The most frequently asked question lately is: should I use a custodial agency or open an account directly with an overseas broker? Basically, it’s about calculating the transaction fees. I’ve also struggled with this because the cost difference for a single trade can really be several thousand New Taiwan Dollars, which can significantly impact profits.

First, let’s talk about the current environment. According to the latest statistics, Taiwanese trading volume in U.S. stocks has already exceeded 8 trillion NTD. Interestingly, although more than 60% of people still use custodial agencies, the number of people switching to overseas brokers is growing at over 30% annually. This trend is very clear.

The logic of custodial agencies is actually quite simple — Taiwanese brokers act as intermediaries to route your orders abroad, hence the name custodial agency. The biggest advantage is that you can place orders directly in NTD without converting currency yourself, making the process simple. But because there’s this extra middle layer, the transaction fees are naturally higher, usually between 0.15% and 1% of the trading amount. Additionally, each order has a minimum fee, typically between $25 and $100 USD, which can be quite costly for small trades.

Overseas brokers are different. You place orders directly on U.S. or international platforms, bypassing domestic brokers, so the cost structure is completely different. Most mainstream brokers now offer zero commission trading, which is much friendlier for frequent traders. But the trade-off is that you need to convert your currency to USD yourself and wire the funds overseas. These processes incur additional costs, including currency exchange fees, wire transfer fees, and some brokers may charge a withdrawal fee when you cash out.

I’ve carefully calculated the specific costs comparing custodial agency fees. With custodial agencies, you pay the broker’s trading fee plus hidden third-party regulatory fees. The trading fee is that 0.25% to 1%, but don’t forget the minimum fee. Third-party fees include the SEC’s transaction fee (0.00051% when selling) and the Financial Industry Regulatory Authority’s (FINRA) transaction activity fee (0.000119 USD per share). These costs are usually integrated into the broker’s fee, so you don’t see them listed separately.

With overseas brokers, the main costs are trading commissions, financing interest, currency exchange fees, wire transfer fees, and withdrawal fees. Most major brokers now offer commission-free trading, but currency exchange fees are usually around 0.05%, with minimum fees ranging from 100 to 600 NTD. Wire transfer fees vary by bank, roughly between 100 and 900 NTD per transaction. Some brokers also charge $10 to $35 USD for withdrawals.

I ran actual calculations using the cheapest setup: custodial agency with Fubon Securities’ 0.25% commission, overseas broker with zero commission, and currency exchange at Taiwan Bank’s 0.05% rate. The results are interesting — when trading amounts exceed $6,000 USD, overseas brokers become more cost-effective. But if you trade infrequently and with small amounts, custodial agencies are actually cheaper.

Here’s a key point: the above calculations assume only one trade. If you trade frequently, say four times a month, each with $10,000 USD, custodial agencies would cost you $100 USD in fees (25 USD times 4), but with an overseas broker that charges zero commission, the wire transfer fee is only paid once, totaling about $11.67 USD — a huge difference.

So, the conclusion from comparing custodial agency fees is: if you don’t trade often and your amounts are small, custodial agencies are more economical; if you trade frequently or with larger sums, using an overseas broker directly is better. But don’t just look at fees — consider minimum charges, wire transfer costs, convenience, fund security, and the range of investment options, as these are the real long-term costs.

By the way, Gate also offers tools and information related to U.S. stocks. If you’re interested, check it out and compare the costs across different channels. Choosing the right method can really save you a lot of money.