Australian fintech Stake will offer $0 brokerage for trading US shares

Stake’s Dan Silver (COO), Matt Leibowitz (CEO), Jon Abitz (CTO). (Image: Sibesh Dangol)

Correction: the method of charging for foreign exchange transactions has been corrected since the original version.

Sydney startup Stake has announced that it will offer trading of US equities with zero brokerage fees from August, giving Australians cheap access to invest in companies such as Apple, Amazon and Facebook.

The local player has beaten the highly anticipated Australian launch of US startup Robinhood, which offers a similar product.

“We’ve been able to come to an agreement with our US broker dealer that allows us to offer zero commission trading from that time,” the company said in an email to customers last week.

“On the business side, zero brokerage helps with our marketing and our message. It’s going to allow millions of Australians to access the world of investment opportunity more simply and more affordably than ever before.”

In lieu of brokerage fees, Stake will generate revenue from a foreign exchange margin levied on contributions into and withdrawals out of the user’s US dollar trading account.

“We haven’t yet finalised the FX fee — it’s currently 0.7% of the spot rate but will increase once we go to zero brokerage. It will be in line with banks and we’ll keep customers and market well informed,” Stake founder and chief operating office Dan Silver told Business Insider.

The company also told customers it may later introduce paid services on top of the basic zero-brokerage product.

“Right now, we don’t know exactly what they will look like, but our customers will lead us to a clearer vision of where we need to go,” its email read.

Silver told Business Insider that generally Stake has shares on offer for companies with a market capitalisation of more than $US1 billion and share price exceeding $US1. The website currently shows brands like Apple, Berkshire Hathaway, Google, Tesla and Alibaba available to buy.

There are currently more than 3,000 publicly listed shares and ETFs on the Stake platform but the trade-off for the zero-brokerage deal signed with its US supplier seems to be that its catalogue will be shrunk.

“Once we go to zero brokerage, we will reduce the number of available securities but it will still be a significant number. This will help us lower our wholesale costs and pass savings onto the customers. We’ll look to offer a premium service down the track to offer a broader range of securities too,” said Silver.

Stake is a representative of South African finance firm Sanlam Private Wealth, which holds the Australian Financial Services licence. The startup is owned by Silver, chief executive Matt Leibowitz and chief technology officer Jon Abitz, along with minor investments from family and friends.