Speaking to InvestorDaily, Powerwrap chief executive Cormac Heffernan said that platforms need to offer individual holder identification numbers (HIN) and no additional settlement fees if they want to compete properly in this space.
“In the future, trading on platforms should be the cheapest way to trade equities,” Mr Heffernan said.
However, some platforms would not be capable of offering equities on an individual HIN, despite the demand from clients, Mr Heffernan said.
“There are a lot of platforms out there that really started off as a managed funds platform and then added on equities and so they’re still really struggling to do it – that’s one issue with the individual HIN,” he said.
“In terms of pricing, equities are still somewhat a manual process for some platforms therefore, they charge a settlement fee and maybe where it’s automated they’re still charging a settlement fee anyway.”
In addition, Powerwrap expected platform trading to evolve further in a few years’ time, Mr Heffernan said.
“In the future, we expect platform trading to be even cheaper than the online brokers,” he said.
“There are a lot of equities out there that are currently sitting with online brokers that should move onto platforms but clearly, they won’t if platforms have more expensive brokerage.”
Powerwrap recently made cuts to its brokerage rate, which were now similar to leading online broker CommSec, as well as eliminating any additional settlement costs.
“Where platforms were originally managed funds-based, they are now clearly a way for advisers and clients to consolidate their entire holdings, which nowadays is likely to contain as much term deposits and equities as it is to contain managed funds,” Mr Heffernan said.
“We had provided full-service broking to our clients on an individual HIN basis and we will continue to do that but a lot of our clients were actually executing their trades with an execution-only broker.
“This is where a lot of the pressure is coming from off clients.”
