How To Start Brokerage Firm – Can an Italian open a trading account with a Dutch broker and buy American stocks on the German stock exchange?
For example, an Italian can open a trading account in Degiro with a Dutch broker. It can buy shares of Apple stock, a US company traded on the Frankfurt Stock Exchange. Here you go. Check out this handy chart and follow the coloring.
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A trading account is an online account that allows you to trade with investments on online exchanges. You can think of it as a digital bank account that allows you to buy and hold securities such as stocks, ETFs or bonds.
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I’m sure you have a local bank account. Is that right? Opening a foreign bank account is difficult. It’s more expensive and complicated to use at home, right? As usual, banks do not provide good service to foreign nationals.
The good news is that trading accounts at brokerage offices can be international. There are many ways to open a trading account with a foreign broker account. For Europeans, it is possible to open a brokerage account in another EU country. Alternatively, you can open accounts in the US or with a Swiss broker.
At least that’s what the rules say. The problem is that brokers do not always offer trading accounts to foreign clients. Don’t ask us why. We don’t understand it either, but some brokers provide cross-border services and some don’t. Here are some examples:
It seems confusing, we admit. How to find out if there is a broker? This is when you filter the brokers available to you. Try our broker finder to get brokers available in your country!
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In conclusion, you can open a trading account with an international brokerage, but it depends on the broker whether they offer services in your country or not.
Let’s move on. One advantage of having an international brokerage account is access to foreign markets. Let’s explore it.
A broker’s job is to connect you with the stock markets. In other words, if you want to buy a stock, the broker will buy it for you in the market. If you want to buy Turkish stocks, your broker must have access to the Istanbul Stock Exchange.
Simply put, the broker decides how many markets to offer. Funny or not, many brokers offer only a small market access. It can be very strange. Even mid-level brokers can skip Japanese stocks, for example, the third largest stock market after the NYSE and NASDAQ.
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It is expensive for a broker to register with each stock market. However, it is difficult to understand what drives brokers when choosing markets. It’s not their size or international client footprint. Here are some examples:
Your broker may provide many markets, but not only online, but directly through the broker. You have to call them and it will usually cost more. For this reason, only online brokers are considered when testing and comparing trading accounts.
So how do you know what stock markets a broker has? Take a look at our comparison table to get an overview.
When we say markets, we usually mean stock exchanges. However, there is a similar theme to other products. For example, in Forex currency pairs, the broker determines how many “markets” they offer. You always have major currencies called majors, but minors are not given and depend on brokers. For forex trading, you will need a great forex broker. Here are the best forex brokers in 2019 list.
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Take a deep breath, because we are now moving into an advanced section. We told brokers that they have to register with stock exchanges, which is expensive, so they don’t provide much market. However, brokers have come up with a clever trick. Some of them provide access to markets through CFDs. Great, and that’s what it is, right? A CFD is a bet on the price of a stock going up or down. By offering this rate to clients, brokers can provide access to all markets without registering on stock exchanges.
CFDs are complex instruments and there is a high risk of losing money quickly due to leverage. Between 74-89% of retail investors lose money on their accounts when trading CFDs. If you want to learn more, here are some CFD trading tips.
For now, remember that if a broker promises to enter a certain market, check whether it is an exchange or a CFD.
In addition to CFDs, you should know about another trick of the broker. Some brokers advertise country-by-country market access, for example: US stocks. If they do, they will allow you to sell shares there, but probably not through the main stock exchange. The most popular stock exchanges in the US are NYSE and NASDAQ. However, some brokers provide access to BATS (Better Alternative Trading System). BATS is a fluid and reliable exchange with more or less the same companies. It is cheaper than the main exchanges. It’s not just a mainstream market. So keep an eye out for exchanges.
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We have already covered several additional topics. Read only if you can continue to the next chapter. Otherwise, proceed to the final questions.
Now hang on, because there’s one last part of the international investment solution. Some stocks are listed on several exchanges. For example, IBM, an American company, is not only listed on the New York Stock Exchange, but also on the London Stock Exchange of Great Britain. This is called cross-listing.
The benefit? You will have access to international stocks in the market that you can access through your trading account with the broker of your choice. For example, you can buy IBM shares if you only have access to the London Stock Exchange. If you are a professional, you can also choose the market with the lowest commission.
You’ve completed this section, congratulations! International investment can be a piece of cake. The next section is about why to use an international broker.
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Don’t forget, you can check which broker is available in your country here or by finding my broker.
Well, all of that may not be true. And we’re not Cosmo. But you have to give it; There are many advantages to having an international broker account. Let’s look at them in more detail.
International brokers are usually cheaper than their domestic competitors. This of course depends on the specific international and domestic broker, but the larger, international players are usually cheaper due to scale exposure.
We often hear that the user experience of the platform is not that important. You probably think so too. Sorry, we have to disagree.
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Having better functionality can give you enhanced trading insights and ideas, a better overview of your portfolio and trading costs, or more security during registration. The quality of the platform is important and as a trend the big players are better than the domestic platforms.
Research and analysis is an interesting topic. We must give it; Some domestic players do quality proprietary research, and domestic analytics tools can beat the big names. However, the general rule is that bigger players can get bigger research teams, and this generally leads to higher quality research and super alerts.
We’ve covered the Cosmo points, but there are other aspects to consider before moving all your money to your new trading account with an international broker.
Many people start investing in the domestic market through their trading account. You fill up your car at a local oil company, your cousin tells you where the manufacturer works, etc. Domestic companies are great, of course, but if you look further abroad, Disney, Google, Louis Vuitton, etc. You can reach world-class companies such as Access to the US, UK, German, Japanese, French and Chinese markets is an advantage that the company does not provide. most domestic brokers.
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When it comes to our product portfolio, it’s not just about countries. International brokers also often have access to a wider variety of products. You can trade more in FX or bonds at an international player. International players can provide a one stop shop for all your trading and investment needs.
On the other hand, you may want to check if an international broker provides access to your domestic market. Maybe not.
Of course, these are just trends. While you can find a great domestic broker, some international players don’t deliver on the promise of a broad product portfolio.
When it comes to trading account security, the advantage of an international broker is not at all clear.
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If you are not from a country with a high credit rating, you may be better off, eg: Protecting US Investors. On the other hand, some say that it would be very difficult to get your money back from a US government agency in Europe if disaster strikes. Both points are valid, and security requires additional thought. Both the security of the broker and the security of the broker’s country must be considered. By country security we mean the regulatory country in which the broker operates (and not necessarily the country in which the brokerage is established).
As you can see, these factors are very dependent
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