Canadian investors have been enjoying the great influx of new fintech companies introducing innovative solutions for self-directed and hands-off investors over the years.
Many big banks have since introduced a few competing discount brokerages so that they can retain their relevance in the changing landscape. However, many of the platforms struggled to compete with the commission-free trades offered by the disruptive fintech companies.
National Bank Direct Brokerage is one such platform that has recently revamped its fee structure to introduce a much-needed change in the situation.
My National Bank Direct Brokerage review will discuss a trading platform by a big bank that has been around for a while but has recently made several changes to give it a competitive edge in the industry.
Commission-Free Trading Platform
Enjoy commission-free trading with National Bank Direct Brokerage, with the first-ever platform in Canada offering $0 trading fees on stocks and ETFs.
- $0 commission on stock and ETF trades
- Offers a wide range of accounts and investment products
- Owned and operated by a reputable bank
- Annual inactivity fee increases costs
- Long customer service wait times
- Poor portfolio analysis tools
What Is National Bank Direct Brokerage?
National Bank Direct Brokerage is a securities trading platform offering you access to self-directed trading for a wide range of securities. It is a trading platform division of National Bank Financial Inc., and it is a part of the National Bank, the sixth-biggest traditional bank operating in Canada.
The platform’s website does not indicate when it was established, but it only began revamping itself two years ago at writing by launching the most competitive online brokerage fee structure in the Canadian market.
National Bank Direct Brokerage has effectively become the only direct brokerage firm affiliated with a major Canadian financial institution to completely abolish commissions for all online trades on Canadian and US-listed securities.
This section of my National Bank Direct Brokerage review will cover the account types that you can open through the brokerage. The online trading platform offers plenty of options for you to consider in terms of the account types you can open through it. Here are the account types you can open using the platform:
- Tax-Free Savings Account (TFSA)
- Registered Retirement Savings Plan (RRSP)
- Registered Retirement Income Fund (RRIF)
- Registered Education Savings Plan (RESP)
- Spousal RRSP
- Spousal RRIF
- Individual Pension Plan
- Locked-In Retirement Account (LIRA)
- Locked-In Retirement Savings Plan (LRSP)
- Life Income Fund (LIF)
- Non-registered accounts (cash, margin, and short selling)
- Estate plan accounts
- Investment club accounts
Businesses and organizations also have the option to open investment accounts with options that include partnership, association, sole proprietorship, and trust accounts.
National Bank Direct Brokerage allows you to use the platform to get easy access to trade several types of securities and investments for your portfolio, including:
- Equity securities (stocks)
- Exchange-Traded Funds (ETFs)
- Mutual Funds
- Guaranteed Investment Certificates (GICs)
- Exchange-Traded Debentures
- Linked notes
The wide option of securities you can invest in using the platform easily brings National Bank Direct Brokerage up among the top trading platforms in Canada.
National Bank Direct Brokerage Platform
This section of my National Bank Direct Brokerage review will discuss the platform and the user experience it offers. The bank has technically entered the disruptive fintech space like many other trading platforms.
NBDB is effectively only available as a web-based desktop application. The brokerage does not have any mobile apps or desktop apps as of yet.
The web-based platform provides you with an interface that offers you reasonable technical and fundamental analysis tools. However, the analysis tools are not as adept as you can find with many of the other trading platforms.
However, it does allow you to easily set up watchlists, alerts, real-time market data, and more. You can get access to Recognia if you need to get investment ideas or for technical analysis.
I would expect the bank to invest in revamping its platform and improve its onboarding for new customers. Though it seems less likely to happen since the change introduced by NBDB effectively slashed the brokerage platform’s revenues.
This section of my National Bank Direct Brokerage review will cover the various costs associated with using the trading platform that you can expect to incur.
National Bank Direct Brokerage Trading Fees
National Bank Direct Brokerage became the first Canadian brokerage platform to introduce $0 commissions on all trades for US and Canada-listed stocks and ETFs. However, trading using the platform is not entirely free.
NBDB does not charge commissions for trading stocks and ETFs through the platform. However, options trading comes with a cost of $1.25 per trade, and you have to make a trade of a minimum of $6.25 for every trade and a maximum of $19.95 if the transaction value is less than $2,000.
You can also use the platform to purchase most mutual fund products without commissions, but you will have to pay the costs of the Management Expense Ratio (MER) that are inbuilt with mutual funds. Most mutual fund transactions also require a minimum $1,000 purchase or higher.
You can buy and sell Exchange-Traded Debentures with $0 commissions using the platform.
