The Australian digital bank has confirmed that it will launch a share trading platform via the Xinja app that gives Australian customers the ability to invest in US shares and exchange-traded funds (ETFs).
Dabble – which is still subject to regulatory approval – will enable those wishing to invest in the US sharemarket the option to do so via the app, whether in full or through fractionalised trading (buying a fraction, or a “slice”) of a US share.
According to Xinja, users will be able to invest $1 or more (up to however much money is in their Xinja Bank account) in approximately 3,000 US shares, with orders executed when the US sharemarket is open.
Customers will then be able to monitor their investments, and ETF and share prices in Australian dollar and US dollar in the app.
The bank’s CEO said the platform will “significantly cut the cost of investing, making it much more affordable for ordinary Australians”, as it comes with an $8 monthly subscription for unlimited trading plus a 1 per cent foreign exchange (FX) fee. As comparison, Xinja suggested that traditional banking services for trading in US stocks can come with brokerage fees of up to $19.50 per trade, plus “significant” FX fees.
Xinja Bank founder and chief executive Eric Wilson said Dabble will give investors access to an alternative investment option in a period when interest rates, and an ability to earn a return on invested funds, remains very low.
“We are offering low-cost, easy access via the Dabble platform, and the option to buy a portion of a share, which we hope opens up markets and investing to people who want to grow their wealth over the long term,” Mr Wilson said.
“Many US-listed companies’ shares trade at very high prices, which locks a lot of people out of the market. So, while brand recognition for leading US companies is very high, few people invest directly. And entering the market hasn’t been easy. We want to lower the cost and make it simpler to bring those opportunities to Australians.”
The bank has warned, however, that share trading should not be undertaken for short-term gain, but for long-term wealth creation.
Mr Wilson commented: “Shares are volatile. The value of stock can go up and down, so you should never invest more than you can afford to lose.
“You should not be investing in shares for short-term gains. It is not for everyone because of the risks involved. But over the long term, and particularly when interest rates are so low, shares can provide investors with access to growth markets and economies, and potentially better returns.”
The Dabble platform will have some restrictions, such as excluding leveraged ETFs, options, and tobacco and weapons-related stocks. Investors who buy and sell a stock within a day for four days in a row (pattern day trading) will have their account blocked.
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Annie Kane is the editor of The Adviser and Mortgage Business.
As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts.