The British barrier to buying U.S. stocks over the Internet is falling.
In the first Internet trading link between the U.S. and the U.K.,
Charles Schwab Europe
clients in the U.K. will be able to trade U.S. stocks over the Internet through parent company
during standard U.S. trading hours starting June 1.
In Germany, too, the trading roadblock was recently dismantled. In April,
, through an agreement with
, launched U.S. equity trading for clients in Germany. Ameritrade also has an agreement with French investment house
to get a cross-border trading agreement up and running this summer. And Germany's
ConSors Discount Broker
allows its customers to trade U.S. stocks.
"There has been an incredible demand for access to the U.S. market, and that partly has been because there has been excitement about what's happening on Wall Street," says Guy Knight, vice president of European marketing for Schwab Europe.
is working on a long-term plan for global cross-border trading by building a network of alliances with brokerages overseas. Before such agreements are worked out, however, executives say there are many regulatory and cultural hurdles that can slow down the process.
U.S. investors who want to buy foreign shares over the Internet, however, are going to have to wait a bit longer.
In Schwab's case, Knight says any decision to let U.S. investors trade U.K. stocks will come from the parent company. Schwab spokesman Glen Mathison says there are no imminent plans to allow U.S.-based investors to trade foreign stocks over the Web (but customers can place such trades over the phone).
Barring any surprises, the U.S. company most likely to allow U.S. investors to trade foreign stocks first is Ameritrade. The firm is due to let U.S. investors trade German stocks this summer and anticipates starting the French deal with reciprocal trading during that same time period, according to Neil Benedict, Ameritrade's vice president for international development. It's also pursuing an agreement in the U.K. that it expects to announce in the next few months.
Cross-border trading efforts have focused so far on foreigners accessing the U.S. market because the U.S. market is so strong. As far back as 1997, Schwab began allowing customers of its Hong Kong unit to trade U.S. shares through the Internet. But eventually, Benedict says, there will be more demand by U.S. investors to trade overseas as those markets become better understood. To that end, Benedict says, Ameritrade is adding to its Web site this summer investment information on French and German stocks. But the business is never going to be all that large -- Benedict agrees with industry estimates that international will likely become 5% to 10% of revenue.
The business is limited in part because there are fewer overseas investors online. Deutsche's Bank 24 has 375,000 accounts, Benedict says, while Schwab Europe has about 14,000 to 15,000 online accounts out of its 150,000 active accounts, according to Knight. Schwab Europe began offering online trading last June. In the U.S., Ameritrade has 428,000 online accounts and Schwab has 6.1 million accounts, more than 2 million of which are trading over the Internet.