Brokerages offering free shares and commission-free trades in tussle for younger investors

Benjamin Cher

Published Thu, Dec 16, 2021 · 12:00 AM

WEALTH management platform Syfe is launching Syfe Trade, a fractional trading product for US stocks, in a tussle for millennials and Generation Z's dollars.

Fractional trading, or buying and selling fractions of a share, isn't a new concept, with that option being available overseas for some time now. This represented a technically challenging project for Syfe, having to deal with forex and other considerations.

"From our perspective, could we have done this earlier? Probably, but we obviously want to spend time building the technology back end and the user understanding," said Dhruv Arora, founder and chief executive of Syfe.

This product offering has pipped neobank Revolut to the line, having only announced its capital markets licence on Dec 6. With younger investors turning to trade on the capital markets, fractional trading makes owning part of an Amazon share more realistic.

"In the first six months, we aim to onboard over 100,000 users in Singapore," said Arora.

Syfe's offering will allow users to buy dollar value fractions of any US stock or exchange traded fund (ETF), from as little as US$1 as opposed to fractions of the share price. Currently other brokerages only allow customers to buy and sell a whole US share. Some, like ProsperUS by CGS-CIMB, are looking into offering fractional trading, while others declined to comment about plans to roll that out.

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Competition in this space has been fierce, with recent entrants moomoo by Futu SG and Tiger brokers offering free shares or welcome gifts of S$200 cash credit to trade with. Syfe is also offering a welcome gift of S$200 cash credit to trade with if users fund their portfolio with at least S$1,000.

Syfe is offering new users 5 commission-free trades and thereafter will charge US$0.99 per trade in the introductory period until the end of Q1 2022 and US$1.49 per trade thereafter. Others like moomoo are offering 180-day commission-free trading, thereafter US$0.0049 per trade not inclusive of the platform fee of US$1 and other fees like goods and services tax. (amendment note)

In a seemingly similar move to Revolut, Syfe will continue to have commission-free trades, according to Arora, with users getting 2 free trades in perpetuity.

"For far too long, the decades-old brokerage industry was in need of a major disruption with high fees and an experience laden with inefficient processes and interfaces. While there have been new entrants to the industry, we are building on the success of our wealth offering, and enhancing it further," said Arora.

While Syfe is more well known for its robo-advisor product, it recently launched personalised portfolios in September, where customers can pick the ETFs they want for their portfolios. According to Arora, about half of the inflow of users to the personalised portfolio product have been from its other robo-advisor product, Syfe Select, signalling users wanting more control over their portfolios.

Millennials seem to be the prime target for these platforms, with all citing a target audience that range from under 40 years old to between late 20s and mid-40s. Syfe is targeting users aged between their 20s and mid-40s. While more interest might be expected from Gen Z and millennials due to their digitally native upbringing, the reality might be a bit different.

"But the reality is the most active users were in the 30s to 40s segments, it's something we'll have to see but to kickstart we will be targeting this product segment," said Arora.

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Amendment note: An earlier version of this article stated that moomoo's platform fee was US$0.005 per share. It is actually US$1.

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