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When investing in the stock market, choosing the right online broker is essential to achieving trading success. A suitable broker has a platform to help traders make better investment decisions, avoid unnecessary costs, and achieve their investment goals.
However, finding the best online broker in the Philippines can be daunting due to the vast number of options available. As of 2018, the SEC (Securities and Exchange Commission) regulates 132 PSE (Philippine Stock Exchange) members/TPs (Trading Participants), 13 non-PSE members, and 47 GSEDS (Government Securities Eligible Dealers).
Filtering through all of these options isn’t easy. Fortunately, by considering a few key factors, traders can narrow their choices and find a broker that meets their needs.
This article will guide you through the Philippine stock market by giving valuable tips on finding your trading partner. We’ll also highlight three online brokers to give you a head start on your search.
5 Things to Consider
Regulation and Licensing
The importance of regulation and licensing and their role in protecting investors’ interests can not be overstated. The Securities and Exchange Commission (SEC) is the government agency responsible for regulating and overseeing the operations of online brokerages in the Philippines. The SEC ensures that online brokerages adhere to strict rules and regulations, which is why choosing a broker registered and regulated by the SEC is vital. For example, Every Broker shall file with the Commission the Annual Audited Financial Report on SEC Form 52-AR.
An SEC-registered broker can offer investors greater confidence in the security and safety of their funds and investments; because of this, traders need to verify a prospective broker’s information on the official website of the SEC.
An illustration of the importance of SEC registration can be seen in how the SEC conducts regular inspections and audits of online brokerages to ensure compliance with regulations. In 2020, the SEC suspended the operations of 7 online brokerages for violations of rules and regulations and imposed fines and penalties on several online brokerages for breach of regulations.
Fees and Commissions
Brokers charge fees for their services, which add up fast. When looking for a broker, determine if they charge reasonable fees and have transparent pricing.
The specific fees and commissions that a broker charges vary depending on the business model, services provided, location, market competition, volume trades, minimum trades, etc. Below are common fees and commissions that investors need to be aware of.
- Trading Fees: These are the fees a broker or exchange charges for executing trades. These fees can take different forms, such as a commission, a per-share charge, or a percentage of the trade value.
- Account Opening Fees: These are the fees that a broker or exchange charges for opening a new account. This fee can be a one-time or recurring charge.
- Annual Fees: These are the fees that a broker or exchange charges for maintaining an account annually. These fees are typically charged as a percentage of the total assets in the account.
- Maintenance Fees: These are the fees that a broker or exchange charges for maintaining an account on a monthly or quarterly basis. These fees are typically charged as a percentage of the total assets in the account.
- Margin Fees: These are the fees that a broker or exchange charges for borrowing money to trade on margin. These fees can include interest and other charges associated with maintaining a margin account.
- Withdrawal Fees: These are the fees that a broker or exchange charges for withdrawing money from an account. These fees can include charges for wire transfers or other types of withdrawal methods.
The trading fee range for online brokerages in the Philippines typically falls between 0.10% to 0.50% of the total trade value, with a minimum fee of 25 PHP (Philippine Peso) to 50 PHP per trade. Note that some brokerages may offer different account types, primary or premium accounts, with other fee structures. Additionally, some brokerages offer promotions or discounts on fees and commissions; it is always good to check for promotions or special offers while reviewing prospective brokers.
Remember that while a lower trading fee may be more attractive, traders must consider the overall value of the services provided by the broker; a broker with a higher trading fee may offer a broader range of investment options, better trading tools, and more responsive customer service.
Trading Tools and Platforms
Access to a wide range of trading tools, and platforms can make it easier for investors to navigate the stock market, perform research, and make trades. Investors must use an intuitive and accessible platform that provides real-time market data and other research tools. The following is a list of trading tools and platforms that online brokerages in the Philippines offer.
Online Trading Platforms
These web-based platforms allow investors to access real-time market data, research, and execute trades. Examples of popular online trading platforms include MetaTrader 4, MetaTrader 5, and First Metro Securities Online.
Mobile Trading Apps
Mobile applications allow investors to access real-time market data, research, and execute trades from their smartphones or tablets. Examples of popular mobile trading apps include COL Financial Mobile App, BDO Nomura mobile app, and the First Metro Securities mobile app.
Research and Analysis Tools
Tools help investors analyze stocks and securities, including financial statements, charts, and news. Examples of widespread research and analysis tools include Stock Rover, TradingView, and Bloomberg Terminal.
