Update: The Swiss Financial Market Supervisory Authority FINMA opened bankruptcy proceedings against FlowBank SA on June 13, 2024.
Free trading has been an international trend for some years now. But free is not always better. The reason is that investors may trade at less favorable prices if trading platforms pass their orders on to third-party service providers (payment for order flow).
Now, for the first time, a Swiss bank is offering free trading. Since mid-July, 2022, users of the trading platform from startup bank Flowbank are able to buy and sell Swiss stocks without paying brokerage fees. But there are limitations. Here, moneyland.ch answers the most important questions.
Can I trade all Swiss stocks for free?
Not all. Flowbank’s free trading offer is limited to stocks with Swiss ISINs which are listed on the BX Swiss stock exchange. However, all major Swiss stocks – including all SMI companies and more than 90 percent of SPI companies – are covered by the offer.
But there are some stocks which are only listed on the larger SIX stock exchange, and not on the smaller BX Swiss exchange. These stocks will initially also be available for trading without brokerage fees, but it is unclear how long Flowbank will maintain this service. After this introductory phase expires, trading stocks which are only listed on the SIX exchange and not BX Swiss will once again cost a 0.1 percent brokerage fee.
The free offer also does not cover stocks in the BX Swiss SME Main Market listing. These are 21 companies which have their primary listing on the BX Swiss, and which are of secondary importance for the majority of investors.
Do I pay any fees at all for Swiss stock trades with Flowbank?
Yes. Swiss government stamp duties always apply equally when you trade with a Swiss bank. That also applies to Flowbank customers, who have to pay a stamp duty for trades in Swiss stocks equivalent to 0.075 percent of the transaction value. The online trading comparison on moneyland.ch clearly shows these costs. But unlike other Swiss banks and stock brokers, Flowbank no longer charges additional brokerage fees for handling trades.
Does Flowbank use the same business model as foreign free trading platforms?
No. Firstly, Flowbank still charges brokerage fees for trades in non-Swiss stocks and other financial instruments. Secondly, Flowbank and all other Swiss banks do not use the problematic payment for order flow business model.
Are there any disadvantages to trading stocks on BX Swiss?
Like SIX, the BX Swiss exchange is regulated by Finma. But it is notably smaller, with trading volumes typically being much lower. That means individual stocks are traded less frequently on BX Swiss than on the SIX exchange. For example, on July 20, 2022, over 169,000 Lonza shares were traded on SIX, compared to less than 100 on BX Swiss.
But BX Swiss told moneyland.ch that liquidity is provided because it can make use of services provided by market makers. This guarantees that the speed and pricing (the spread between the bid and ask prices) can match those of other stock exchanges.
Can I choose whether a specific trade should be made on SIX or BX Swiss?
No. According to Flowbank, it does not offer more than one listing of any stock. Swiss stock trades with Flowbank are always made on the BX Swiss if the stock is listed on that exchange. Stocks which are only listed on SIX are traded on that exchange.
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