how to go about opening a broker account

How to go about opening a broker account

I am here to facilitate your financial growth, so what better way to do this then to enable you to have a place to do your trading. This is done through a portfolio kept with a broker. There is the option of a broker for the business or high net worth individuals and of late there is a trend of the emergence of brokers for the beginner investment.

Why specialization of brokers?

Brokerage is expensive, probably the single cause of the erosion of the capital growth gains in the short run. Now the problem comes in the fact that brokers are charged a percentage per trade by the JSE so they charge a percentage. This system becomes expensive the larger the trade.

Example:

1 %( average brokerage rate for trades bellow R20000) of R1m is R10000!
That is a lot of money so brokers structure their brokerage for different needs to better deliver their products.

Brokers for the individual

As this is for the young and growing investor I will focus my attention on brokerage for the individual. Next I will list some brokers for the individual that are not online:

1. BP Bernstein (Pty) Ltd 011 479 3400 Bedfordview www.bpbernstein.co.za
2. Consilium Securities (Pty) Ltd 011 340 1300 Rosebank www.consiliumcapital.com
3. FFO Securities (Pty) Ltd 011 471 0500 Roodepoort
4. Independent Securities (Pty) Ltd 011 489 5400 Houghton www.independentsecurities.co.za
5. Lefika Securities (Pty) Ltd 011 214 7237 Illovo www.lefikasecurities.co.za
6. Legae Securities (Pty) Ltd 011 551 3601 Houghton www.legae.co.za
7. NVest Securities (Pty) Ltd 043 735 1270 East London www.nvestsecurities.co.za
8. Peregrine Equities (Pty) Ltd 011 722 7600 Sandton www.peregrine.co.za
9. Philippus de Witt (Pty) Ltd 011 482 4525 Auckland Park
10. Prescient Securities (Pty) Ltd 021 700 3600 Cape Town www.psec.co.za

I will not speak of these just yet as I think a phone based portfolio is too complicated for somebody starting out. I prefer the internet based brokers as your cost is the internet usage which will always be cheaper than a phone call. It also allows you to learn the ins and outs of trading at your pace; others also offer virtual accounts to fantasy trade before using your own money. I will speak of the individual online brokers individually from least favourite to most favourite (which is the one I use: Standard Bank Online Share Trading).

We are young adults and time is of the essence so the criteria was how time effective was it to get info on the go about the offering from the home page, the cost of trading which is probably the most important criteria, the education available from the site and the track record recently published in a survey of the best brokers.

1. Barnard Jacobs and mellets (BJM Private Client Services (Pty) Ltd 011 750 0000 Illovo www.bjm.co.za

I opened the site and I found when I tried to open the online site it wasn’t available. Sorry, but that writes it completely off! Can’t afford this to happen when you are losing money on a falling share. So I give it 0 out of 10.

2. Nedbank Online Share Trading 086 000 3681 Sandton https://nedbankonlinetrading.nedsecure.co.za

This is a broker completely dedicated to high net worth individuals ( approximately R500 000+ starting balance would be a reasonable start here). For our purposes and the majority of people I want to reach this is not useable…yet. So I’ll give it 1 for future prospect.

3. Anglorand Securities Ltd 011 484 7440 Parktown www.anglorand.co.za

For the same reason as Nedbank this is not so easily accessible for the average teenager and young adult as they want a R20000 minimum deposit. Even if you have this money the brokerage is structured so that it’s cheap when you are trading in very large amounts, with a minimum of R210 per trade. This is criminal for the budding young investor. I give them a 3 as they are available to some but not most of the people who this blog will reach.

4. Afrifocus Securities (Pty) Ltd 011 290 7800 Sandton www.afrifocus.co.za

This is a completely black owned enterprised and as with a lot of our “BEE fully compliant” businesses, it seems they are more concerned with advertising this fact on the site than making a more user friendly site. They display what they offer and it seems like they have reasonable products, but the site looks as if its in its infancy and that is a concern for when there is traffic and you need to execute a time sensitive trade( more in these later). I could not find indication of costs on page. That is disturbing, what determines whether you make gains on the JSE depends on the cost of the trade. I would give it a miss but the first of the ones seemingly focussed on younger investors. It will have to be a 3 for this broker just because of the lack of proper communication and pricing.

5. BoE Online Share Trading 086 000 3681 Sandton www.boepersonal.com

This is a subsidiary of the Nedbank online share trading franchise but is more suited to the lower net worth individuals. It has opening fees that add up to R1374, and a quarterly fee of R134.Its monthly subscription is slightly steep at R150, but that is around the going market rate. Its brokerage is a o.7% and a minimum of R70, which is not terrible. They have very cheap fees for their derivatives but its hard to get over the R1374 opening charge…so I give them a 4 because of the exclusionary effect of their opening balance and monthly fees.