Charting and Technical Analysis Tools
These tools help investors analyze stock price movements and trends, including moving averages, momentum indicators, and support and resistance levels. Examples of popular charting and technical analysis tools include TradingView, Stock Rover, and MetaTrader 4.
Customer Service
Customer service helps investors with queries and concerns. Unfortunately, the quality of customer service departments varies, so it is always beneficial to compare the customer service offered by different brokerages before making a decision.
When collecting data relating to a broker’s customer service department, check for reviews and ask for referrals from others who have experience working with a particular broker. This process will give you a clearer idea of the quality of service offered by the broker.
You can use many criteria to evaluate a broker’s customer service. The following are elements an online broker’s customer support should have.
- Responsiveness – Answers questions and resolves issues promptly
- Availability – Easily reached during extended hours(including weekends and holidays)
- Communication – Communicates clearly and effectively, using easy-to-understand language and providing detailed explanations when necessary
- Personalization – A tailored approach to customer service, considering each client’s needs and preferences
Investment Options
Investment options help investors diversify their portfolios and achieve their investment goals. Brokerages may offer different investment options, so compare the options provided before making a decision. Listed below are some of the investment options offered by online brokerages in the Philippines.
- Stocks –The most common investment option online brokerages in the Philippines offers. Stocks represent a share of ownership in a publicly traded company and can allow investors to earn dividends and capital gains.
- Mutual Funds – Professionally managed investment funds that pool money from multiple investors to purchase a diversified portfolio of stocks, bonds, and other securities.
- Exchange-Traded Funds (ETFs) – Parallel to mutual funds, they are traded on stock exchanges, like stocks. Using exchange-traded funds (ETFs) allows investors to invest in a diversified portfolio of stocks, bonds, and other securities.
- Bonds – Debt securities that allow investors to lend money to a company or government in exchange for regular interest payments and the return of the principal at maturity.
- Foreign Stocks – Some online brokerages in the Philippines also allow trading in foreign stocks, allowing investors to expand their portfolios and invest in companies outside the Philippines.
Top Brokerages in the Philippines
Once you understand the factors that make an online broker ideal, you can use that knowledge to review the market options that possess those factors: COL Financial, BDO Nomura, and First Metro Securities.
eToro
eToro is a social trading platform that allows users from the Philippines to invest in a range of assets, including stocks, cryptocurrencies, and commodities. One of the key benefits of eToro for beginners is its user-friendly platform, which is designed to be accessible and intuitive for new investors. The platform features a range of educational resources, including video tutorials and a practice trading account, that can help users learn the basics of investing and trading.
Another benefit of eToro is its social trading feature, which allows users to follow and copy the trades of successful traders. This can be particularly helpful for beginners who are just starting out and may not have a lot of experience or knowledge in investing. By following and copying the trades of successful traders, users can learn from their strategies and to improve their own skills.
Overall, eToro is a good option for traders from the Philippines who are looking to start investing in a range of assets. Its user-friendly platform, social trading feature, and range of educational resources make it a great choice for those who are new to investing and trading. Additionally, its regulation by reputable authorities provides an added level of security and trust for users.
- eToro’s platform is user-friendly and easy to navigate.
- eToro has social trading features
- eToro offers a wide range of financial products, including stocks, cryptocurrencies, and forex.
- eToro has higher fees compared to other online brokers.
- The high fees can affect the profits of beginners negatively.
- eToro’s research tools are limited, which may not be sufficient for advanced traders.
Regulation: eToro is regulated by financial authorities in multiple countries, including the Financial Conduct Authority (FCA) in the UK and the Cyprus Securities and Exchange Commission (CySEC). In the Philippines, eToro is not currently regulated by the Securities and Exchange Commission (SEC).
IG
IG is a popular online trading platform that accepts users from the Philippines and provides a wide range of investment options, including stocks, bonds, forex, and commodities. It is known for its user-friendly platform and educational resources, which make it a good option for beginners.
One of the key features of IG that is beneficial for beginners is its range of educational resources. IG offers a range of trading courses, webinars, and market analysis that can help new traders learn about investing and trading. The platform also features a demo account, which allows users to practice trading with virtual funds before investing real money.
IG is also regulated by several reputable authorities, including the Financial Conduct Authority (FCA) in the UK, the Australian Securities and Investments Commission (ASIC), the Monetary Authority of Singapore (MAS), and the Dubai Financial Services Authority (DFSA). This provides users with an added level of security and protection for their investments.
