Online broker Stake gears up for CommSec, NABtrade battle

Millennial-focused trading platform Stake is set to take on the incumbents announcing the launch of its ASX offering.

Stake pioneered commission-free access to US markets for Australian traders. Picture: AP

Millennial investors are in the sights of online brokerage Stake, which says it plans on launching an Australian Securities Exchange offering, supplementing its US equities trading business, in the coming months.

The start-up intends to switch on ASX trading in the fourth quarter of the calendar year after internal testing and a closed beta for users.

But any attempt to gain customers from the major trading platforms, including incumbents CommSec and NABtrade, could be frustrated by delays and paper-based processes at the banks.

Stake founder and CEO Matt Leibowitz. Source: Supplied

Stake founder and CEO Matt Leibowitz said the business was aiming to shake-up a trading market where the costs of trade were high and service quality was low.

“Customers are not getting full transparency about the cost of trades and how things work and we think the model can be shaken up, it’s a big opportunity given we’ve got 350,000 customers,” he said.

Stake has added more than 200,000 new users since June last year.

Mr Leibowitz said the rising interest in exchange traded funds, passive investing and share trading among young Australians was proof people were actively interested in their financial futures.

“People want to manage their own money, they want to be in control,” he said.

Stake, which pioneered commission-free brokerage on the US market for Australians, offering free shares to new customers, said it would be unable to offer free trades for Australians.

“We haven’t quite confirmed the pricing yet, but it’ll be a fraction of the cost of the incumbents,” he said.

Trades on Stake have been rapidly growing in recent months.

Since its inception users have traded $US8.3bn ($11.05bn), with that number bolstered by the almost $US1bn traded just last month. Mr Leibowitz said he ­believed 75 per cent of Stake’s ­customers would be interested in trading on the Australian market.

But, Mr Leibowitz said Stake was ramping up its transfer team ahead of the launch given clunky paper-based systems for ­customers to swap brokers in place at major trading platforms.

“We could process as quickly as we can. It’s a bit of an ordeal with the existing incumbents,” he said.

“The process should be quite seamless, it should but it’s not, we’ve had to build a team around it and copy in customers to see how broken the system is on the other side.”

Trades under the Stake platform will be executed via the ASX and Chi-X markets.

Mr Leibowitz said the $500 minimum-parcel size restriction by the ASX removed its capacity to offer free shares to new customers.

“There’s not that many free shares to give out, the US model is a bit different,” Mr Leibowitz said.