The old adage “If You‘re Not Paying for It; You‘re the Product“ was originally popularized by free-to-air television in the 1970s, where the viewers got tons of adverts pushed down to their television sets. The saying came back with a vengeance as the Internet gained popularity, companies like Facebook and Google offered “free” services but in the process also transformed advertising forever.

Lately as the FinTech sector has been getting a lot of attention with incumbent firms challenging old business models we once again need to pay heed to the saying.

Some of the most publicized and highly valued incumbent brokerages are offering 0$ commissions, but what the retail customer often fail to notice is that the 0$ commission come with caveats.

When customer makes an order you would expect that it is sent to the stock market where it is matched, but that is actually rarely the case. Instead the Order is “sold” to a market maker who provides the matching service, a practice originally invented by Bernie Madoff.

In the US federal rules dictate that brokers must seek the best execution for clients’ trades, but finding the best price is not necessarily a requirement. It is rather in the interest of the broker to route the order to the market maker that pays the most. The practice is getting scrutinised by regulators and there are ongoing class action lawsuits.

At 8 Securities we have always offered a 0$ commission brokerage service without selling the order flow. But as any company we also need to have some form of revenue. So we have opted for the simplest and most transparent model we could come up with. We charge our customers a flat fee of HKD 88 per month for unlimited trading in the Hong Kong and US stock market. We obviously incur a cost for each trade made and some customers trade more than others, but it is the simplest and most transparent model we could think of.

There is clearly value in our customer data. While other brokerages sell their data to third parties, at 8 Securities we have done something very different. Instead of selling the data we pass it back to our customers. We have introduced a Leaderboard in our App where our customers can see the portfolio and trades of the top traders and their own relative ranking. They can also see the buy/sell momentum across our entire customer base and also a live feed of all trades. We are continually improving the ways in which our customers can make use of the data our community generates.