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Sharewatch, the Cork-based company offering execution-only share trading, has launched a service aimed at small shareholders, including workers who have received shares as part of save-as-you-earn (SAYE) employee share ownership schemes.

The service allows customers to trade shares up to a value of €15,000 for a flat fee of €50. There is no need to open an account with Sharewatch. "Small shareholders and SAYE beneficiaries don't want lots of paperwork or hassle," said Mr Peter Byrne, managing director of Sharewatch.

Since SAYE schemes were introduced four years ago, they have greatly increased the number of people who own shares. However, accumulating the shares has often proved easier than selling them, according to Sharewatch.

Up to now, SAYE shareholders have either had to open a share trading account, incurring an annual fee, or use a company-nominated broker to sell their shares.

Boom time for day traders

"Thanks to the strong recovery in stock markets so far this year — the ISEQ index is back to a level of just over 4,600 after reaching a low of 3,620 a year ago — anybody with a share or pension portfolio should be breathing a little easier. The thought of another year of negative returns could have frightened smaller investors away for good, and pumped up the already highly inflated property markets.

Day trading is apparently picking up with a vengeance in Britain and America, where Barclays Stockbrokers, the biggest UK execution-only broker, reports that day trading volume is up by 50% since March while the number of new stockbroking clients is up by nearly 400,000 in the same period.

Day trading is very much a minority activity here, with the Goodbody and Davy Stockbrokers’ internet-based execution services and Fexco attracting most of the business.

This market could get a lot bigger though if the low 0.3% commission charge offered by Sharewatch, the new execution-only service in Cork, really takes off (see this week’s MoneyMatters for details).

It may well do when people realise the profits they make on their daily trades won’t be absorbed by the minimum €30 to €70 commissions that the other firms charge.

All this day trade activity is attracting the attention of the British revenue authorities, who up to now have been treating day traders as private investors.

Some of the bigger day traders want to register as “sole traders”, a category of self-employed, but are so far being refused by the British tax authorities who require that they prove they are under- taking a real business and are not just engaged in private investing.

The issue has been raised only a couple of times in recent memory, according to a spokesman for the Revenue Commissioners. In both cases, it was determined that the day traders were in fact deemed to be investors. If someone who day trades wants to be categorised as self-employed, they would have to show that they were providing a service for others and not just for their own gain, said the Revenue spokesman."

BM writes from Dublin: I want to get involved in dealing in shares, Irish and non-Irish on a small scale, so the costs are important. What do the various brokers charge?

"Competition has recently heated up among the brokers and financial advisers who buy and sell stocks for their clients. The internet-based financial adviser, Sharewatch, has now begun offering a share-dealing service and claims to be the cheapest with a commission of 0.3% with a minimum charge of €30.

Commissions charged by the Irish stockbroking firms are as follows based on information from their own websites: BCP 1% and minimum charge of €45; Goodbody 1.25% and €32 minimum; Fexco 1.25% and €32.50 minimum; Dolmen Butler Briscoe 1.3% and €35 minimum; Campbell O’Connor 1.5% and €25 minimum; Davy 1.5% and €60 minimum.

Online dealing services are also available from international internet-based brokers like E*Trade and Charles Schwab. But remember to check what sort of hidden extras any broker or dealer charges — especially when it comes to trading in non-Irish shares. Some brokers charge administration fees, foreign trade fees and foreign exchange fees that can add significantly to the cost of dealing."

Small-time investors starting to return to the market

"Renewed confidence is beginning to permeate the equity markets, writes Gretchen Friemann

With the aftershocks of the devastating 1990's stock market collapse, still rippling through investors' bank accounts, many consumers remain justifiably sceptical of plunging back into equities.

But the emergence of a new execution-only stock broking service from Cork is evidence that the do-it-yourself investment market is beginning to show signs of life once more with the lure of cheap commission rates and explosive stock markets.

Since the beginning of the year, major global indices have recorded double-digit increases, holding out the promise once more of profitable returns for private investors.

Day traders, whose rash investments came to symbolise the excesses of the late-1990s bubble, now seem to be piling back into the market with Barclays stockbrokers, the UK's biggest execution-only retail stockbroker, recording a 50 per cent surge in volumes since March.

ComPeer, a UK market research group, published a survey earlier this month that showed a 42% increase in trades between April and June, with the number of clients rising to 395,000.

There's a good reason why private investors are risking another bite of the cherry. Since March, a new confidence has permeated equity markets and the year-to-date figures for the major indices make for reassuring reading.

Even the technology sector is shaking off its anaemic pallor, with the Nasdaq recording a 35.2% jump since January, making it one of the best performing major indices so far this year. It's good news too for the ISEQ, which has rebounded by 14.6%.

