Online stock trading donot allow Canadians in US

[nishant]

Does any body know why a TN visa holder residing in US cannot open online trading account like Firstrade which has $ 4.95 per trade and no minimum balance requirement

In online application form, doesnot have Canada in country of citizenship.

You can open with other traders like Fidelity but cost $ 20 per trade and $ 2500 minimum balance.

[Reba]

Why not email the company themselves and ask them?

[Steven]

It's probably for two reasons, the first is that they don't trust foreigners necessarily, but the main reason is the Patriot Act.

The Act requires banks, brokers and so on to have established the identity of people they deal with and the regulations for aliens in non-immigrant categories are pretty strict. Essentially they more or less require you to appear in person, although providing copies of your ID such as your SSN card and passport should be sufficient, having read the Act. However a lot of lawyers say to banks the person must appear in person to open an account.

Obviously this makes it very difficult to open any sort of on-line account and this really sucks because you can usually get better interest rates at on-line banks.

I even offered to go to the HQ of one of the on-line banks so they could verify my identity but they didn't seem keen on the idea.

-- Thu Feb 19, 2009 12:52 am --

I looked up the identification regulations:

For a non-U.S. person, one or more of the following: a taxpayer identification number; passport number and country of issuance; alien identification card number; or number and country of issuance of any other government-issued document evidencing nationality or residence and bearing a photograph or similar safeguard.

So basically a passport should do it for legal purposes.

[nitefriend]

According to Firstrade's website, the cost is $6.95 per trade.

Interactive Brokers is dirt cheap, $1 minimum per trade. The drawback is that you may have to pay $10/month if you don't pay enough commissions $30/month. You need to trade many times each month to pay $30 in commission. Paying $10/much is not much. If you make 2 trades (buy and then sell 1 stock and pay $6.95 each time) you will be paying $13.90 which would cost more than what IB charges which is just $12 ($10 monthly access fee 2 * $1/trade) assuming you buy/sell 100 shares.

If you want to trade options, you can't beat IB which is just 70cents per contract with a minimum of $1 while Firstrade charges $6.95 75cents per contract.

Also, IB has many advance order types which can help you save money or losing money (trailing stops).

Check their website InteractiveBrokers.com. I mainly use IB even though I have etrade and TDAmeritrade accounts. I use TDA mainly for mutual funds.

[Steven]

I think you may also run into a problem based on what your tax home is, it's one thing to be a "non-U.S. person" but if I recall the SEC rules correctly your tax home must also be in the US in order to use a US broker, haven't checked them though, you'd need to talk to a broker. So if you still file a resident T1 and a 1040NR in the US I think you have to use a Canadian broker. Some brokers are registered in both countries though so it's just a paperwork problem.

[nishant]

No. The issue is only with Canada, Australia and some other developed countries.

Firstrade allows trading for all other non citizens work-visa holders in US including countries in Africa and Asia.

[Steven]

Well Canada is the relevant one though isn't it.

[beckybecky]

The reason why Firstrade don't allow Canadian customers is simple. It is because Canadian gov't is as strict as the U.S. gov't. Too many restrictions~ Residents of other countries won't have this problem.