Execution-only brokers have been reviewing their services and pricing to prepare for a wave of new customers in the wake of the sharemarket recovery. They say large numbers of customers are reactivating dormant accounts and investors are moving accounts from full service to execution-only brokers.

The brokers are competing with sharper price deals, improved services and expanded research offerings.

Macquarie Group has relaunched its execution-only service as Macquarie Edge and incorporated “social networking” features into the new platform. E*Trade has added a tax-reporting service. Suncorp has signed up a new partner, CMC Markets, and upgraded the research and education parts of its service. CommSec is adding more research and extending its mobile service.

E*Trade managing director Stuart Sayers says business started to recover in February and March and has been growing steadily.

“August would have been a good month in any year," he says. "Two out of our five best days ever were in August. And the August volumes were maintained through September.

“Two things account for the very strong figures in the past couple of months: there was a lot of pent-up money sitting on the sidelines and traders are keeping the duration of their holds short. The average has come down from eight days to four. That explains a lot of the volume increase.”

Two months ago, E*Trade added a free tax-reporting service. Clients can have a full tax report on any taxable items held on their E*Trade account.

Macquarie Group's DirecTrade service has been superseded by Macquarie Edge. The head of direct investing at Macquarie, James Leplaw, says the new service has adapted features from social-networking sites such as Facebook and allows users to set up “investor communities”.

Leplaw says the other distinctive feature of the new service is a more useful aggregation of data.

“Our research [found] self-directed investors are getting too much information and they are getting it in disaggregated form. What we have done with Edge is bring the data, news and research together in a relevant format. If the client is a BHP shareholder, they will find Macquarie research on the stock, BHP company announcements, Dow Jones news reports, consensus estimates and sector reports packaged together.”

Bell Direct is another execution-only broker that has focused on making data more useful for clients. Its market-overview page gives investors a single-view dashboard of the markets and their account, plus the latest news.

Bell Direct chief executive Arnie Selvarajah says: “We've made the information contextual. We filter according to the stocks in each client's portfolio and present it so everything is available with as few clicks as possible.”

In June, Bell Direct launched new online trading tools. Investors can call up reports on directors' trading activity, unusual volumes, changes to substantial holdings, market depth charts, lists of stocks at their 52-week highs or lows and changes to analysts' buy and sell recommendations.

Suncorp's manager of personal lending products, Paul Evans, says since it switched broking partner's to CMC Markets, its clients have access to live dynamic pricing and free Aspect Huntley research.

CommSec is also adding more research. It has been hiring analysts to expand into institutional broking and managing director Matt Comyn says much of their output will be available to retail clients. CommSec has also been building a more integrated service so investors can use one login for their trading, cash management and margin loan accounts.

Prices come down

Strong competition in the execution-only broking market is exerting downward pressure on fees.

Suncorp has dropped its standard brokerage from $23.95 to $21.95 for trades with a value of less than $10,000. The rate goes up to $29.95 for trades worth between $10,000 and $25,000 and the fee is 1.2 per cent above that.

Bell Direct is a later entrant, setting up in late 2007, and has a modern trading platform that allows it to keep its costs low. Its fee of $15 a trade (or 0.1 per cent of the value of the trade, whichever is higher) is among the lowest in the market.

According to Canstar Cannex, the cheapest online brokerage is Amscot Discount Stockbroking's rate of $14.85.

CommSec has a standard fee of $29.95 a trade but that falls to $19.95 a trade for internet preferred clients, which means the investor has a linked cash management account.

E*Trade has a high standard rate of $32.95 (or 0.11 per cent, whichever is higher) but offers volume discounts. Clients who make between 11 and 20 trades a month pay $27.45 a transaction (or 0.11 per cent) and clients who make more than 20 trades a month pay $21.95 a transaction (or 0.11 per cent).

Macquarie has dropped its standard fee from $39.95 on its old DirecTrade service to $28.95 on Edge. It is offering a three-month introductory rate of $23.95 and clients can maintain that rate by making one trade a month and keeping $5000 in their accounts. Clients who trade at least five times a month pay $18.95.