has just fired a shot heard round the trading world. Backing up its commitment to international investments, Fidelity today launches a trading platform that will allow retail customers to trade stocks online, in real time, in 12 global markets and eight international currencies, side by side with dollar-denominated securities. Financial advisers will have access to trading equities in 25 markets and 16 currencies.
Designed for the sophisticated investor or frequent trader, this new resource not only provides real-time quotes and trade executions in global stock markets, but also offers the opportunity to convert from the dollar into a foreign currency instantaneously, at market exchange rates.
Transactions can be settled in U.S. dollars or the local currency. Cash balances can be held in dollars or foreign currencies -- and switched with a click of the mouse. There is no requirement to have previously converted to a currency before an order is executed.
Commissions depend on the size of the order and the market in which it is executed, but are competitive with domestic schedules -- and inexpensive when you consider not only the benefits of real-time execution, but the wealth of information provided by the site.
Global market information:
Recognizing that each global market has different size "ticks" and market spreads, the site provides responsive information for each order, about whether the market is open to accept the order, and when market orders will be executed, as well as any market regulations regarding limit orders.
For each security there is in-depth research from
, in a format similar to the research Fidelity provides for domestic equities. You'll see charts, earnings history, as well as balance sheet and income statements for each company. No longer will foreign equities, and the numbers that go into their earnings, be a "dark pool" for investors.
Not only are transactions executed instantly (during market hours for that security) but the purchases and sales show up online in the same brokerage account statement as domestic trades. One interesting statistic: For global equities the gain (or loss) percentage is shown both in dollars and in the currency of the transaction.
There is an online research center devoted to this new way to trade international markets. There is also 24-hour access to trained representatives who can answer any questions.
Global diversification required:
After every global market "crashed" in synch last year, many investors must be wondering about the benefits of global diversification. Certainly, it's not protection from a market decline. But diversification does give exposure to areas of potentially greater growth.
Consider this: From the market lows in early March through the end of August, the
S&P 500 Index
rallied 51%. But during the same period, China's
Hang Seng Index
was up 74%, India's
soared 92%, Mexico's
gained 66% and the Spain's
Ibex 35 Index
rose 67% -- to name just a few of the global markets that out-rebounded the U.S.
Fidelity has recently increased its recommended equity portfolio allocations to 30% international. The company has re-balanced its target-date Fidelity Freedom funds to include this expanded allocation to international equities.
For many investors, a well-diversified international mutual fund will do the job of global exposure. And certainly exchange traded funds have provided a fast-growing, and much more focused, approach to international investing.
But for investors and traders willing to make a serious commitment to global markets, this new platform takes it to a new level. This isn't for amateurs. Those with a $1 million account balance at Fidelity will qualify for access. Or those who make 120 trades a year are invited. But Fidelity is willing to make exceptions to these minimums for those who express an interest.
Walt Disney said it best: "It's a small world, after all." For investors, Fidelity is making that statement ring true.
Terry Savage is an expert on personal finance and also appears as a commentator on national television on issues related to investing and the financial markets. Savage's personal finance column in the Chicago Sun-Times is nationally syndicated. She was the first woman trader on the Chicago Board Options Exchange and is a registered investment adviser for stocks and futures. Savage currently serves as a director of the Chicago Mercantile Exchange Corp.