According to Mr John Crowley of Sharewatch - a Cork based financial services company that introduced its new low-cost, telephone trading service earlier this month - private investors are regaining confidence. And he believes that the 0.3% commission Sharewatch charges, the lowest in the State for telephone execution-only trades, will prove irresistible to private investors who "don't manage a large portfolio and just want a simple share transaction".

In the Republic's increasingly competitive private-client stock-broking environment, Sharewatch is hoping to strip market share from its more established competitors and, on the face of it, the company's minimum €30 transaction fee looks like an unbeatable bargain.

Both Davy and Goodbody, the two largest stockbrokers in the republic, levy a commission fee of 1.65% - a more than five-fold increase on Sharewatch's rate. Fexco stockbrokers, another execution-only trading service and Sharewatch's closest rival, offers a commission of 1.25% and minimum and a minimum charge of €32.50 on a €5,000 trade.

Davy and Goodbody stress their online trading systems offer significant reductions on their telephone services with a trade of more than €25,000 carrying a commission fee of 0.5%, although there are also account maintenance charges.

Despite the cheaper online rates from the large brokers, Mr Crowley believes there is a substantial market for private retail investors disenchanted with high commission fees for execution only trades.

He argues that small investors would rather forgo the professional research and advice the large brokerage houses include as part of their service than continue to pay high commissions on simple trades.

He said: "The feedback we get is that people don't want advice on small amount of shares. As far as we can see, investors want to get a good margin on their trade and if your stock rises by 1.25% then that means most of your profit has gone to the broker."

But according to Davy's head of share dealing on the private-client desk, Mr Chris Connaughton, "trading is not just about low commission rates, it's about access and security".

He argues that investors trading though Davy have "access to all markets in all currencies and benefit from a straight processing system that cuts out any manual interception". However, the cost of running such an extensive back office adds to Davy's overhead costs and explains why Sharewatch can offer the prices it does.

Buying stock through Sharewatch is the investor equivalent of flying with a low-cost airline. This is trading without any of the frills. There is no advice or research. Investors simply ring through their trade on a lo-call number to the company's partners in Glasgow, Direct Sharedeal, which executes, clears and administers the transaction.

According to Mr Crowley, Direct Sharedeal is not a member of the Irish Stock Exchange but accesses Irish shares through the London Stock Exchange. Sharewatch, which is staffed by its three directors - Mr Crowley, Mr Peter Byrne and Mr Ger Iveson - originally attempted to set up as an online trading service more than three years ago but the deal fell through when the stock-broking firm they were partnered with was bought out.

Now Mr Crowley claims Sharewatch has its sights set on carving up the small investor market place. He estimates that its biggest competitor, Fexco, has a customer base of 25,000 to 30,000 and he is confident that Sharewatch's rates will soon begin to eat into the company's significant market share.

Fexco stockbrokers, a division of the Fexco financial services group based in Killorglin, was ordered by the Central Bank in January 2000 to stop accepting new business until it had taken on sufficient staff and upgraded its systems to handle the volume of business it had attracted at that point.

The company has since satisfied all Central Bank requirements and its deputy Managing Director, Mr Denis Crowley, stresses he is "comfortable with Fexco's pricing structure", although he conceded Sharewatch's commission rates "appear to be very competitive".

Fexco is not the only low-cost stock-broking firm to have suffered trading restrictions. BCP Stockbrokers received a similar reprimand from the Central Bank in the same year, as the number of people who owned shares in the state rocketed to more than 500,000 following the Eircom floatation.

Then there was the collapse two years ago of Cork stockbroker W&R Morrogh. It is incidents like these that Davy's Mr.Connaughton points to when he stresses the importance of "security and access".

Sharewatch is regulated by the Irish Financial Services Regulatory Authority. It is a privately owned company, which is more than 60% owned by the three directors. Independent News & Media took a 15% stake in the company three years ago.

Mr Garret Doyle, who is the son of the Irish Independent's editor, Mr Vincent Doyle, serves as a non-executive director on the company board. "

Save money and stop talking in phone numbers

"LOW commission is virtually meaningless. At Davy's they charge 1.65 per cent on telephone trades. You might expect to be billed €16.50 commission on €1,000. However, you would be wrong.

The stockbroker charges a minimum commission of €60. Which means that, for a €1,000 trade, 1.65 per cent suddenly becomes 6 per cent. And all of this before 1 per cent stamp duty is factored in.

The rule of thumb is simple: The lower the percentage commission, the higher you can expect the minimum charge to be. Or in other words, one way or another they're going to get you.

Sharewatch is offering execution-only telephone trades with 0.3 per cent commission. No other Irish broker provides this service for less than 1 per cent commission.

It sounds too good to be true. However, the minimum charge is just €30. There are very few stockbrokers who can better this.

