Canadian investors will soon have the power to buy and sell stocks on their cell phones, a development that could revolutionize the business by allowing traders to make real time decisions wherever they are, leading to higher trading volumes.
But unlike the United States, where brokerages raced to release apps for BlackBerries, iPhones and other mobile devices, and are now having to retool them because of rapidly changing technology, Canadian firms have been biding their time.
Discount brokerages now say they will launch the service as early as later this year.
Brokerages say Canadian clients are clamouring for trading tools on their phones and mobile devices. But for a number of reasons - including Canada's expensive data plans from cell-phone service providers - demand in Canada has lagged that in the United States, according to industry experts.
In fact, nearly 10 years ago, TD Waterhouse experimented with a mobile trading tool but found that neither the phones, their networks nor retail investors were ready for the new technology at the time, said John See, president of TD Waterhouse Discount Brokerage. As a result, discount brokerages in Canada have taken their time developing mobile trading tools.
TD Waterhouse, Canada's biggest discount brokerage, is spending a final few months making sure its application is just right before launching it by the end of this year. A key concern is security.
"We are presenting it in as secure an environment as we do online, and therefore we extend our complete online security guarantee through the mobile offering as through a regular PC," Mr. See said. "My kids would say 'Gee, Dad, can I pocket dial, can I pocket trade?' We have really set it up with the same protection that you would have off of your PC or home computer."
That includes high-tech customer authentication. "Obviously we don't want any weak links in the system ... so it has taken us a little bit longer and will take us a little bit longer," Mr. See said.
James McGuire, vice-president of digital strategy and experience at Royal Bank of Canada, said RBC also plans to add the ability to trade securities to its mobile platform in the next year or so. And it, too, has been taking its time.
It knows that customers want to be able to place trades, see their order status and receive alerts on their phones.
Some of the first brokerages to come out with the capability in the United States now have regrets about launching it as early as they did, Mr. McGuire said. "The investment they have needed to make has been fairly substantial because what they put out originally isn't what they've stuck with," he said. "Because the technology has changed so dramatically and so quickly, many of them have had to rewrite their applications."
But the service is now gaining steam south of the border. TD Ameritrade Holding Corp., the third-largest online broker in the United States measured by client assets, now sees about 5 per cent of its trades made through mobile devices, according to Fred Tomczyk, the company's CEO.
While that might not sound like much, growth has been phenomenal - the proportion doubled from 2.5 per cent in just one year. During any given week, 100,000 unique users now access TD Ameritrade through mobile devices, according to Mr. Tomczyk.
That said, it's still early days. "It's certainly still not widespread, it certainly hasn't been adopted by institutions the same way [mobile]banking has," Mr. McGuire said.
But the Canadian discount brokerages believe traders here will be fast adopters once the technology is available. RBC just launched a mobile banking application in December, and it has been downloaded more than 600,000 times. While traders are a smaller market than bank customers, they tend to be technologically savvy and eager to do things on the go, said Mr. McGuire.
Research suggests that almost half of Canadians will own smartphones by next year, Mr. See said. And a study done by Ipsos Reid last year suggests that 20 per cent of self-directed investors would be interested in trading on a mobile device in Canada, and a much larger proportion of those 35 years of age and under would like the ability.
In addition, data plans are becoming cheaper and bandwidth is increasing, said Eddy Ortiz, director of digital strategy at RBC. "So mobile is in a perfect place at this stage," he said.
It's likely that some of the trading that's currently done online will shift toward mobile devices once the capability is rolled out. But Mr. McGuire said this new development could be so evolutionary that it will actually result in increased total trading volumes in Canada.
"We believe that the volume of trades being executed will increase because you have your device on you and available at all times," he said.