An article published in 'Le Temps' (a daily newspaper in French-speaking Switzerland) highlighted the significant differences in prices on online stock exchange platforms. Price differences in themselves are, in my opinion, not a problem in themselves: in a liberal economy, each company is fortunately free to set the prices that suit it and that it considers competitive. In any case, the market will punish it sooner or later. With regard to stock exchange platforms, we obviously cannot invoke a 'lack of consumer information' or any 'abuse': we are nevertheless addressing a public which, by definition and a priori, has a sufficient level of sophistication (training, curiosity, capacity for discernment, etc.) for it to make decisions with full knowledge of the facts and which has the capacity to make an informed choice.
What surprised me, however, was the absence of any reference to the tax risk that the use of stock exchange platforms abroad represents for Swiss residents: in fact, given the upheavals we are witnessing in the area of transparency and the exchange of information, but also the non-resolution and lack of clarity on this subject, what sane person would want to park their savings in an account abroad?
In Switzerland, we have witnessed the questioning of a half-century-old tax agreement by and with France. Are we really sure that we want to place our assets hostage, as a Swiss resident, in a French account? Not for me… and too bad if the fees are 4 times higher in Switzerland! I could, I am almost certain, buy a very large house for a price equivalent to a shed in Switzerland in a district of Baghdad. However, I do not do it…
Moreover, it is this argument that is at the basis of the incredible expansion of Swiss private banks for almost a century, let's not forget: the argument, for the first 'economic' refugees, has always been security-related and linked to instability (monetary, political and, yes, fiscal) of fear of the country of origin, much less a stated desire to evade taxes. It was only with the advent of the so-called 'left-wing' governments after the war that many Europeans said to themselves that tax savings were also very important, even if in a Europe in ashes and having experienced two world wars less than 25 years apart, the search for stability remained the main argument.
Yes, if Swiss banks (and stock exchange platforms) seem to be abusing the situation according to the author of the article, they have, let's recognize it, a competitive advantage. They would be very stupid not to take advantage of it as long as customers find it to their advantage.
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Thank you Armand for this reminder. Note that it is also useless to focus only on the price of transactions. There are many other hidden costs with the various service providers. In particular, for a dividend-oriented investor, therefore focused on the long term, the custody fees are much higher. We talk about these different fees here:
http://www.dividendes.ch/forum-2/le-bar/frais-de-courtage/
Yes, finally there are also “low cost” brokerage sites in Belgium and Luxembourg.
Hello Armand,
Thank you for this article, as well as for the comments from Jérôme and Hubert: This subject had been partly dealt with previously with the intervention of Jean Louis and Jérôme at the time, the Trading function of Postfinance was evaluated: I would add that at present,
– As indicated, it is necessary to take into account the uncertain taxation…. with retroactive effect.
– The risk that accounts will be blocked in neighbouring countries from a capital of Euro 100,000.- is real – All that for having wanted to earn a few francs on brokerage operations –
Personally, EURO ACCOUNT with POSTFINANCE - Regarding transaction security, it seems to me to be much more secure than those offered by certain trading providers:
– Read their contracts carefully
Postfinance Trading:
Easy operations, fast execution, quite a few analyses possible. - Available in euros, normal or prepaid credit cards in different currencies at a very competitive rate.
Thank you Armand for this article.
Two points nevertheless strike me:
1) What do you mean by "tax risk of using foreign stock exchange platforms for Swiss residents"? I am not concerned but it seems to me that many Swiss residents use Interactive Brokers, to name the best known, and are very satisfied with it.
2) Regarding brokerage fees you write "In any case, the market will punish it sooner or later". This would be true if there was real competition. Swissquote, with 50% of the market, can do what it wants, for example double the deposit fees, without risking losing many customers.
Regarding the blocking of funds at 100,000 euros, it is necessary to clarify and put things into perspective, because anything is being said on the subject.
The European Banking Union provides for a solidarity mechanism by paying into a European fund which would allow for the reimbursement of up to 100,000 euros per depositor in a bankrupt bank.
But, on the negative side, this fund does not yet exist and it seems that it will take some time for it to become operational and, above all, there is no guarantee that it will be sufficient in the event of a chain of bankruptcy... and what does the Confederation provide for in the event of the bankruptcy of a Swiss establishment?
Hum…
But above all, online brokers such as Bourse Direct, Boursorama etc., to speak only of the French, are subsidiaries, legally INDEPENDENT of their parent companies, deposit banks which could very possibly go bankrupt. Unduly transferring cash from the daughter to finance the mother constitutes the offence of misuse of corporate assets, punishable by five years in prison.
And above all, we remind you that brokers are only depositaries of their clients' securities, just as a supermarket is the depositary of a can dispenser that does not belong to it. Here too, using clients' wallets and not reimbursing them on demand constitutes fraud.
I have a hard time seeing Boursorama, Bourse Direct and their ilk going bankrupt. On the other hand, it seems to me that UBS shareholders and depositors were sweating a lot some time ago, right?
The question of the maximum amount to be deposited remains important, but it does not justify, in my opinion, the rogue practices which consist of taking more than 2000 CHF in fees and commissions per year for a portfolio of 75,000 CHF, even if it is doing well.
As regards Bourse Direct, a subsidiary of Viel et Compagnie, the liquidity of the securities accounts is with CALYION (CA-CIB), a subsidiary of Crédit Agricole.
What would happen to direct stock market clients if Crédit Agricole went bankrupt with regard to their cash and securities?
For the securities it seems to me that the bank does not have the right to touch them and they should be returned to the stock market client directly (in theory in practice there can always be fraud or loss of securities by the bank!).
For cash in securities accounts:
Given the new single resolution mechanism put in place by the banking union, it seems to me that it is up to the customers and shareholders of the banks to assume responsibility first.
However, in practice the money is stored at Crédit Agricole, direct stock market customers would perhaps be indirectly considered as CA customers, therefore having to assume the consequences and losing their liquidity.
In any case, I ask myself this question, but in any case I don't know of any French online broker who is not in contact with a risky French bank.
There are much cheaper options in Switzerland than banks, which are among the most thieving (and criminal) in the world.
Personally, I left UBS, which was robbing me with custody fees that amounted to pure and simple racketeering. I am currently with Strateo Geneva and PostFinance. The first charges me 100 francs per year and the second 0! At UBS, I was at more than 3000 francs. On top of that, you have to factor in much lower transaction fees. In addition, my transfer fees were reimbursed (free transactions) by Strateo.
Since the beginning of the crisis, UBS has increased its custody fees twice. I have informed my intermediary that I will no longer participate in their recovery, as my taxes have already been used for this!
I am also with Postfinance, free deposit fees, all account management free, free cards, free withdrawal fees at all ATMs worldwide, and the transaction fees for securities are still competitive... in short, there is no comparison.
My grandmother asked to withdraw her securities so as not to pay custody fees.
At the time it was done.
Question: Is this still possible?
Sometimes there are possibilities that we forget about because the intermediaries do not offer them to us.
But legally, I don't really see what would prevent the holding of the securities that one holds, whether in bearer or registered form.
In the case of registered securities, can we contact the shareholder register directly and request the physical transfer of the securities?
Has anyone here tried this?
Basically, there should be no reason why this could be opposed. However, it would become a bit complicated to manage, especially when you start buying shares abroad and you start to have a well-stocked portfolio. It would mean a lot to manage yourself, between contacts to transfer securities during purchases, sales, means of receiving dividends, etc. In short, it would be complicated, especially since custody fees at some financial intermediaries are free (Interactive Brokers or Postfinance for example).