Dabble Share Trading

Anyone else excited?

I am pretty excited. Almost opened a CBA account as I was looking at doing investments and was going to ask if this was something we could jump into, in the future then saw the news :slight_smile: would be great if we can do ASX too.

I know a lot of places where I can plug our new service, let me know when we’re ready to go and I’ll kick off a round of advocating. Even better if there is a referral program :stuck_out_tongue:

Australian Financial Review (may have pay wall)

Another source

Offical Media release by XInja:

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Hi there, I’m an investor and just read about the Dabble announcement. I’m interested to know, in being able to offer brokerage-free trading in the US, will there be any dependence on HFT in the order routing?

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A couple of questions:

Who is Salan Wealth and what is their role in this product ?

Is this effectively the Drive Wealth product ( used by Stake and others) integrated into Xinja ?

Press release says subject to regulatory approval - what approvals do you required ?

Thanks

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Hey @Hello - Sanlam Wealth is our licensing partner. Xinja Pty Ltd is a Corporate Authorised Representative (CAR) of Sanlam Private Wealth Pty Ltd (Australian Financial Services Licence No. 337927). Yes - we’ve integrated with DriveWealth. One of the differences is though that it’s integrated with the Xinja bank account (so funds for both buys and sells settled instantly out of or back into the account as soon as the US market opens). Regulatory approval in this instance is ASIC (for the Sanlam part) and also APRA for Xinja (because we’re an ADI).

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BTW, Eric about to be interviewed on Ausbiz about it https://www.ausbiz.com.au/

Hi @diazkongming and welcome! :wave:

So it won’t be possible for high frequency trading to take place in volume as customers won’t be able to pattern day trade through the Dabble platform.

Further to this, the broker is a pass through facilitator of Dabble trades. This means that they are obliged under SLAs (Service Level Agreements) to place trades upon receipt.

Whereas, the HFT system is algorithmic in nature, and attempts to move markets through volume. As Dabble is linked to the client’s Xinja banking account and the US margin account does not hold any balances, the trade order journey starts from a client’s Xinja bank account, which is in AUD. HFT is meant to be high volume and “instantaneous” to market moves. Dabble doesn’t really accommodate HFT definition of “instantaneous”.

I hope that helps to answer your query!

If you have any other questions please let us know :blush:

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Hi @xinjalotto,
Will it be possible to transfer existing US holdings into Dabble so that they become part of my portfolio?

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Hey @Jabba!

It’s possible if you’re able to complete an ACAT form to send to our platform provider DriveWealth. We’ll have more information to share about this process closer to launch, so please get in touch with us again later! :blush:

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Hi @xinjalotto, thanks for your reply.

My apologies, I think I wasn’t 100% clear with my question. I’m not seeking to do HFT myself on the platform, what I’m wondering is whether, when I place a buy or sell order on Dabble, what the order routing will be, and whether through the journey between me placing my order and it getting filled, are there any HFT firms in the ecosystem.

For example, if I was to place an order to buy Stock X at $1.05, which exchange does it get sent to to be filled? If it happened to get routed through the BATS exchange, they are known for selling order flow to HFT firms, who then use their algorithms and speed to sweep up all of Stock X that is going for $1.05 and cheaper, and then turn around and tell me it’s only available for $1.06 (i.e. scalping the trade).

So I suppose my ultimate question is how is Xinja able to offer brokerage-free trading in the US market? Is it because Xinja will receive rebates or some other compensation for order flow from the exchanges (or whoever is facilitating the trades)? If that is the case, then my concern is that HFT could be sitting behind it, and my limit orders will be systematically scalped.

What triggers my question is the fact that most platforms like Robinhood are only able to offer brokerage-free trades in the US because they get rebates from HFT, so I am interested to know whether Xinja has found an alternative way to offer brokerage-free trades without needing to rely on HFT in the background.

Many thanks!

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Don’t see the point, look at Stake, no brokerage, no monthly subscription, only a $5 fx fee, but you have both an Australian and American account, so that $5 is only when transferring from one to the other, so dividends and sales proceeds go into the American account, and if you then purchase more shares, no fix fee!

