Taiwan US Stock Investment Cost Revealed | Are the Custodian Commission Fees Really Cheap? How Do Overseas Brokers Save Money?

For Taiwanese investors, the first step into the US stock market is often hindered by complicated transaction costs. Should you choose omnibus trust trading or open an overseas broker account directly? This article will start from the commission fee costs to help you find the most cost-effective trading route.

Omnibus Trust vs Overseas Broker: Cost Differences Between Two Paths

Omnibus Trust: Convenient but Higher Cost

Omnibus trust trading (trust buying and selling of foreign securities) essentially means you use a domestic broker as an “intermediary” to indirectly buy and sell US stocks. The advantages are clear—easy account opening, direct deposit in New Taiwan Dollars, no need to exchange currency yourself, and regulatory oversight by the Financial Supervisory Commission provides trading security.

What are the disadvantages? High fees. The order commission for omnibus trust trading usually ranges from 0.25% to 1% of the transaction amount, with almost every order having a minimum fee ($25–$100). For example: buying $1,000 worth of stock with a 0.3% fee should cost only $3, but if the minimum fee is $25, your actual cost becomes 2.5%—an 8-fold increase.

Overseas Broker: Lower Costs but More Complex Process

In contrast, overseas brokers offer attractive conditions—zero or very low commissions, fast trading, and a broader range of assets. But what’s the cost? You must handle currency exchange and remittance yourself.

This means that each time you transfer funds to an overseas broker, the bank charges a 0.05% currency exchange fee (minimum NT$100–NT$600) plus a telegraph fee of NT$100–NT$900, and some brokers charge an additional US$10–US$35 withdrawal fee. These hidden costs add up and should not be underestimated.

Omnibus Trust Commission Fee Comparison: Overview of Broker Rates

Hidden costs of omnibus trust fees include not only the broker’s direct order fee but also:

• Exchange fees: The US SEC charges 0.00051% on the sale side
• Transaction Activity Fee (TAF): FINRA charges $0.000119 per share (minimum $0.01, maximum $5.95)

These third-party fees are usually integrated into the omnibus trust fee and are not listed separately.

Overseas Broker Fee Comparison: Who Is the Most Cost-Effective?

Bank Currency Exchange and Remittance Fee Table

Practical Cost Comparison: Which Should You Choose?

Calculating with the lowest cost combination: omnibus trust using Fubon Securities )0.25%(, overseas broker using Mitrade )0 commission(, and bank using Bank of Taiwan:

Assuming exchange rate: 1 USD = NT$30

) Key Insights

For transactions under $6,000? Omnibus trust is more cost-effective. When your single transaction size is small, bank remittance costs $1 minimum telegraph fee NT$120–200$25 are relatively high, making omnibus trust direct deposit advantages clear.

For transactions over $6,000? Overseas brokers are more worthwhile. Cost advantages start to shift here. The zero-commission benefit of overseas brokers gradually outweighs the impact of currency exchange fees.

Transaction frequency is the key. If you trade 4 times a month (2 buys and 2 sells), a $10,000 fund in omnibus trust will incur a fee of $25×4 = $100; whereas with an overseas broker, since currency exchange is a one-time cost, multiple trades still only cost about $11.67, saving nearly 90% of costs.

Other Cost Considerations

Regardless of the method chosen, you need to bear:

• Dividend withholding tax: 30% withholding tax on cash dividends (some can be refunded)
• Margin costs: If using margin accounts, interest applies

Omnibus trust does not support margin trading, but overseas brokers often do, which is an additional advantage for investors seeking leverage.

Who Should You Choose?

Small investors, infrequent traders → Omnibus trust is convenient and cost-effective, depositing in TWD directly, avoiding currency exchange hassle.

Frequent traders, ample funds → Overseas brokers have clear commission advantages; once trading exceeds 4 times, omnibus trust cost benefits quickly diminish.

Need for margin or professional tools → Overseas brokers offer more flexibility and advanced features.

Overall, while omnibus trust fee structures are transparent, small and frequent transactions can quickly accumulate costs. Although overseas brokers require initial currency exchange costs, their long-term advantages grow with trading frequency. Rationally choosing based on your capital and trading activity is the best strategy to minimize costs.