Stock Trading Cost Breakdown | Comparison of Taiwan Stock vs US Stock Commission Fees and Selection Guide

Cost Differences Across Markets: Why Do Same Stock Purchases Cost So Much Differently?

Stock trading involves more than just a single fee; investors need to bear a comprehensive set of transaction costs. Buying and selling stocks in the Taiwan stock market and the US stock market can incur fees that differ by several times, which is a common oversight among many investors.

Stock Buy/Sell Commission Fees are primarily charged by brokerage firms to execute and process trade orders. Depending on the trading market, the fee structure can vary significantly. Generally, these fees include “transaction commissions” and “other costs” (such as transaction taxes, clearing fees, system service charges, etc.). Investors should carefully review these details before trading.

Complete Breakdown of Taiwan Stock Trading Costs

Composition of Taiwan Stock Commission Fees

As a local investor trading Taiwan stocks, the most common method is through a dedicated securities account. The costs mainly consist of two parts: 0.1425% commission fee and 0.30% securities transaction tax. It’s important to note that the securities transaction tax is only levied on sales, not on purchases.

Most Taiwanese brokerages offer discounts on commissions, typically between 50% and 60%, which can lead to significant savings for small investors.

How to Calculate Taiwan Stock Commission Fees

Cost when Buying Stocks:

Commission = Stock Price per Share × Number of Shares × 0.1425% × Discount

Cost when Selling Stocks:

Commission = Stock Price per Share × Number of Shares × 0.1425% × Discount

Transaction Tax = Stock Price per Share × Number of Shares × 0.30%

Example Analysis:

Suppose an investor buys and sells Kuan Shih Fu (Code 910322.TW), each transaction of 1 lot (1,000 shares), at a price of NT$200 per share, with a brokerage offering a 60% discount on commissions. The total costs for the entire cycle are as follows:

This means the trade must generate at least NT$942 in profit to break even.

Comparison of Major Taiwanese Brokerages’ Fees

Different brokerages offer varying discounts, so investors should compare carefully before opening an account. The table below lists four reputable local brokerages with their minimum odd-lot commission fees and main promotional offers:

Choosing a brokerage depends not only on commission discounts but also on branch network, customer service quality, and platform features.

Complete Guide to US Stock Trading Costs

Composition of US Stock Trading Fees

There are mainly two ways to invest in US stocks: via Taiwan broker’s cross-border agency services or by opening an account directly with an overseas broker. Regardless of the method, the costs involved include broker commissions (fees) and other charges (such as exchange fees at 0.3%, SEC fee at 0.0008%, trading activity fee at 0.0145%, etc.). Note that dividend tax (30%) is only applicable when receiving dividends from stocks.

Method 1: Trading US Stocks via Taiwan Broker’s Cross-Border Agency

What is Cross-Border Agency Trading?

Cross-border agency (Sub-brokerage) refers to “business of buying and selling foreign securities on behalf of clients.” Investors first open an account with a domestic broker authorized for overseas securities agency services, then buy and sell foreign stocks through that account. The process involves the domestic broker accepting the order and then placing it with an overseas broker, hence the term “cross-border agency.”

How to Calculate Cross-Border Agency Fees:

Fees typically range from 0.25% to 1%, depending on the broker. Most brokers offering this service set a “minimum fee,” meaning that regardless of order size, the fee will not be lower than this amount.

For example, Yuanta differentiates between manual and electronic orders:

• Manual order fee: 1%, minimum NT$50
• Electronic order fee: 0.5% to 1%, minimum NT$35

Additional costs include:

• Sale transaction tax: 0.00278%
• System service fee: US$3 per order
• ADR custody fee: US$0.02 to US$0.05 per share
• International remittance fee: US$15 per day

Comparison of Taiwan Cross-Border Agency Broker Fees:

When purchasing US stocks via cross-border agency, always check the full fee details on the broker’s website, as there are additional charges beyond the commission.

Method 2: Trading US Stocks Directly with Overseas Brokers

Advantages of Overseas Brokers:

Due to intense market competition, most overseas brokers have eliminated stock trading commissions, which benefits high-frequency or small-amount traders. However, be aware of deposit and withdrawal issues, with most brokers charging around US$30 for these transactions.

Notable Overseas Brokers:

Interactive Brokers (IBKR)

Founded in 1978, headquartered in the US, it is one of the largest online securities firms globally. Offers trading in major markets’ stocks, futures, options, forex, and bonds.

• Pros: Wide global market coverage, relatively low financing rates
• Cons: Complex trading platform interface, not entirely commission-free
• Minimum deposit: None
• Withdrawal fee: US$10
• Commission: Fixed US$0.005 per share or tiered based on monthly trading volume

Onada

A long-established trading platform offering diverse investment products, with leverage up to 888 times on popular assets like gold and US major indices.

• Minimum deposit: None
• Commission: 0.1%
• US stock trading: Over 800 stocks

Firstrade

Headquartered in the US, provides 24-hour Chinese customer service, with localized support. Although the platform lacks real-time online chat, phone support covers Chinese users.

• Pros: 24-hour Chinese customer service
• Cons: Not a listed company
• Minimum deposit: None
• Withdrawal fee: US$25
• Commission: None

Determining the Minimum Profit to Break Even

Break-Even Profit Calculation for Taiwan Stock Trading

A common mistake among investors is to sell immediately after a stock price rises, ignoring the impact of transaction costs. Returning to the Kuan Shih Fu example, the total transaction costs are NT$942, meaning the stock must rise by at least NT$942 to break even. In other words, investors need to ensure their gains significantly exceed all transaction costs before considering profit-taking.

Break-Even Profit Calculation for US Stock Trading

US stock trading is more complex due to multiple fee components. Investors must sum all costs for buying and selling, including commissions, transaction taxes, system service fees, etc. Only when the total profit exceeds this sum can they avoid losses.

For short-term traders, frequent trading incurs high commission costs. In such cases, CFD (Contract for Difference) trading may be a more economical choice.

Why Are CFD Trading Costs Lower?

CFD is a contract without a fixed expiry date, allowing investors to profit from price differences. It is similar to stock trading but does not involve actual ownership of stocks. This trading method only charges spreads and overnight fees, with no commissions, transaction taxes, or deposit/withdrawal fees. For high-frequency or intraday traders, CFD platforms can effectively control trading costs regardless of the number of trades.