trading comparison on moneyland.ch accounts for both brokerage fees and custodial fees based on your specific trading requirements.

2. Exchange fees

In addition to the brokerage fees charged by brokers, you may also be charged exchange fees. Most Swiss online brokers pass on exchange fees to users in addition to brokerage fees. It is worth noting though, that exchange fees are relatively low in relation to other trading costs – at least in the case of major exchanges.

Cornèrtrader does not pass on exchange fees – these are covered by brokerage fees. Credit Suisse brokerage fees cover SIX Swiss Exchange fees, but it passes on fees charged by other exchanges.

Tip: Ask your broker whether or not additional exchange fees apply to trades on the securities exchanges which you use, and what the exact fees are.

3. Custody transfer fees

Migrating from one custodian bank to another can be difficult because most Swiss brokers charge high fees for transferring securities like shares or bonds. Depending on the securities you hold and the online trading platform you use, these custody transfer fees can be as high as several hundred francs per title. Some brokers charge a lower 50 francs or 35 francs.

Good to know: Some online trading platforms cover the cost of transferring securities from your former custodian when you sign up as a new customer. You can find more information on custody transfer fees here.

Tip: Before changing brokers, find out whether your prospective new broker covers the costs of transferring your securities. In some cases, having your old broker sell your securities and then repurchasing the same securities through your new broker can work out cheaper than transferring.

4. Order types

All Swiss online trading platforms let you place market orders. But if you need more complex order types, your options are more limited. For example, trailing stop orders and one cancels other (OCO) orders are only offered by relatively few brokers.

You can find more information about the kinds of orders offered by different Swiss online trading platforms here.

Tip: Use the order types filters in the online trading platform comparison to compare Swiss brokers based on the order types they offer.

5. Partial fills

Depending on the kind of orders you use and the size of your order, it is possible that the broker cannot completely fill your order in one shot. This can impact the brokerage fees charged for trades. Some brokers, like Raiffeisen, charge their full brokerage fee for each partial fill.

Other brokers do not charge separate brokerage fees for partial fills when the full order can be filled within one trading day. This regimen is used by Swissquote, PostFinance, TradeDirect and the Zürcher Kantonalbank.

Credit Suisse charges just one brokerage fee when an order is filled over up to 7 days. Migros Bank charges one brokerage fee for orders filled over up to 5 days.

Bank Cler, BKB-EasyTrading, Cornèrtrader and money-net always charge just one brokerage fee per order, even when multiple partial fills are required.

Tip: Get informed about possible costs related to partial fills – particularly if you use limit orders. Adding a fill or kill instruction to orders helps you avoid partial fills.

6. Functionality and user experience

Functions and the user interfaces vary broadly between online trading platforms. While professional investors often require a broad range of functions, complex trading platforms are likely to confuse those new to online trading.

Among others, the online platforms from Swissquote and Saxo Bank are widely used. Both of these banks license their online trading platforms to other brokers.

Tip: Open free demo accounts if possible, in order to test the functionality and user interfaces of online trading platforms. The online trading comparison on moneyland.ch clearly shows which brokers offer free demo accounts.

7. Accessible securities and exchanges

Tip: Get informed about the securities which you can access through different brokers. The online trading comparison on moneyland.ch lets you filter online trading platforms based on the exchanges you want to trade on and the kinds of assets you want to invest in.

8. Pre-market and after-market trading

Most Swiss brokers do not offer pre-market and after-market trading outside of standard exchange trading hours. But some do offer limited pre-market and after-market trading.

Cornèrtarder offers pre-market trading on US exchanges. PostFinance offers pre-market and after-market trading for specific warrants (Off-Ex Trading from SIX). Swissquote offers pre-market trading for some specific markets over the telephone.

Tip: If you are interested in pre-market or after-market trading outside of exchange trading hours, take this into account when choosing a broker. Note that options are very limited.

9. OTC securities

Not all securities are listed on stock exchanges. Many securities – particularly shares and bonds issued by small companies – are traded over the counter (OTC). Some Swiss brokers like TradeDirect let you access OTC securities.

Many other Swiss brokers let you trade a limited selection of OTC securities. Swissquote, for example, states that OTC trading is possible – with the exception of pink sheets and penny stocks. Some brokers (like VermögensZentrum and the Aargauische Kantonalbank) have higher brokerage fees for OTC trades than for trades of listed stocks.

Tip: If you plan to invest in OTC securities, get informed about whether or not brokers give you access to those securities.

10. Custody services for OTC securities

Not all brokers provide custody services for OTC securities purchased directly rather than through the broker. This affects you if, for example, you buy bonds, shares or participation certificates directly from issuing companies or through crowdfunding platforms or third-party brokers.

Many of the Swiss brokers behind online trading platforms let you transfer and deposit third-party securities into your custody account (custodial fees apply). But typically, not all securities are eligible. PostFinance accepts securities in electronic form, but not physical securities certificates. Other brokers like Migros Bank accept both electronic and physical certificates.

Other brokers, like Cornèrtrader, do not let you transfer OTC securities from third parties into your custody account.

Tip: If you want to hold OTC securities from third parties in your custody account, get informed about whether or not brokers offer this service.

11. Segregated vs. non-segregated assets

Brokers may hold shares in street name, meaning your shares are held in a collective custody account in the broker’s name. You hold a claim against your broker for the shares you invest in, but you do not actually own the shares and do not have voting rights in the underlying companies. When your securities are segregated, on the other hand, they are held in an individual custody account in your name and you have voting and ownership rights.

Most of the Swiss brokers behind online trading platforms hold securities in street name. You as the investor are not the legal owner of the securities.

Examples of brokers which hold securities in street name include: Aargauische Kantonalbank, Migros Bank, money-net, PostFinance and the Zürcher Kantonalbank.

A minority of brokers, like TradeDirect, use segregated custody accounts. Credit Suisse gives the option of segregated custody for an additional fee. At Bank Cler and the Basler Kantonalbank, whether segregated custody or street name custody is used depends on the specific security in question.

Tip: If direct ownership and voting rights are important to you, get informed about which brokers offer segregated custody.

12. Tax statements

The cost of tax statements varies between brokers.

A few brokers do not charge fees for basic standard tax statements. These brokers include the Aargauische Kantonalbank, Cornèrtrader (digital statements), Swissquote and VermögensZentrum.

Other brokers charge a flat fee (100 francs, for example) or charge fees based on the number of security titles held. Some brokers charge up to hundreds of francs for a tax statement.

Tip: Get informed about the cost of tax statements in advance, especially if you hold a lot of different stocks. Tax statement fees are clearly shown on product information pages in the online trading platform comparison.

More on this topic:
Interactive Swiss online trading platform comparison