Sydney startup Stake will launch its $0 brokerage US share trading service within the next few days, giving ordinary Australians a low-cost opportunity to invest in brands like Amazon, Facebook and Tesla.
The fintech first revealed in June its plans for the new service but the details hadn’t been settled at the time. Now founders Dan Silver and Matt Leibowitz have revealed to Business Insider that the only user fee would be 70 basis points on the foreign exchange rate when loading up and withdrawing from the US dollar trading account.
Stake had also previously flagged intentions to introduce paid services on top of the basic product, but Leibowitz now confirmed that only the “no brokerage” service would go live to start with.
“We’ll start with zero [brokerage]. Make it very vanilla and very clean – less is more in our books,” he told Business Insider.
“And we’ll learn from what the user wants. It’s hard to work out what [paid] value they want until they’re actually using the site and interacting with it.”
While public access is anticipated in the coming days, some users are already trading on the zero brokerage platform.
“We’ve given our early adopters – those who signed up [their interest] before July – access to zero [brokerage] already… And the top referrers on our waiting list have also been given the option.”
Stake doesn’t hold any customer funds itself but rather has packaged together the local account provider, foreign exchange merchant and the US trading platform to allow a customer access to all three in one place — to make starting up and transactions easier.
The local startup has managed to get a head start on US millennial share trading app Robinhood, which has previously publicised Australian expansion plans but has not yet launched locally.
Leibowitz said it’s possible to offer zero brokerage for US share trading because of the competitive market of securities exchanges in that country.
“Unlike here in Australia, where there is one dominant stock exchange, in the USA, there are 12 main stock exchanges where stocks can trade… These exchanges are competing for every trade,” he said on a blog post last month.
“To increase volume on their platform, US exchanges offer extremely low costs of execution and even throw in incentives for larger players to trade there. Some people actually get paid to trade on an exchange.”
He added that a company such as Amazon is listed on the NASDAQ but can “actually be traded on all of the exchanges”.
The Stake site has both EFTs and company stocks on offer, with brands like Tesla, Google, Berkshire Hathaway and Facebook on display for purchase.
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, Leibowitz and chief technology officer Jon Abitz, along with minor investments from family and friends.
Leibowitz told Business Insider that, even though “a lot of people have requested” it, the startup is not actively looking to raise further capital from institutional investors.
“We’ve been more focused on the product than [capital] raising. Obviously if the opportunity came up with the right partner – if the product was better with the partner on board and the person provided mentorship so we could grow and develop… then we’d entertain it.”