Another benefit of IG is its user-friendly platform, which is designed to be accessible and intuitive for beginners. The platform features a range of tools and resources that can help users make informed investment decisions, including price alerts, news updates, and technical analysis tools.
Overall, IG is a good option for beginners from the Philippines who are looking for a user-friendly platform with a range of educational resources. Its regulation by reputable authorities and range of investment options provide added security and flexibility for users.
- User-friendly platform
- Wide range of financial products
- Strong research and analysis tools
- IG’s fees are higher compared to some other online brokers.
- IG has limited educational resources which can be a disadvantage for beginners.
Regulation: IG is regulated by financial authorities in multiple countries, including the Financial Conduct Authority (FCA) in the UK and the Australian Securities and Investments Commission (ASIC). In the Philippines, IG is not currently regulated by the Securities and Exchange Commission (SEC).
First Metro Securities
First Metro Securities is a Philippine-based online brokerage platform that offers a range of investment options, including stocks, bonds, mutual funds, and exchange-traded funds (ETFs). It is regulated by the Securities and Exchange Commission (SEC) in the Philippines, providing users with an added level of security and protection for their investments.
One of the key benefits of First Metro Securities for beginners is its user-friendly platform. The platform is designed to be accessible and easy to use, with features such as real-time stock quotes, market news updates, and technical analysis tools. The platform also features a range of educational resources, including webinars, investment guides, and market insights, that can help new traders learn about investing and trading.
Another benefit of First Metro Securities is its low minimum investment requirements, which makes it an attractive option for beginners who may not have a lot of capital to invest. The platform also offers competitive trading fees and commissions, making it a cost-effective option for investors.
First Metro Securities also offers a range of customer support options, including phone support, email support, and live chat. This can be particularly helpful for beginners who may have questions or need assistance with their investments.
Overall, First Metro Securities is a good option for beginners in the Philippines who are looking for a user-friendly platform with a range of investment options and educational resources. Its regulation by the SEC, low minimum investment requirements, and competitive fees and commissions make it an attractive option for new traders.
- An online trading fee of 0.25% of the gross value or Php20 per trade, whichever is higher.
- FMS is a member of the Philippine Stock Exchange (PSE).
- FMS is registered with the Securities and Exchange Commission (SEC).
- FMS’s investment options include stocks, mutual funds, UITF, and ETFs.
- FMS offers a mobile app, outstanding customer service with responsive, helpful assistance, an enhanced user interface, and sortable columns.
- FMS delivers the breakdown of daily market performance – including local and foreign participation, net buying, and selling.
- FMS consolidates client portfolios, including stocks, mutual funds, and cash.
- FMS supplies clients with enhanced research report pages.
- In 2020, First Metro Securities reported revenue of Php 2.2 billion.
- Competitive fees
- User-friendly platform
- Educational resources
- First Metro Securities has limited financial products (stocks and mutual funds only).
- Minimum deposit requirement of PHP 25,000 may be a barrier for some beginners.
Regulation: First Metro Securities is regulated by the Philippine Securities and Exchange Commission (SEC) and is a member of the Philippine Stock Exchange.
Being Ready to Trade
Choosing the best online broker in the Philippines can be daunting, but it doesn’t have to be. Knowing how to screen all the options will result in finding a trading partner in no time. Traders who consider all the factors and narrow their choices will find a broker that meets clear, well-defined requirements. Start the search by considering COL Financial, BDO Nomura, and First Metro Securities.
FAQ
The Securities and Exchange Commission (SEC) Philippines is the principal regulator for the financial markets in the Philippines. The Securities and Exchange Commission regulates capital markets, including broker-dealers, investment companies, financing and lending firms, financial institutions, and other licensed intermediaries. There are over 351,000 stock corporations, per the SEC’s latest annual report.
Among the best Philippine stocks to buy are Ayala Land, Inc. (ALI), SM Prime Holdings (SMPH), International Container Terminal Services, Inc. (ICT), Ayala Corporation (AC), and SM Investments Corp. (SM).
Stocks are shares of ownership in a company. Upon purchasing publicly traded stocks, a trader becomes a part-owner and can participate in the company’s growth and future profits. If the company suffers a loss or performs below market expectations, traders may suffer a loss.
Yes, to actively trade stocks on the exchange, investors must open an account and present valid identification to a broker.
StockHax strives to provide unbiased and reliable information on cryptocurrency, finance, trading, and stocks. However, we cannot provide financial advice and urge users to do their own research and due diligence.
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