According to a report from Reuters on Monday, Stakeshop Pty Ltd is looking to launch its 3 AUD brokerage services in Australia by listing the stocks that are already listed on the local exchanges. The entry of this discounted broker might disrupt the existing brokerage in the country.
The Chief Executive Officer and Founder of Stakeshop, Matt Leibowitz, said, “For me, there hasn’t been a material change in the industry since the inception of electronic brokerage in the early 2000s…But, I took this moment as a big moment 25 years after.”
The Startup supported by Tiger Global has been tapped by Finclear, a broker-dealer for listing Australian stocks. The trading of stocks listed on ASX will be sponsored by CHESS which means traders will be able to execute trades under their own name and get the delivery of stocks.
The firm will offer the cheapest brokerage services when launched in the Australian market with the new discounted model. The Australian market is being dominated for years by CommSec, which is a subsidiary of the Commonwealth Bank of Australia.
The Commission-Free Disrupter
The presence of Stakeshop in the Australian market has been established for a while now. The firm started offering trading services in the country in 2017 by offering stocks listed in the United States to Australian and New Zealand investors. The brokerage services, however, were kept commission-free, but the firm generates money by charging 0.7% when traders do AUD to US Dollar swap.
The CEO also revealed that the client base of the platform is currently around 360,000 customers, while the overall trading volumes have hit $1 billion.
As a launch promotion, the firm will offer commission-free brokerage services till the end of the year for trading in Australia but will start charging 3 AUD for every trade executed after the end of the promotion. Nevertheless, this is still much lesser than the minimum commission charged by CommSec (about 10 AUD),
The CEO, Leibowitz, believed this new model would shoot the firm to the top soon. This business model is tested and tried as startups like FreeTrade, BUX, and Robinhood are causing a seismic shift in the European and US brokerage markets.