If you intend to use the traditional phone-based system to place orders, you can expect to pay additional costs. The minimum commission for placing a telephone order for trading stocks, ETFs, or mutual funds through the platform is $44.95.
National Bank Direct Brokerage Account Fees
The fee structure change introduced by National Bank Direct Brokerage eliminates most of the trading fees you can expect to pay for using the platform, but there are considerable costs you can incur while using the platform in terms of its account fees.
- Any withdrawals from RRSPs, RRIFs, or LIFs will constitute a $50 charge
- The platform will charge $100 to reimburse any excess contributions
- The platform charges $100 each year for account administration fees if your account balance is less than $20,000 or you do not meet its requirements of being 30 or younger and make at least five trades for the trading year between June 1 to May 31.
- Any account transfer to other institutions incurs a $150 charge
- Paper statements cost $6 every quarter
- NSF checks cost $45 each
- Estate settlement charges amount to $200 per estate
- Gains and loss reports come with a $50 charge for every item
- Any duplicate statements or confirmations cost $10 per item
National Bank Direct Brokerage also offers decent interest rates for margin accounts. The interest rates get better for margin accounts with higher balances.
|Debit Balance in Margin Account||CAD Interest Rate||USD Interest Rate|
|$0 – $9,999||3.85%||4.50%|
|$10,000 – $99,999||3.75%||4.50%|
|$100,000 or higher||2.75%||4.25%|
Is National Bank Direct Brokerage Safe And Legit?
National Bank Direct Brokerage is undoubtedly a legitimate platform. Being a division of National Bank Financial Inc., it is also a member of the Canadian Investor Protection Fund (CIPF) and the Investment Industry Regulatory Organization of Canada (IIROC).
Being a member of CIPF automatically provides any clients that have an account with National Bank Direct Brokerage protection for their assets of up to $1 million in case the fund becomes insolvent.
However, that is unlikely to occur. Being a part of the National Bank of Canada, NBDB enjoys the backing of one of the most significant Canadian financial institutions. The National Bank of Canada was established in 1859 and seems unlikely to go anywhere.
National Bank Direct Brokerage never fared well among the top brokerage platforms in Canada, even though it has been around for a while. Several reasons have contributed to its low ranking. Unfortunately, the user experience and customer support issues are the primary factors here.
The brokerage was already struggling with meeting the demands for customer service requests well before it changed its fee structure to a $0 commission trading model.
Its consistently low Globe and Mail rankings by Rob Carrick year after year, along with comments about the platform’s customer service on the internet, are proof of that.
NBDB was far behind most of its peers in terms of shifting to a digital setup. Until last year, the platform chose to stick with a paper-and-mail-it setup.
Shifting to a digital setup drastically improved its customer onboarding processes, but not without issues. Many customers, existing and new, are facing challenges accessing the platform or opening new accounts.
This section of my National Bank Direct Brokerage review will cover some of the most frequently asked questions about the platform.
A. Unfortunately, no. Unlike most of its peers offering online brokerages, NBDB does not have one and has yet to announce any plans for a mobile app.
Q. Do I have to be a client at the National Bank of Canada to open an account with National Bank Direct Brokerage?
A. No, you do not. Opening an account with National Bank Direct Brokerage if you are an existing client of the National Bank can be convenient, but it is not necessary.
A. As of now, the platform does not allow customers to purchase cryptocurrencies. However, there are online trading platforms that offer Canadians the opportunity to invest in these decentralized digital assets.
National Bank Direct Brokerage Alternatives
The cheapest way to buy stocks are from discount brokers. My favourite trading platforms in Canada that don’t have inactivity fees, and have excellent trading platforms, are:
|Wealthsimple Trade||$50 Signup Bonus|
|Questrade||$50 Free Stock Trades|
To learn more, check out my full breakdown of the best trading platforms in Canada here.
National Bank Direct Brokerage has been around for a while, but its recent change to deliver on the promise of commission-free trades through the platform is a gamechanger for many investors.
It is awesome to see another Big Bank-led trading platform reinvent itself to enter the competitive fintech market for Canadian investors.
As of now, no other platform can beat National Bank Direct Brokerage in terms of costs. However, my recommendation for a trading platform is not limited to how little you have to spend to trade using its services.
NBDB still works with an outdated platform with no mobile app, and it retains a low Globe and Mail ranking. The platform undoubtedly has the potential to become the best trading platform, but it might not be there quite just yet.
Wealthsimple Trade is our preferred brokerage for most Canadian investors due to its excellent platform and track record for an ideal overall experience. It was also the first platform to introduce commission-free trades for stocks and ETFs in Canada.
You can check out my full Wealthsimple Trade review to learn more about the platform.