The domestic stock market does not fully justifies the expectations of a private investor: unclear legislation (e.g. licensing brokers in Russia and open accounts in Russian banks), the problems with the exchanges (only for the last 1.5 years on the Moscow stock exchange was more than 4 faults affecting the work of the trader), lack of guarantees — all this suggests that it is better for the private investor to refocus on European and American stock exchanges.
Exchange of the USA is much more transparent and reliable than domestic courts. Opening a trading account with a broker is happening in the oldest banks of the country, the activities of the broker and segregated client accounts under the control of an independent regulator NFA. You just need to open a trading account with a broker, and then you can start a successful trade.
Opening a trading account with a broker in the United States from the CIS countries
According to one of the largest analytical agencies in the United States, the capitalization of the Russian market is amounted to 415,89 billion dollars, which is roughly comparable to the capitalization, for example, of Apple (585,9 billion US). Similarly, you can compare the offered services and software tools — the Russian courts in this respect are lagging very badly.
Russian brokers understand that 70 thousand of active accounts on the Russian stock exchange is not serious and therefore offer access to foreign sites, but the cost of this service is very high. For example, the minimum deposit for a client from one of the leading Russian brokers will be 10 thousand dollars, and the commission per share will be 0.01$. U.S. excluding charges of regulators and exchanges. The acquisition of an option or futures contract will cost 1.75 dollars per share + $ 25 — monthly fee for use of the terminal by the broker.
A reasonable question: why spend such big commission for domestic broker if you can directly enter foreign intermediaries and work with it without additional fees? Several advantages of this option:
- domestic brokers offer access to US equities only, foreign brokers enable you to carry out transactions with futures and options (a minimal set of tools);
- serious insurance of client money in case of bankruptcy of the broker (or its unreliability).
However, in practice everything is not so simple. Due to various reasons, there is no direct access to investors in the post-Soviet space to brokers. With a direct appeal to such brokers like TradeKing, Zecco, E-Trade, TD Ameritrade, Fidelity, the Russian investor will receive a denial. According to analysts, it is not sanctions, but the high cost of care of such clients. Retail brokers, which should ensure Russian support, are interested in customers with a deposit of 20 thousand dollars, and there are only few brokers who can spend such sum.
From 16 best brokers of the USA for the 2016 year by version of Barron’s portal, only three brokers are ready to open a trading account with a broker for investors from the CIS countries.
The complexity of opening a trading account with a broker in the United States:
- for a comfortable trading options in the U.S. you will need 50 thousand dollars, in Russia it is possible to start trading with a starting capital of 30 thousand rubles;
- to start trading, e.g. with options you will need to specify the status of a qualified investor (in Russia brokers are absolutely not interested in the knowledge you have in stock trading). However, in the form of a U.S. broker, you can simply specify the availability of basic knowledge — broker believe in the word;
- system of taxation. In Russia this problem is solved directly by the broker (and the tax office is not interested in the the investor up to $ 1000, though the evasion may result in unpleasant consequences). In the United States the question of taxation, the client decides on their own. Between countries, the rule of interaccounting taxes: the income tax is paid in the US, some in Russia, but the Russian tax authorities simply do not know how to calculate the tax base and do not accept documents certified by US brokers.
The issue with the tax is solved in Russia in a roundabout way. Statements of U.S. broker reworked in accordance with Russian requirements. This is presented with a brokerage agreement, the receipt on transfer of money to a brokerage account, that proof of profit, etc. And if working with domestic broker (even with the registration offshore), there are schemes of tax evasion, to evade tax in the U.S., and then cash out the profit in Russia is very difficult. If the documents will be accepted by the investor, investor will pay 13% tax on income.
1. Interactive Brokers — 2nd place in the ranking according to the Barron’s portal
The company was founded in 1977 and today it has a market capitalization of $ 5 billion. This broker has about 3,300 open accounts of private investors from all CIS countries. This company is attractive for its wide coverage of the market reasonableness of trading systems, connectivity options, multi-language support.
Conditions for private investors:
- the minimum Deposit is 10 thousand dollars (or equivalent in another currency). For investors with age under 25 years — 3 thousand dollars;
- the fee for trading stocks — $ 0.005 for the paper. With a monthly turnover of 300 thousand shares, the Commission will decline to 0,0035 dollars per share;
- commission for options — 0,70 USD. USA contract (0,5 USD with turnover of 50 thousand options);
- commission for futures — 0,25-0,85 USD;
- commission for bonds — 0,002-0,1 USD.
2. Lightspeed Trading — 10 place
The company was founded in 2001 and belongs more to brokers who work with corporate clients, but there are proposals for private investors, including from the CIS countries. Opening a trading account with a broker will require 25 thousand dollars (assuming that you work through your own terminal) or 10 thousand dollars provided that you work via the Internet platform of the broker. The second option restricts some types of transactions.
To open a trading account with a broker, the documents are forwarded in electronic form, but in some cases you will have to send the paper version of the documents to the office.
Proposals for private investors:
- if the Deposit is less than 15 thousand dollars and the absence of transactions each month is charged a fine of $ 25 (a little bit, but it is unpleasant);
- the commission for trading stocks — 0,0045 dollars per unit (minimum of 4.5 dollars for a deal);
- the fee for withdrawal is $ 50 regardless of the amount.
3. Just2Trade — 16 place
A relatively young team, founded in 2010 and recently purchased by one of the largest brokers in Russia. That is why it is easier to open an account for Russian investors here. To open a trading account with a broker, it is enough to send documents in electronic form.
The conditions offered to investors:
- minimum Deposit — 3 thousand dollars;
- deposit — $ 30, withdrawal — 40 dollars;
- commission per trade, with shares of 2.5 dollars regardless of their number.
4. MB Trading and Place Trading
Small brokers who are more profitable brokers for private investors from the CIS countries, but offer a smaller set of tools. To open online brokerage accounts, the documents are sent by email, pre-certified by a notary with translation into English. The Commission will be about $ 4.95. for the trade (MB Trading) and 0.01 USD per share (Trading Place). The first broker offers the minimum deposit of only 250 USD, the second — 3 thousand dollars.