The Tiger Brokers trading app will take on Sharesies and Hatch. Photo / Provided
Competition between online trading platforms in the equity market is set to heat up with China-backed Tiger Brokers launching its trading app in the New Zealand market, taking on local players Sharesies and Hatch Invest .
Tiger Brokers has operated in New Zealand since 2015, but its client base is largely made up of Chinese New Zealanders, but new chief executive Greg Boland said he was aiming for a wider market with his Tiger Trade investment app.
“We’ve changed a lot to have better customer service in New Zealand – before that it was offshore. We’ve spent a lot of time and resources to have more customer service capacity in New Zealand and be able to provide better service for New Zealand Customers.”
Boland joined the firm in October after working two and a half years for Craigs Investment Partners as a compliance officer.
Tiger Brokers is owned by Beijing-based UP Fintech Holdings, which was founded by Chinese fintech entrepreneur and NetEase developer Wu Tianhua in 2014.
The group issued U.S. certificates of deposit on the Nasdaq in March 2019 and had a market capitalization of US$829 million ($1.2 billion) as of Monday.
In fourth-quarter results released on Friday, the company said it had revenue of $264.5 million and total funded accounts of 673,400. It is growing rapidly outside of China with more than 90% of new accounts came from outside of China in the last three months of 2021 and now has total client assets on its platform of US$17.1 billion.
The company has nine million users worldwide. It has seen major growth in Singapore and was also launched last month in Australia.
In a statement released as part of its results, Wu Tianhua, CEO of UP Fintech, said he viewed Australia as a large market underserved by traditional financial services institutions.
“We are confident that our innovative mobile trading platform will be well received by local customers. Although we face many respectable competitors in the local market, we believe our comprehensive product offering sets us apart.”
In New Zealand, it will come up against local player Sharesies which offers access to the New Zealand, US and Australian equity markets as well as Hatch which allows Kiwis to invest in US stocks.
The Australian player Stake also has a foothold in the New Zealand market.
Boland said one of Tiger’s points of difference was its access to Asian markets with the app giving access to A-listed shares of Hong Kong, Singapore and China as well as Australian and US markets.
More sophisticated investors will also be allowed to open margin accounts allowing them to borrow to invest and also trade futures and options.
“There are two or three points of difference; the first is our offer in the Asian markets. [the app] it also has a lot more bells and whistles.”
Boland said it offers fundamental and technical analysis, live news and in-depth market data so investors can see bid and ask prices and how many people were behind it.
“We also have an in-app community, which means people can check out their app and see other people’s opinions on certain shares.”
Boland said he offers a demo account of up to $100,000 for investors to practice and hone their investing skills.
“This is particularly important not only for novices but also for more experienced traders who may wish to consider other ways to trade, especially things like options when you’ve never done it before.”
“For a beginner, the idea of having a demo account and being able to trade Apple or Tesla stocks is a pretty cool way to learn what your risk appetite is.”
Like Sharesies and Hatch, there is no minimum amount to invest, although its fixed minimum brokerage fee of $1.99 per order on US stocks means investing small amounts of money is not profitable. Boland said it becomes more profitable for those who invest at least $350-$400, with the commission being 1c per share for US trades.
Sharesies charges a brokerage commission of 0.5% for amounts up to $3,000 and 0.1% for amounts over $3,000. A $100 investment through Sharesies would cost 90c.
According to Sharesies, its competitor Hatch would charge $3.50 and Stake $2. Tiger comes in at $1.99.
Although the app redesign is new to New Zealand, Tiger has been around since 2015 and hasn’t been without its problems.
In July 2020, he breached the NZX Disciplinary Tribunal for violating registration rules and was publicly censured and fined $160,000.
The court found that Tiger breached the rules by depositing client funds into an account that was not a client funds account and for failing to comply with an instruction from the NZX to stop using that account .
In April 2020, the Autorité des marchés financiers also issued a formal warning to Tiger for not having several adequate protections against money laundering (AML) in place.
At the time, he found that Tiger Brokers had failed to: adequately conduct enhanced and ongoing customer due diligence, where applicable, adequately verify the identification documents of relevant clients, obtain an adequate source of funds or wealth information regarding high-risk clients and take reasonable steps to verify that information, report any suspicious activity to the appropriate authorities within three business days of forming a suspicion or take reasonable steps to determine whether a customer or any beneficial owner was a politically exposed person.
He had until September 30, 2020 to comply with the law.
Boland said regarding NZX censorship, censorship related to failure to obtain NZX approval for a new client funds account.
“This was purely a matter of NZX rules, and a failure to obtain NZX approval rather than a breach of client obligations. The current law governing client funds accounts is that set forth in the FMCA and is regulated by the FMA.
“It has never been suggested that we breached these obligations, and I can confirm that we complied at all times with our FMCA [Financial Markets Conduct Act] customer funds obligations.
“While the NZX tribunal case is complicated, we respect their decision and have accepted their findings and have procedures in place to ensure a similar breach does not happen again.”
Regarding the FMA’s warning, Boland said it was based on procedural failures and has completed a remediation program in response to it.
“We have responded positively to the FMA’s warning letter on our AML procedures and have significantly expanded our AML teams and resources to ensure full compliance with our legal obligations. Our AML procedures have been rewritten and we have conducted several successful independent audits on our systems since then.”
Tiger’s push comes at a volatile time for stock markets. The S&P500 is down nearly 7% year-to-date, while the Nasdaq is down more than 12% year-to-date.
Boland said when markets fall, it’s an opportunity for investors to buy at lower prices.
“You think of people like Tesla. It was up to around US$1200 and now it’s just over US$800 – you’re buying it at 70% of what it was three months ago. .
“We’re not suggesting you buy Tesla stock you have to do [your] his own duties in this matter.”
“But this gives you an example. When there is volatility, particularly experienced investors tend to buy more because there is an opportunity to make money on the other side.”