Recently, many friends have asked me how to buy U.S. stocks through cross-border entrusted trading, so I’ve put together my understanding and shared it with everyone.

Simply put, cross-border entrusted trading means you open an account with a domestic broker in Taiwan, and then the domestic broker places orders with an overseas broker on your behalf. It may sound like there’s an extra layer of middleman, but for beginners it’s actually quite convenient. You can settle directly in TWD, and dividends are remitted back to your domestic account automatically, so you don’t have to deal with foreign-currency issues yourself. The downside is that transaction fees are indeed higher than if you use an overseas broker directly, and the range of investable products is relatively limited.

From my own experience: if you’re a long-term investor with a larger amount of capital but infrequent trading, cross-border entrusted trading is more than enough. Especially now, after Cathay’s cross-border entrusted trading reform, the minimum consumption threshold was removed. Fees start from 0.1%, which makes it one of the most competitive options among Taiwanese brokers.

The way cross-border entrusted trading works is actually quite straightforward. You first place an order through your Taiwanese broker’s app. Then the broker forwards your order to its overseas partner broker. After the overseas broker completes the trade on a U.S. exchange, the execution results are reported back to the Taiwanese broker, and your account will be updated accordingly. Throughout the process, you don’t need to directly contact the overseas broker or handle remittance hassles yourself. The stocks you buy are held in the broker’s overseas custody account. Although they are held in the broker’s name, you have all the ownership rights—this is a standard practice in international markets.

When it comes to costs, cross-border entrusted trading mainly includes several components. First is the commission charged by the domestic broker, which is generally between 0.1% and 1% of the transaction amount. Differences among brokers can be significant. Next are trading fees charged by the U.S. Securities and Exchange Commission (SEC): 0.00278% is charged when you sell. There is also a Trading Activity Fee (TAF), typically $0.000119 per share. In addition, dividends are subject to 30% income tax withholding. However, you can apply for a tax refund—though the process is somewhat troublesome.

For account opening, you need to prepare two forms of ID, a seal, and a copy of your bank account, then you can apply in person at the broker or online. When you complete the account opening, remember to tell the staff to choose TWD or USD as the settlement currency.

There are a few trading rules you should pay attention to. Cross-border entrusted trading can only use limit orders; you cannot place orders directly at market price, so you need to set the price in advance. Your account must have deposited funds in advance for a trade to be executed, and the pre-deposited amount is usually higher than the actual transaction amount because exchange-rate fluctuations need to be considered. Cross-border entrusted trading does not support margin trading, but most accounts can do intraday trading. U.S. stock trading hours are 9:30 a.m. to 4:00 p.m. U.S. time, which corresponds to roughly 9:30 p.m. to 4:00 a.m. the next day in Taiwan time (in wintertime, it is one hour later). Also, cross-border entrusted trading settles using the broker’s fixed exchange rate, so there can be an exchange-rate spread. After buying, funds are deducted on T+1; after selling, proceeds are credited on T+3.

Comparing brokers: Fubon, E.SUN, and KGI charge fees in the range of 0.5% to 1%; Yuanta and Taishin are 0.5%; E.SUN is 0.4%. However, because Cathay’s reform removed the minimum consumption threshold, the fee starts from 0.1%, making it the most cost-effective choice. But honestly, fees are quite similar across brokers, and you can negotiate. Still, compared with overseas brokers, cross-border entrusted trading is more expensive, so it’s not recommended for people who trade frequently.

If you want even lower costs, you can also consider opening an account directly with an overseas broker. For example, Firsttrade is a U.S.-based broker; it offers commission-free U.S. stock trading and only charges exchange fees, which are essentially negligible. The account opening threshold is higher, though, and most websites use an English interface. Another option is U.S. stock CFDs, with fees as low as 0.01% and no commissions—only spreads and overnight financing fees—suitable for those who trade frequently or want leverage.

In summary, cross-border entrusted trading is suitable for investors who don’t trade often, want a simple and convenient process, and are willing to hold long term. If you want lower costs without having to deal with too high a barrier, U.S. stock CFDs are a good alternative. And among broker options, the Cathay cross-border entrusted trading order tutorial is relatively user-friendly—especially since their reform has significantly reduced costs.