As for partial stocks, hello that’s how the US market works, you can do that with any broker.
So dabble Bottom line, it’s expensive, and big whoop!

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Dabble sounds interesting.
Just one question, in regards to the US taxation obligations are Xinja handling that- I currently use stake to trade the US market who look after all taxation obligations in the US on clients behalf.

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You would expect yes as it sounds like exactly the same product ( google Drive Wealth) that Stake use ( and others) labeled Xinja and intergrated into App. It would be hard to offer without this.

Hi @BrettH - following on from @Hello’s comment, our partner DriveWealth auto deducts 25% withholding tax for dividends in the US. For Australia, the ‘W8BEN’ form (relevant tax form in AU) will be completed by DriveWealth on the customer’s behalf and a statement will be available at the end of the year but customers should seek independent advice on what tax is payable.

Hi @diazkongming - apologies for the confusion. Let me try that again!

So Xinja is able to offer brokerage-free trading in the US market because we charge a subscription fee of $8 per month. In addition, we charge a 1% FX margin to cover our foreign exchange administration costs as well as cover for FX volatility.

DriveWealth (our trading platform) place the trades with the exchange, and Xinja doesn’t control this part of the trade process. It’s out of both of our hands as to how the exchange finds the other side of the trade. DriveWealth look to execute at the market rate, and are governed to execute at “best price”.

Hey @me60732 and welcome back! :wave:

As you may already be aware Stake have different tiers with their mid and premium services being subscription-based trading at $9/mth and $19/mth respectively, with each increase in tiering offering higher levels of service and trading experience, such as trading on unsettled funds.

To our knowledge, rather than their lowest tier being fixed at $5 per FX transfer, this is set at 0.70% of the FX spot trade rate. Further to this, any withdrawals from the USD margin account are $2 on top of the foreign exchange charge which is done at a spot FX fixed at T+2 business days from the transaction date. We understand that there is an Express FX transfer that offers 1 business day funds transfer, however, this costs an extra 0.50%, on top of the 0.70% standard FX charge.

This means you have to wait at least 2 business days to get your money into your US account before you can trade. Trading can only take place and money transfers out of your USD margin account can only be conducted on settled funds. That is - you have to wait for the trades to settle before you can trade or withdraw.

The advantage of Dabble is that you can trade on unsettled funds at both FX level and at US trade order. We think our service sits somewhere between Stake’s $9/mth and $19/mth premium subscription tiers. In addition, we think our investors will like that portfolios can be expressed in AUD for clarity, particularly considering the recent volatility that we have been experiencing in the AUD/USD exchange rate.

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Thanks @xinjalotto, that makes sense re the subscription fee. I’ll also do a bit of research on DriveWealth to see what their deal is. I think Xinja is building a good brand around the motto “how money should be”, so if Dabble turns out to be a hunting ground for HFT, that could erode that brand positioning and make Xinja seem no different to the rest of the banks.

If you haven’t already, if you’d like you can hear Eric (Wilson, our CEO) talk more about Dabble here: https://www.ausbiz.com.au/media/xinja-to-dabble-in-the-us-markets-?videoId=2913&fbclid=IwAR2-FZTRAhj9W98K5A6nnlqEwJMZW_OZ3mY1iBKzaB5ggKQhjMh8ybwDJYc

I don’t know where you’re getting the stake subscription from, I’ve used stake for about 3 years, and have never paid a subscription.

Hi @Me60732 it sounds as if you may be on the Stake starter. More information about the tiers of Stake subscriptions may be found via their website here: https://hellostake.com/pricing/ and here: https://hellostake.com/wp-content/uploads/2020/03/Pricing-PDF.pdf

Thanks @xinjalotto, that video was actually very relevant for my question. The interviewer raised the issue at about 4:00 and Eric confirmed there won’t be any sales of order flow to third parties, which is a good sign. Now all I need to research is whether DriveWealth also doesn’t sell its order flow, and I’ll be 100% at ease.