Online Stock Brokers Allow Easy Entry Into Stock Market

Gone are the days when having a stockbroker means you’re a millionaire with a lot of cash to spare. Thanks to the advent of new and secure online stock trading platforms, investing in the stock market can be as easy as opening a deposit account with your bank, or even easier.

We’ve mentioned that one of the goals of an exchange is to provide an orderly trading environment for the market participants. One of the ways through which an exchange achieves this is by licensing specific entities to engage in the actual buying and selling of shares on the trading floor. These are the stock brokers.

Stock brokers basically are middlemen who facilitate the purchase and sale of securities listed on an exchange where they are licensed to operate. Stock brokers earn money from commission on sales and purchases. Imagine if anyone who wants to buy or sell shares will go to the trading floor and haggle with everyone else. That would be chaotic! This scenario of sheer chaos is avoided by allowing only those professionally licensed to do the trading among themselves.

Brokers match buy and sell orders among each other customers. They service requests of multiple clients whose orders can range from as little as a few hundred pesos to as much as hundreds of million pesos worth of shares. Not a long time ago, having a stock broker is considered as a luxury. But with the exchange’s impetus to modernize, new players working on online platforms started operating on the market. This was also because they need to attract new investments from local small investors or the broader retail market.

One such online stock broker is CitiSecOnline.com or COL.

CitiSecOnline

CitiSecOnline is an online stock broker allowing retail players to enter the stock market without the perceived prohibitive costs of participating

Based on my personal experience, it was easier for me to open an account with COL than opening a savings account with a bank. All of the forms to open a stock trading account are available from COL’s website. You can either fax, e-mail, mail or bring your application forms to COL’s office and make a deposit to fund you stock trading account. Once your application has been approved and your funds have been credited, you can instantly start trading using COL’s online web-based platform.

COL has a regular trading account with a minimum funding requirement of 25,000 pesos and an “easy investment program (EIP)” account that allows you to begin with as little as 5,000 pesos. You don’t really need millions to start owning stocks and see your investments grow at a greater phase than your deposit.

As a word of caution, COL and other online stockbrokers offer brokerage services only, i.e. facilitating transactions, and do not offer advisory services, i.e. what stocks to pick or when to buy or sell. That would be your call. However, it offers research products that you can use as a guide to investment. Also, all investment risks are borne by the investor alone. Since you know that investment in equity is the riskiest form of investment, be guided that you should be prepared to lose part of the capital that you invested in the short-term.

An alternative to COL is First Metro Securities Brokerage Corporation or First Metro Sec, a subsidiary of First Metro Investments Corporation, the investment banking arm of the Metrobank Group. First Metro Sec links your online trading account to an existing Metrobank account through Metrobank’s online banking facility, Metrobank Direct. There is no minimum amount required to open a First Metro Sec online stock trading account as long as there are sufficient funds in your linked Metrobank Direct account. This linkage allows for easier settlement of stock purchases and easier access to proceeds from stock sales.

First Metro Securities Brokerage Corporation

Your First MetroSec online stock trading account links to your Metrobank Direct online banking facility, making settlements and crediting easier.

Whatever service you use, you will still be participating in the same stock market, the only difference would be in commissions and in the interface of the platform. But before you use any of these brokerage services, it would be sound if you do your research on which stocks to pick. More on that in the next blog.

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About Benedict Bernabe

Benedict Bernabe, 27. Benedict has a Master's degree in Development Studies from the University of Melbourne, Australia and a Bachelor of Arts degree in European Languages, cum laude, from the University of the Philippines Diliman. He has worked with the United Nations in the Philippines as the Community Facilitator of the Community of Practice on HIV&AIDS. He worked with Standard & Poor's Capital IQ, a financial information company, as researcher, translator and quality analyst in the investment research team. Prior to this, we worked at IBM Business Services. Benedict is a certified yoga teacher.

2 responses to “Online Stock Brokers Allow Easy Entry Into Stock Market”

  1. Marion Siongco says :

    Hi!

    Just wanna know if this is the same as discount brokerage services, where trading fees are cheaper compared to other forms of brokers

    Im still on the beginner stage of my finance Life, still learning the fundamentals, terms, etc.

    Thanks!

    • The Manila Finance Guy says :

      Hi Marion!

      Thank you for your query. Online brokers are examples of “discount brokers”. The other type of brokers is the full-service broker, which offer all the brokerage services and unsolicited investment advice. Online brokers are at the other end of the brokerage service range in terms of cost and complexity of services. They offer you the basic buying and selling services with other ad hoc products available for an extra fee. Think of it as an airline. Full-service brokers offer you everything like an airport lounge, hotel transfer, re-booking options, in-flight meals and entertainment with the corresponding costs included in the fare while budget airlines offer you lower fares and some of these services for an add-on fee. The point is, for both type of airlines, it will get you to your destination.

      I hope this answer helped and I hope for a fruitful financial life for you!

      Thanks,
      The Manila Finance Guy

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