‘One off’ trades. If you’re new to the world of shares, then you may not be overly familiar with this term. It’s a phrase that can be negatively used by full service stockbrokers, yet it describes a sizable portion of the share trades that are completed each day on the ASX. What is a one off trade? Why do full service brokers avoid them? Do they have any benefits? And, if so, how is a one off trade completed?
What is a One Off Trade?
Investors that spend a lot of time buying and selling shares will usually have an established relationship with a broker and an active trading account. ‘One off’ trades are share sales that are completed without the shareholder having to set up a trading account through a stockbroker. For example, you may own a parcel of shares as a result of an employee rewards scheme, through demutualisation or perhaps you just inherited them. Regardless of how you obtained the shares, you’ve now decided to sell them, and you have no plans to buy or sell any more shares in the near future. In this scenario, your best option for a quick and simple sale is through a one off trade.
Why do Full Service Brokers Typically Avoid One Off Trades?
Traditionally, share sales were completed by setting up an account with a stockbroking firm. You’d have numerous meetings with the stockbroker, complete reams of paperwork, discuss the many and varied investment options available to you, and thus would begin a longstanding relationship between you and your broker. But one off trades aren’t like that – those meetings and hours spent completing paperwork won’t lead to any further business for the firm. Because it’s a one-time sale, many full service stockbrokers feel that accepting a one off trade is just a wasted investment in a business relationship that has no long-term potential. As a result, they have been known to turn away one off trades.
What Are the Benefits of One Off Trades?
Setting up an account with a stockbroking firm takes time and a whole lot of paperwork. You have to schedule in an appointment, send through the necessary correspondence, wait for information to arrive by post…by the time your account is active and you’re ready to start selling, the price of your shares may have changed dramatically. Additionally, once you have an account, you’ll be actively encouraged to keep buying and selling shares (as this is how the broker makes their money).
In contrast, a one off share sale completed with an online broker saves you both time and money. It allows you to sell your parcel of shares quickly, easily and effectively. In fact, your part of the process can be completed online in as little as 15 minutes! And once the sale is finalised, you won’t have to worry about being pressured to keep investing.
How Is a One Off Trade Completed?
To sell your share parcel through a one off trade you’ll need to start by finding a reputable and established online broker who specialises in these kinds of share sales. The process then becomes very simple. Once on their website, you’ll be asked to provide proof of identity and some information about the shares you are planning to sell (these details can typically be found on any Dividend or Holding Statement that you’ve received). After the online broker has completed an identification check and verified ownership of the share parcel, they’ll then move ahead with completing the sale on your behalf.
Disclaimer: This content does not necessarily represent the views of IWB.