Thomas
Could you possibly walk us through an actual transaction as you visualize it
The big problems that companies like Schwab are having is all the red tape that surrounds the different security regulations in each country. In addition, currency conversion costs for both the buy and the sell are also a big headache. SEG is in a way by-passing all of this red tape and currency conversion problems by getting each customer to open accounts in the countries they want to trade and being a portal for those trades. Using this approach the customer gets the lowest commission costs and fastest trade execution and doesn't have to worry about currency conversion for each trade.
So what are the steps:
Say you want to trade on a regular basis in Hong Kong, India and Australia.
You would go on SEG's website and bring up each country you want to trade in. For each country they will provide at least two leading brokerage houses in the country that they are partners with. SEG will provide you details on the broker (history, etc.), commission costs, margin rates, etc. and you choose which broker you want to use for that country. SEG is only partnering with the top brokerages in the each country so you know the brokerage house you are signing up with is secure and is cutting edge. To date all eight of SEG's brokerage partners are at least in the top 5 brokerage firms for their country. The agreements with each brokerage are exclusive long term agreements so there is no chance of another portal coming in and doing the same thing SEG is offering, at least not with all the top brokerage houses around the world. SEG will provide you with the form to open the account with the brokerage house you choose for that country. SEG will then assist you to fill out and open the account and also assist you to transfer the funds into or out of this account. After this is done you will have a physical account with that brokerage house in that country in their currency.
So if you want to trade in Hong Kong, India, and Austr. you would open accounts with the brokerage firms of your choice in each of these countries and deposit funds in each of these accounts. The technically slick thing is that SEG than acts as a single interface for all your accounts and trades. All your trades are made through the same trading interface and all your trading activity, balances, etc. are merged together on your SEG account. So once the accounts are open you will not even realize you have three separate accounts because they are all merged at SEG. When doing the trade you just type in the symbol and click the country and the rest is done for you.
So what are the plus:
If you wanted to trade a Hong Kong stock through say Merill Lynch, you have several problems.
1. You are charged for currency conversion both for the buy and the sell. This can be a significant cost (several percent of the trade). With SEG you don't have to worry about currency conversion for each trade since you money is already in that currency.
2. It has to go through both the Merill Lynch North American desk and their Hong Kong desk (if they have one). Because of territory rights for each desk you get charged commissions at both desks which can really add up. With SEG you only have a single flat fee commission which is the same as the brokerage house you signed up with. There is no added cost for using SEG as the portal.
3. Speed! - because of all the different rules and regulation for each country the trade has to be check and re-check and sent through more than one desk when using a broker like Merill Lynch. You can imagine how long it takes for an order to be processed using this approach. Since with SEG you have an account right on the exchange your trade will go through at the fastest possible rate for a investor. You are on the same playing field as individuals trading in that country.
So what are the negatives.
1. Since you are using different brokers you will have your trading funds spread around in the different trading accounts. Of course you can wire money in and out of each account and SEG will assist you in this process.
The majority of investors don't have a clue how to research a broker in a foreign country, how to open an account in that country or how to transfer funds in and out of an the account. SEG will provide all of this information and services in one easy to use site making the process of opening accounts in foreign countries simple. Since they provide a single interface for all the accounts the investor will not have to worry about all the headaches of using different brokerage firms in different countries (e.g different trading interface, different language). However other than just being a portal for the trade SEG will also provide a bunch of other services which investor/users will sees as value added. You might want to look at Crazy Canuck's post for some info. on this. Message 13236345
Best Regards
KEITH |
