A reader has asked: I am looking for a stockbroker with reasonable commissions and for trading Japan Hong Kong China and Indian stocks
What are the key security aspects in need for ensuring my account funds and the securities purchased shares ETFs etc are secure?
I have western world broker butmost don’t offer such reach as I am a UK national living in the UK
Answer: Trading in overseas markets has never been that straight forward for private clients although things are improving by leaps and bounds. Still, a lot of changes of late have been focused on the Americas rather Asian markets.
That said it is possible to find brokers who can deal for you in those markets.
You don’t specify if you are after advice as well, so I will assume that you are looking for an execution-only service.
Two obvious choices spring to mind in terms of execution-only stockbrokers who trade Asian securities these are Saxo Markets and Interactive Brokers both of whom have UK based operations.
Saxo Markets offers access to Hong Kong, Singapore and Tokyo whilst Interactive Brokers offer Indian and South Korean markets in addition to those covered by Saxo.
Both Saxo Markets and Interactive Brokers offer a keenly priced commission structure though there will be minimum ticket charges to take into account.
As to mainland China, I don’t believe foreign retail clients can deal directly in mainland Chinese equities. However, many dual-listed stocks trade simultaneously in Shanghai and Hongkong. There are also a growing number of Chinese stocks which are listed or traded in NewYork.
China is something of a closed shop still for foreign retail investors, however, there are plenty of ETFs that track Chinese equities and many of those are available to UK clients to trade-in.
In terms of the second part of your question regarding security.
I am sorry to say that is out of your hands to some extent. I say that because it’s quite likely that brokers trading in overseas securities will subcontract their custody arrangements to third parties, though these will typically be specialist clearers and custodians which are often subsidiaries of larger financial institutions, as such it won’t be possible or practical for you to kick the tyres of that custody chain.
As a UK customer, however, your funds and securities will be protected by the Financial Services Compensation Scheme, which insures the clients of FCA regulated firms against fraud or failure to a value of £85,000 pounds.
