Is investing in US stocks difficult? A detailed breakdown of omnibus trading vs overseas broker fees

In Taiwan, the first question when investing in US stocks is “Which method should I choose?” Many investors find themselves confused between using a local custodian bank and overseas brokers, not to mention understanding the fee structures of each. This article aims to clarify the cost differences between these two approaches, so your money is spent wisely.

Two Ways to Invest in US Stocks in Taiwan

What is Custodian Delegation (Fùwěi Tōu)? Simply put, custodian delegation means you authorize a domestic broker to act on your behalf to purchase US stocks. The process is as follows: You → Domestic broker → Overseas broker → US stock market. Because there is an additional layer of agency, it’s called “custodian delegation.” The advantage of this method is that you can deposit in TWD, and the domestic broker automatically handles currency exchange and settlement, making the entire process very friendly for Taiwanese investors. The downside is that the broker earns an extra layer of commission, with fees typically ranging from 0.15% to 1%.

Trading directly with overseas brokers is different. You open an account directly with an overseas broker, convert your funds to USD yourself, transfer the money, and then place orders to buy US stocks just like trading on the Taiwan stock market. The clear advantage here is that most overseas brokers have achieved zero commissions, which is very friendly for frequent traders. However, the cost is that you need to handle currency exchange and remittance yourself.

What Does Custodian Delegation Fee Include?

Many people are scared off by the “transaction fee” of custodian delegation, but the fee structure is actually more complex than it appears.

Direct charges:

• Transaction fee: This is the main cost, usually 0.25% to 1% of the transaction amount. But there’s a catch—almost all brokers have a minimum fee limit, typically between $25 and $100 USD. For example, buying $1,000 worth of US stocks with a fee rate of 0.3% (which would be $3), still incurs a minimum charge of $25, making the actual cost 2.5%!
• Other service fees: Currency exchange fees, paper statement fees, etc., but these are usually negligible.

Hidden third-party regulatory fees:

• Exchange fees: The US SEC charges only on sell transactions at a rate of 0.00051%.
• Transaction Activity Fee (TAF): Collected by FINRA, also only on sell transactions, at $0.000119 per share, with a minimum of $0.01 and a maximum of $5.95.

These two fees are usually integrated into the broker’s overall fee and are not listed separately.

Hidden Costs of Overseas Brokers

While overseas brokers seem to have lower fees, other costs can add up:

• Trading commissions: Most mainstream brokers now offer commission-free trading, but some still charge.
• Currency exchange fees: Banks typically charge around 0.05% for currency exchange, with minimum fees (usually NT$100–NT$600).
• Remittance fees: Banks charge NT$100–NT$900 for transferring funds from Taiwan to overseas brokers.
• Withdrawal fees: Some brokers charge $10–$35 USD when withdrawing funds.
• Margin interest: If you use margin to buy stocks, the broker will charge interest.

All these miscellaneous fees can be higher than you expect.

Custodian Delegation Broker Fee List

Based on the latest 2025 rates:

Mainstream Overseas Broker Fee List

Bank Currency Exchange and Remittance Fees

Actual Cost Comparison: Custodian Delegation vs. Overseas Broker

Using the lowest fee institutions (Fubon 0.25% for custodian delegation, Mitrade 0 commission, Taiwan Bank for currency exchange):

Key point: When a single transaction exceeds $6,000, overseas brokers become cheaper. But what if you trade frequently? For example, four trades of $10,000 (two buys and two sells), custodian delegation would cost $25×4 = $100 in fees, while the overseas broker with zero commission and only one remittance fee totals $11.67. The difference is obvious.

Custodian Delegation vs. Overseas Broker, Which to Choose?

When to choose custodian delegation:

• Small amounts ($1,000–$5,000) per single transaction
• Don’t want to bother with currency exchange and remittance
• Frequent fund inflows and outflows, seeking convenience

When to choose overseas brokers:

• Large amounts or frequent trading
• Willing to handle currency exchange yourself
• Want advanced features like margin trading and securities lending

For example, Mitrade is authorized and regulated by the Australian Securities and Investments Commission (ASIC) (License: 398528), offers zero-commission trading, with a minimum deposit of $50 (supports TWD), very friendly for Taiwanese investors.

Summary

• Custodian delegation is suitable for small, infrequent traders, offering convenience and no need for currency exchange.
• Overseas brokers are better for large or frequent traders, with additional costs for currency exchange and remittance, but lower long-term fees.
• The apparent simplicity of custodian delegation fees can be deceptive due to minimum charges, increasing costs for small trades.
• Choosing based on your trading amount and frequency is the smartest investment strategy.