Hamish Rutherford at the Dom Post reports:
iPredict, the futures dealer owned by Victoria University is revising its fees structure following threats of a user exodus.
Last month iPredict announced a new structure to help cover its costs. The company admitted the fees would penalise small traders, with costs of at least $30 a year.
While iPredict has thousands of traders registered, and expects a pickup in the run up to this year’s election, only around 100 traders have more than $500 in the market at present.
Users with less than $100 in their accounts, believed to represent most iPredict traders, would quickly see their investment eroded under the proposals.
The announcement resulted in hundreds of complaints on its website, with even some of iPredict’s largest users threatening to quit the site because of the resulting fall in liquidity which the fee structure might cause.
This afternoon iPredict has announced that its board had decided to ditch a monthly $2.50 fee, as well as a $2.50 sign up fee.
There is no doubt iPredict had to change its fee structure. Their only fee had been a 2% withdrawal fee which meant traders like myself who have never withdrawn funds, have never paid a cent to iPredict.
However the proposed monthly flat fee would have been unfair to smaller traders.
“Our traders have suggested that the flat rate fees would deter small account holders who are important for market liquidity, so the board decided to eliminate those fees,” iPredict chief executive Matt Burgess said.
Instead of the monthly fees, iPredict will push ahead with a transaction fee of $0.0035 per share traded, capped at $5 a month, as well as a credit card fee on deposits, and a 2 per cent fee on all profits withdrawn from the site.
“The new fees structure is a better fit with how traders use iPredict, it encourages liquidity, and we anticipate the new structure will raise around the same revenue as the alternative,” Mr Burgess said.
A third of a cent fee per share traded seems fair to me, and I think the monthly cap could even be a bit higher.
The fees charged by iPredict compare favourably to equity trading, with most brokers charging at least $30 per trade for NZX and ASX listed securities, as well as requiring significant documentation.