Campbell O'Connor's (COC) minimum charge is €25, however, its commission rate is 1.5 per cent. This makes COC better value for trades not exceeding €2,000. And above that level, Sharewatch is virtually impossible to beat.

Irish brokers are also fond of applying foreign trade fees. Davy, for example, charges €40 for telephone transactions outside the UK and Ireland. COC charges €50. Sharewatch has no such fee.

The company, which is based in Cork, claims 50-85 per cent savings per trade compared with other Irish brokers.

The annual account fee of €60 is less startling. COC, for instance, charges nothing. Others, however, have account fees in excess of €80.

THE VERDICT

The Sharewatch cost per trade is exceptionally good value. There can be virtually no reason to conduct execution-only business with another broker. The only exception is if you have a very small amount of stock and do not intend to trade more than once or twice a year.

The €60 annual account fee does not stand out from other brokers' charges in the same way as the individual trading costs do. It is, however, perfectly acceptable and would be quickly absorbed through even a modest level of activity. This is a buy.

MARKS OUT OF 10: 9 "

Best Buy's

"Investors who believe they have a better nose for the market than their stockbrokers are being targeted by Sharewatch, a new discount broker that operates on an execution-only basis. It charges just 0.3% commission with a minimum charge of €30, which is considerably less than 1.75% commission charged by most of the big name stockbrokers..

The phone based service allows investors to trade in Irish, UK and American stocks and to maintain accounts in euro, sterling or dollars. Dont expect glossy research or investment tips. This is a no-frills service that simply relays your order.

Sharewatch is policed by the Irish Financial Services Regulatory Authority as a multi-agency intermediary. More information is available at 1890-946649 or at www.sharewatch.com/trade."

Share trading service launched

"Cork-based financial services company Sharewatch has launched a low-cost telephone share-trading service, offering investors a commission rate well below that being charged by stockbroking firms. The execution-only service allows clients to trade leading British, Irish and US shares with the option of euro, sterling or dollar accounts.

It offers a trading commission of 0.3 per cent, with a minimum commission of €30. All of the Republic's stockbrokers charge commission of 1 per cent or more, while some charge as much as 1.5 per cent.

Sharewatch is a privately-owned company, regulated by the Irish Financial Services Regulatory Authority (IFSRA). An IFSRA spokesman confirmed the company was authorised as a multi-agency intermediary with authority to receive and transmit orders in international shares and insurance policies. All deals will be executed, cleared and administered by Direct Sharedeal Ltd., a member of the London Stock Exchange, which is regulated by Britain's Financial Services Authority (FSA)."

Trade your shares over the telephone

"SHAREWATCH, a Cork based financial services company, has launched the country's lowest-cost telephone share trading service.

This execution-only service offers clients the facility to trade leading Irish, UK and US shares with the option of euro, sterling or dollar accounts.

With a trading commission of only 0.3%, Sharewatch share trading can offer savings of between 52% and 84% per trade compared to services currently available here. Registration information is available at 1890 946 649 or online at www.sharewatch.com/trade. Sharewatch Trading offers the lowest commission rates available in Ireland. Calls are charged at LO-CALL rates and each account is fully protected by the FSA Investor Compensation Scheme.

Sharewatch is a financial services company well known for its financial information site, www.sharewatch.com. A privately-owned firm, it is based at the national Software Centre campus located at Mahon in Ccork.

Sharewatch is regulated by the Irish Financial Services Regulatory Authority. Funds are held in a segregated account with Ulster Bank. UK stocks are held in either a nominee account or a Crest Personal Membership account. Irish and US stocks are held by both Merrill Lynch and KAS Bank. All deals will be executed, cleared and administered by Direct Sharedeal limited, a member of the London Stock Exchange and regulated by the Financial Services Authority (FSA)."

Sharewatch breaks new ground

"Cork: Sharewatch, the Cork-based financial services company, has launched what it says is Ireland's lowest cost telephone share trading service.

This execution-only service offers clients the facility to trade leading British, Irish and US shares with the option of euro, sterling or dollar accounts.

With a trading commission of only 0.3%, Sharewatch share trading offers savings of 52%-84% per trade compared with services currently available in Ireland.

Sharewatch Ltd is regulated by the Central Bank of Ireland. All Equity Share Trading will be executed, cleared and administered by ODL Securities Ltd which is a member of the London Stock Exchange and is authorised and regulated by the Financial Services Authority. All CFD's & Spread Betting are Provided by CMC Markets UK Plc and CMC Spreadbet Plc who are both authorised and regulated by the UK Financial Services Authority. Sharewatch Ltd is registered in Dublin, Ireland No 286532. Registered Office NSC Campus, Mahon, Cork, Ireland. Website Service Terms Privacy Policy © Copyright 1996-2012 Sharewatch Limited.