6. Absa Stockbrokers (Pty) Ltd 0860 05 0403 Parktown www.absastockbrokers.co.za

Absa has very reasonable brokerage rates of minimum R120 and flat 0.4%. It has no monthly subscriptions. It somewhat has a an education service but it is brief and not enough for a beginner. It does not have a derivetives section so for these reasons I give it a 5.

7. KSL Online 086 537 6500 Illovo www.kslonline.co.za

Is actually a very good broker for starting out. The only gripe I have with it is does not seem to offer derivatives trading, as much as this for the more advanced trader, this is where investors with a limited capital supply could be making their money and getting into more trades. It has a Very reasonable monthly subscription of R50 a month; and the brokerage is a flat 0.35%. I know it unfair of me to make the fact that this broker does not trade derivatives be so detrimental to its rating but you will see the importance of having these instruments available to you. I give this one a 6.

8. Sanlam iTrade 011 778 6600 Dunkeld West www.sanlamitrade.co.za

This is a beautifully put together site and once you get used to it is ideal for the type of thing s we want from it. They have two option subscription of R50 or R100 rand, I always advocate full subscription. Has an extensive learning area and this is second only to brokerage in terms of importance when starting out on the JSE with a broker. This too does not seemingly have derivatives trading, so for this reason another 6.

9. PSG Online 0860 77 4774 Bryanston www.psg-online.co.za

We have gotten into my last three and favourite brokers. It was hard separating them but I had to go with what I know and have used extensively. More on that later. Tied for second place is PSG online. What an amazing offer they have, iwill soon open an account with them when time is available to trade again. They have seemingly almost every product my broker has except live FREE seminers. There is no space to mention all the benefits they have so I will mention all those that they have in excess on standard bank…for now. For simplistic purposes lets say they allow you to go international as they also trade in foreign markets and deal in so many economics tools that I shall be explaining later. I give this company a go with an 8.

10. Imara S.P. Reid (Pty) Ltd 011 550 6200 Illovo www.imaraspreid.co.za

Now this baby offers all the benefits of standard bank apart from the live FREE seminers. They charge competitive rates and are a great place to start for the investor with limited capital. Why? They seem to have the most extensive availability of derivatives and are recommended by an analyst that has made me some good profits by picking derivatives for me. Its tied for second at 8

11. Standard Bank Online Share Trading 0860 12 1161 Johannesburg www.securities.co.za

And finally my favourite Standardbank online share trading. It won Business Day Investors Monthly stockbroker of the year award. Its easy to use interface, quickness in reponse, education centre, availability of products and its very low minimum brokerage rate of R50. I say it’s a definite yes at 9

*note: always add about R100 rand on top of brokerage that is less than R500 to see how much the total cost of the trade will be

Required documents


As the documents will be similar for most brokers here are the basic required documents for Standardbank online share trading, contact each individual broker when finding out how to send them and what exactly they require.

Standardbank requirements

We will require certain documents from you when opening an account with us. For existing South African Standard Bank current or savings account customers these can be faxed, emailed or posted to us at:

Fax: +27 11 631-0649
Email: securities@standardbank.co.za
Post: Internet Accounts
PO Box 61309
Marshalltown 2107
Johannesburg
South Africa

For non Standard Bank current or savings account customers or Standard Bank customers residing in Namibia, Swaziland or Lesotho, certified copies or originals of these documents will have to be posted to us.


Individual - South African Standard Bank current or savings account customer

1. Copy of a valid South African identity document (if resident) or passport (if foreigner) with your specimen signature.
2. Proof of residential address, for example, water and electricity bill (not older than three months), your bank statement (not older than three) or current lease agreement. The documents must be in the name of the account holder. If not, written confirmation from the account holder that the applicant lives at the residential address and a copy of the account holder's identity document is required.
3. Proof of income tax number, for example, copy of an official document issued by the South African Revenue Services. An IRP5 will not be accepted.
4. Cancelled cheque or a certified copy of your bank statement (not required for South African Standard Bank current or savings account customers). The name of the bank account must correspond with the applicant’s details.

if you have no intention of opening as a company or such then move directly to the bottom with the bold text for what is in the next issue

What companies and such will have to submit

As the world changes people will have different needs so I am also posting what companies and so on will need to submit:
For non Standard Bank current or savings account customers or Standard Bank customers residing in Namibia, Swaziland or Lesotho, certified copies or originals of these documents will have to be posted to us.


