Competition among online share market trading platforms is set to step up a notch with Chinese-backed Tiger Brokers launching its trading app into 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 has been largely Chinese New Zealanders but now new chief executive Greg Boland says it is targeting a wider market with its investing app Tiger Trade.
"We have changed a whole lot of it to have better customer service in New Zealand - before that it was offshore. We have spent a lot of time and resource on having more customer service capability in New Zealand and being able to provide better service for New Zealand clients."
Boland joined the company in October after working for two and half years at Craigs Investment Partners as its compliance manager.
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 American depositary receipts on the Nasdaq in March 2019 and had a US$829 million ($1.2 billion) market cap as of Monday.
In fourth-quarter results issued on Friday the company said it had revenue of US$264.5m and had total funded accounts of 673,400. It is growing fast outside of China with over 90 per cent of new accounts coming from outside of China during the last three months of 2021 and now has total client assets on its platform of US$17.1b.
The company boasts nine million users worldwide. It has been on a major growth push into Singapore and last month also launched in Australia.
In a statement released as part of its results Wu Tianhua, UP Fintech CEO, said it viewed Australia as a vast market that was underserved by traditional financial services institutions.
"We are confident that our innovative mobile trading platform will be well received by local clients. While 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 share markets as well as Hatch which allows Kiwis to invest in US shares.
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 providing access to Hong Kong, Singapore and China A listed shares as well as Australia and the US markets.
More sophisticated investors will also be allowed to set up margin accounts allowing them to borrow to invest and trade in futures and options as well.
"There are two or three points of difference; one is our offering into the Asian markets. It [the app] also it has a lot more bells and whistles."
Boland said it offered fundamental and technical analysis, livestreaming news and in-depth market data so investors could see the bid and offer prices and how many people were behind it.
"We also have an in-app community so that means that people can look on their app and see what other people's opinions are on certain shares."
Boland said it offered a demo account of up to $100k for investors to practise and sharpen their investment skills.
"It is particularly important for not only novices but also more experienced traders who may want to look at other ways of trading, particularly things like options when you haven't done it before."
"For a newbie the idea of having a demo account and being able to trade Apple shares or Tesla is quite an interesting way of learning what your appetite for risk is."
Like Sharesies and Hatch it has no minimum amount for investing although its flat minimum brokerage fee of US$1.99 per order on US shares means investing small amounts of money is not cost effective. Boland said it became more cost effective for those investing at least $350 to $400 where the commission was 1c per share for US trading.
Sharesies charges a brokerage commission of 0.5 per cent for amounts up to $3000 and 0.1 per cent for over $3000. A US$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.
While the revamp of the app is new to New Zealand Tiger has been here since 2015 and it has not had a trouble-free ride.
In July 2020 it ran afoul of the NZX's disciplinary tribunal for breaching listing rules and was publicly censured and fined $160,000.
The tribunal found Tiger broke the rules by depositing clients funds in an account which was not a client fund account and for failing to comply with a direction from the NZX to cease using that account.
In April 2020, the Financial Markets Authority also issued a formal warning to Tiger for failing to have several adequate anti-money laundering (AML) protections in place.
At the time it found Tiger Brokers had failed to: adequately conduct enhanced and ongoing customer due diligence where required, adequately verify relevant customer identification documents, obtain adequate source of fund or wealth information relating to high risk customers, and take reasonable steps to verify that information, report suspicious activity to the relevant authorities within three working days after forming a suspicion or take reasonable steps to determine whether a customer or any beneficial owner, was a politically exposed person.
It was given until September 30, 2020, to become compliant with the law.
Boland said in terms of the NZX censure, the censure related to a failure to obtain NZX approval for a new client funds account.
"It was an NZX rules matter only, and one of failure to obtain NZX approval rather than a breach of client obligations. The actual law governing client fund accounts is that set out in the FMCA, and is regulated by the FMA.
"It was never suggested that we had breached those obligations, and I can confirm that we were compliant at all times with our FMCA [Financial Markets Conduct Act] client fund obligations.
"While the NZX tribunal matter is complicated, we respect their decision and have accepted their findings and put in place procedures to ensure a similar breach does not happen again."
As to the FMA warning Boland said it was based on procedural failures and it had completed a remediation program in response to that.
"We responded positively to the FMA warning letter on our AML procedures and have considerably expanded our AML teams and resources to ensure full and complete compliance with our statutory 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 sharemarkets. The S&P500 is down nearly 7 per cent so far this year while the Nasdaq has fallen more than 12 per cent year to date.
Boland said when markets fell it was an opportunity for investors to buy at lower prices.
"You think of the likes of Tesla. It was up to around US$1200 and now it is just over US$800 - you are buying it at 70 per cent of what it was three months ago.
"We're not suggesting you buy Tesla shares you need to do [your] own homework on that."
"But it gives you an example. When there is volatility particularly more experienced investors tend to buy more because there is an opportunity to make money on the other side."