Fidelity Investments, jumping on growing demand from investors for higher returns and diversification through international stock trading, is making it easier for independent advisers, brokers and direct retail investors to access overseas markets in U.S. dollars or local currencies.
Fidelity's brokerage unit, which has been working on an online international-trading service for about 18 months, went live with the offering last Thursday. Advisers can enter orders and receive execution and settlement details on stocks in 25 countries and in 16 currencies through Fidelity's WealthCentral platform, while brokers using the firm's National Financial Services LLC clearing subsidiary can trade through the Streetscape platform.
Retail investors can trade through their online accounts on a more limited basis in 12 foreign markets and eight currencies.
“International-stock-market trading is not for everyone,” said Richard Hart, senior vice president of new business and initiatives at National Financial, acknowledging the accelerated currency and settlement risks of international trading. “But we see this as very complementary” to the more than 1,450 mutual funds and exchange-traded funds with international exposure that Fidelity offers.
He said that the new capabilities have attracted interest from broker-dealer prospects who previously wouldn't have entertained using National Financial.
“We expect more bang for the buck initially in NF, but anecdotally we think we will see lift on the adviser side, too,” Mr. Hart said.
“Trading international stocks previously has been clunky and manually intensive,” he said. “Now it is straight-through and seamless.”
To make international trades, professionals until now had to call Fidelity's international-capital-markets desk, which had ties to local brokers in 43 countries. The all-electronic global trading capabilities will be available to advisers and brokers through their relationship managers, Mr. Hart said.
Pricing for both National Financial's brokerage clients and the registered investment advisers who keep their assets under custody with Fidelity Institutional Wealth Services varies widely according to the mix of services used and the countries where stocks are traded.
Rival clearing and custody firms such as Bank of New York Mellon's Pershing LLC division and Penson Financial Services have offered international-trading services for some time.
“[Fidelity] lost out to some of those firms, but I think they are taking on those guys more,” said Alois Pirker, a research director and head of the wealth management group at Aite Group LLC, a consulting firm.
National Financial last month opened a clearing business in Canada for local brokers, and Mr. Hart said that the trading capabilities represent the second leg of the unit's international strategy. The firm could potentially offer local services in Asia and Europe, he said, but has no specific plans to do so.
Fidelity's ability to make global trading available on advisers' and brokers' workstations gives it at least a temporary selling point over some competitors.
Pershing offers international-stock-trade execution in almost 50 countries and multiple currencies, but it doesn't yet provide access through its NetX360 platform for brokers and advisers. It expects to do so next year, said Frank La Salla, a managing director of global securities services at Pershing.
Since many Pershing clients have international outposts, they have long expected it to offer trade execution and global clearing services, he said. John Diamantis, another Pershing managing director, said that some advisers at large RIA firms are also active users of its global margin product, which allows them to borrow in multiple currencies against the value of their international holdings.
A spokeswoman at The
Charles Schwab Corp., which doesn't have a clearing arm, declined to comment.
J. Thomas Bradley Jr., president of TD Ameritrade Holding Corp.'s institutional arm for independent advisers, said the firm has no immediate plans for a multiple-currency-stock-trading offering, saying that the its platform of ETFs and mutual funds, along with clients' access to American depositary receipts, seem sufficient for most advisers.
Fidelity is promoting the new offering to retail clients and advisers through print and online advertisements, some of which will use the slogan “Take on the world.” It is part of a broader push under which Fidelity recently increased the international component of its target date funds to allocations of between 20% and 30%, and recommended that most investors with return horizons of five years or more increase their international-equity allocation to 30%.
The firm has already tested the online-stock-trading approach with its retail customers who make at least 120 trades annually or have a portfolio valued at $1 million or more And it is offering research from Thomson Reuters and Audit Integrity Inc. on individual international stocks to retail investors and advisers.
E-mail Jed Horowitz at [email protected].