Partnership - South African Standard Bank current or savings account customer

1. Copy of partnership agreement.
2. Copy of resolution covering opening, appointing of authorised representative and operation account.
3. For authorised representative, documentary proof of residential address, for example, water and electricity bill (not older than three months), or current lease agreement.
4. For authorised representative, copy of valid identity document (if resident) or passport (if foreigner).
5. For all partners, copy of valid identity document (if resident) or passport (if foreigner) and registration documents for legal entities.
6. Details of all partners (name; date of birth; identity number; residential address; tax number and contact details)
7. Cancelled cheque or a copy of partnership bank statement (not required for South African Standard Bank current or savings account customers). The name of the bank account must correspond with the applicant’s details

For non Standard Bank current or savings account customers or Standard Bank customers residing in Namibia, Swaziland or Lesotho, certified copies or originals of these documents will have to be posted to us.


Trust - South African Standard Bank current or savings account customer

1. Copy of trust deed or other founding documentation.
2. Copy of letters from the Master of the Court on registration of trust and appointment of trustees.
3. Copy of resolution covering opening, appointing of authorised representative and opening of account.
4. For authorised representative, documentary proof of residential address, for example, water and electricity bill (not older than three months) or current lease agreement.
5. For authorised representative, copy of valid identity document (if resident) or passport (if foreigner).
6. For all trustees, beneficiaries and founders of trust, copy of valid identity document (if resident) or passport (if foreigner) and registration documents for legal entities.
7. Details of all trustees, beneficiaries and founders of trust (name; date of birth; identity number; residential address and contact details).
8. Proof of income tax number, for example, copy of an official document issued by the South African Revenue Services.
9. Cancelled cheque or a copy of the trust bank statement (not required for South African Standard Bank current or savings account customers). The name of the bank account must correspond with the applicant’s details.

For non Standard Bank current or savings account customers or Standard Bank customers residing in Namibia, Swaziland or Lesotho, certified copies or originals of these documents will have to be posted to us.


Company - South African Standard Bank current or savings account customer

1. Copy of Certificate of Incorporation of companies (CM1).
2. Copy of Memorandum and Articles of Association for companies.
3. Copy of notice of registered office and postal address (CK22) for companies.
4. Copy of documentary proof of appointment of directors (CM29).
5. Copy of resolution covering opening, appointing of authorised representative and operating of account.
6. For authorised representative, proof of residential address, for example, water and electricity bill (not older than three months) or current lease agreement.
7. For authorised representative, copy of valid identity document (if resident) or passport (if foreigner).
8. For all directors and shareholders (holding more than 25% voting rights) of company, copy of valid identity document (if resident) or passport (if foreigner) and registration documents for legal entities.
9. Details of all directors and shareholders (holding more than 25% voting rights of company (name; date of birth; identity number; residential address and contact details).
10. Proof of income tax number and Vat registration number, for example, copy of an official document issued by the South African Revenue Services.
11. Company letterhead.
12. Cancelled cheque or a copy of company bank statement (not required for South African Standard Bank current or savings account customers). The name of the bank account must correspond with the applicants details.

For non Standard Bank current or savings account customers or Standard Bank customers residing in Namibia, Swaziland or Lesotho, certified copies or originals of these documents will have to be posted to us.


Closed Corporation (CC) - South African Standard Bank current or savings account customer

1. Copy of Founding Statement (CK1) or amended Founding Statement (CK2) for CCs.
2. Copy of Association Agreement for CCs (if applicable).
3. Copy of resolution covering opening, appointing of authorised representative and operating of account.
4. For authorised representative, proof of residential address, for example, water and electricity bill (not older than three months), current lease agreement.
5. For authorised representative, copy of valid identity document (if resident) or passport (if foreigner).
6. For all members of CCs, copy of valid identity document (if resident) or passport (if foreigner) and registration documents for legal entities.
7. Details of all members of CC (name; date of birth; identity number; residential address and contact details).
8. Proof of income tax number and Vat registration number, for example, copy of an official document issued by the South African Revenue Services.
9. CC letterhead.
10. Cancelled cheque or a copy of CC bank statement (not required for South African Standard Bank current or savings account customers). The name of the bank account must correspond with the applicants details.

For non Standard Bank current or savings account customers or Standard Bank customers residing in Namibia, Swaziland or Lesotho, certified copies or originals of these documents will have to be posted to us.

Thank you, next we will be dealing with what kind of investor are you? What products best suite you and what approach suites your income and wealth level. Watch this space…