“The report finds that firms offering zero-commission trading grew their share of accounts from 18.9 percent at the end of Q3 2021 to 22 percent in June 2022 as the model gained traction and attracted thousands of new investors interested in the benefits of free trading.”

December 21, 2022

Zero-commission Trading Reshaping Canadian Online/Discount Brokerage Landscape

TORONTO (December 21, 2022) – ISS Market Intelligence (ISS MI), a unit of Institutional Shareholder Services providing critical data and insights to global asset managers, insurance companies, and distributors to help them make informed and strategic decisions to manage and grow their business, today announced the release of its special research feature on zero-commission trading in the Canadian online/discount brokerage channel, as published in its Investor Economics Retail Brokerage Distribution report for Q3 2022.

The report finds that firms offering zero-commission trading grew their share of accounts from 18.9 percent at the end of Q3 2021 to 22 percent in June 2022 as the model gained traction and attracted thousands of new investors interested in the benefits of free trading. 

Limited zero-commission trading approaches in the Canadian online/discount brokerage channel can be traced as far back as 2013 with Questrade’s commission-free ETF trading offer. The official arrival of a full-scale freemium model occurred in 2018 with the launch of Wealthsimple’s zero-commission trading platform. The shift to zero-commission trading was later adopted by a number of online/discount brokerage firms in 2021 including by National Bank, Desjardins, and newcomer Mogo.

The new ISS MI report examines the firms that have adopted this model and its impact on revenue, account openings, trade volumes and assets. The feature addresses key questions about zero-commission trading and poses further questions that industry executives must ponder as they evaluate their pricing strategy.

“While the zero-commission model has the potential to attract a number of new investor cohorts, Canadian online/discount brokerage firms must carefully weigh the offer against the impact of the loss of trading revenue,” said Vince Linsley, Toronto-based Associate Director at ISS Market Intelligence. “This is particularly noteworthy as they lack the ability to leverage some of the non-trading revenue lines of their U.S. counterparts (such as payment for order flow), or the ability to build subscription or alternative revenue sources.”

The report also finds that 54 percent of client accounts at firms with a zero-commission trading are held by investors under 35, suggesting that the concept has struck a chord with a younger generation. The report includes newly collected age segmentation data detailing the types of investors that have been attracted to firms offering zero-commission trading, as well as changes in the overall share of online/discount brokerage accounts of dealers within the channel.

Learn more about the Retail Brokerage Distribution report here.


About ISS Market Intelligence
ISS Market Intelligence (MI) is a leading global provider of data, analytics, insights, media, and events solutions to the global financial services industry. ISS MI empowers global asset and wealth management firms, insurance companies, distributors, service providers, and technology firms by providing cutting-edge market-engagement platforms and the actionable intelligence necessary to fully assess their target markets, identify and analyze the best opportunities within those markets, and execute on comprehensive go-to-market initiatives to grow their business.  ISS MI clients benefit from our increasingly connected global ecosystem that leverages a combination of proprietary data, powerful software and analytics, timely and relevant insights, in-depth research, as well as an extensive suite of industry leading media brands that deliver unmatched market connectivity through news and editorial content, events, training, ratings, and awards. ISS MI data and analytics solutions include intelligence from BrightScope, Discovery Data, Financial Clarity, Flowspring, FWW, Investor Economics, MISight, Mortgage Clarity, Plan for Life, RainmakerLive, and Simfund, and ISS MI media brands and market-engagement platforms include Chief Investment Officer, PlanAdvisor, PlanSponsor, Financial Standard, FS Sustainability, Money, and Industry Moves.

About ISS
Founded in 1985, Institutional Shareholder Services group of companies (ISS) empowers investors and companies to build for long-term and sustainable growth by providing high-quality data, analytics and insight. ISS, which is majority owned by Deutsche Bourse Group, along with Genstar Capital and ISS management, is a leading provider of corporate governance and responsible investment solutions, market intelligence, fund services, and events and editorial content for institutional investors and corporations, globally. ISS operates on an arm’s-length basis and Deutsche Bourse has adopted Principles protecting the independence and integrity of ISS’ research offerings. ISS’ 2,000 employees operate worldwide across more than 30 global offices in 15 countries. Its more than 4,000 clients include many of the world’s leading institutional investors who rely on ISS’ objective and impartial ESG and governance research, market intelligence and fund services and data and analytics, as well as public companies focused on ESG and governance risk mitigation as a shareholder value enhancing measure. Clients rely on ISS’ expertise to help them make informed investment decisions.  

Media Contact:

Audrey Dedrick
Analyst – Communications

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