Last Updated on June 15, 2022 by Chin Yi Xuan

In the past, investing in the US stock market via Malaysia-regulated brokers has always been complex and expensive. This caused many investors to opt for overseas brokers to invest in the US market.

However, all this changed when Rakuten Trade launched their much-anticipated US stock trading service in January.

So, is it good?

Right off the bat, I’d say Rakuten Trade is the only local broker that I can actually recommend for Malaysian investors to invest in the US market. HOWEVER, I do not recommend it for active traders.

Intrigued to know why? Wonder if you should use Rakuten Trade to access the US stock market?

Let’s find out in this full review!

Before you proceed, here are some related posts that you might find useful:

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Highlights of Rakuten Trade US Stock Trading

  • Affordable fees (like finally!): Rakuten Trade now allows users to invest in the US market, with commissions from RM7 – RM100. This is the lowest yet among Malaysia-regulated platforms.
  • Invest in the US market easily: Rakuten Trade users get perks such as FREE live datafeed, FREE corporate action handling, and transparent conversion rate while investing in the US market.
  • Other markets soon: Rakuten Trade is planning to offer access to the Hong Kong market starting mid-2022!
  • Room for improvements: No short-selling, no margin trading, no fractional shares (yet), and a lack of order execution feature (eg. Market order) means there is room for improvements for Rakuten Trade.
  • In short, Rakuten Trade is a great option for investors looking to access the US market at an affordable price. That said, active traders may find the lack of certain features restrictive. 

Rakuten Trade US stock trading fees

Let’s start off by addressing the elephant in the room: Is Rakuten Trade’s fee affordable?

For this, it is helpful to know that there are 3 kinds of regulated brokers in Malaysia offering access to overseas market, namely:

  • Traditional investment banks that offer expensive brokerage fees, usually too shy to display their fees transparently on their website. (eg. Maybank)
  • Dedicated brokers trying to disrupt the local brokerage scene with ‘affordable’ fees. Unfortunately, they are still far from affordable especially for investors with small capital. (eg. MIDF Invest, FSMOne)
  • And lastly, we have Rakuten Trade which offers a fee structure that is actually sensible for Malaysian investors to access the US stock market.

Well, just check out the comparison table below between Rakuten Trade, MIDF Invest, FSMOne, and Maybank – and decide for yourself:

Rakuten Trade vs MIDF Invest vs FSMOne vs Maybank fee comparison
Rakuten Trade vs MIDF Invest vs FSMOne vs Maybank fee comparison for US stock trading

Comparing in trading value (RM) side-by-side, this is how much platform fee you’ll be paying using each Malaysia-regulated platform to buy US shares:

Rakuten Trade vs MIDF Invest vs FSMOne vs Maybank fee comparison for US stock trading
Rakuten Trade vs MIDF Invest vs FSMOne vs Maybank fee comparison for US stock trading (by trade value)

As you can see, for most scenarios, Rakuten Trade offers a more flexible and affordable fee structure for investors without incurring heavy commissions.

Personally, I think Rakuten Trade’s fee structure is game-changing among local brokers. Now, investors can access the US stock market via a Malaysia-regulated broker at fraction of a cost, especially for beginner investors with small capital.


Trading experience (Features) 

#1 User-friendly interface

Rakuten Trade built their US stock trading service on top of their existing trading platform. As a long-time user, I think this is good news because Rakuten Trade’s platform is really simple to use.

Either from Rakuten Trade’s website or iSpeed app, you can switch between Malaysia and US markets easily.

Rakuten Trade US Stock Trading
Rakuten Trade user interface is simple to use, be it via website or app.

#2 FREE Live Datafeed

Another plus point with Rakuten Trade is all US stock prices are quoted live (ie. Real-Time) on Rakuten Trade.

For many platforms, you’ll usually have to pay for live data, else you’ll only receive a 15-mins delayed datafeed. This is the case for MIDF Invest, another Malaysia-regulated broker that offers US stock trading. 

MIDF Invest only offer delayed pricing, where you have to pay for real-time datafeed.
MIDF Invest only offers delayed pricing, where you have to pay for real-time datafeed.

Hence, it’s great to see Rakuten Trade offering free live datafeed for users. This means that the price displayed for a stock will always be at-the-moment stock price.

Rakuten Trade offers live datafeed for free
Rakuten Trade offers live datafeed for free

#3 Transparent Currency Conversion Rate

Through Rakuten Trade, you can invest in US stocks directly by using MYR, which will be converted to USD automatically during transactions.

This is a great convenience for Malaysian investors. Reason being, unlike using overseas brokers, you do not have to worry about finding ways to fund your broker in foreign currency.

In addition, you’ll be shown the conversion rate prior to each trade execution. The rate is updated daily, as quoted by Rakuten Trade’s foreign exchange provider. As such, everything is transparent and you’ll always know what to expect.

Rakuten Trade offers transparent conversion rate for US share trading
Rakuten Trade offers transparent conversion rate for US share trading

#4 No charges for corporate action

Furthermore, just like trading Malaysia stocks, Rakuten Trade handles any corporate action for your US stock investments for FREE.

In other words, you do not have to pay Rakuten Trade in order to receive dividends or execute a right issue (you may have to pay for these on some other platforms).


5 Areas of improvement & why this might not be for active traders

With the launch of US stock trading service, Rakuten Trade is set to disrupt the Malaysia brokerage scene.

That said, I think there are some areas of improvement for Rakuten Trade. Below are 5 key areas that I think Rakuten Trade should strive to improve on to serve users better:

(a) Lack of basic order execution features

One thing that I found lacking while using Rakuten Trade to trade US stocks is the missing of (basic) order execution features such as Market Order. Unfortunately, the only execution option on Rakuten Trade is Limit Order.

  • Market Order is an execution feature that allows investors to buy or sell shares at the immediate best price. As such, it is available in most stock trading platforms that I’ve used in the past (even Rakuten Trade’s own Bursa trading)
  • Limit Order allows investors to line up their orders to buy or sell shares at a specific price or better.

While this may not be a huge issue for most investors, a lack of Market Order execution may turn off some investors that prefer not to wait for their orders to be matched, or day-traders that require immediate market execution. 

I’ve reached out to Rakuten Trade’s team on this matter, and it seems like there is no plan to add execution features like Market Order on their US stock trading service for time being.

Market Order vs Limit Order
Market Order vs Limit Order

(b) Limited stocks to trade (but it’s improving!) 

Secondly, despite offering access to the US market, Rakuten Trade does not actually offer all of the stocks listed in the US market.

That said, Rakuten Trade has been gradually adding new US stocks and ETFs since their launch.

As of June 2022, Rakuten Trade offers about 855+ stocks, 6 ADRs & 205+ ETFs listed on the NYSE and Nasdaq exchanges. 

While you may trade the most well-known US stocks (eg. Apple, Tesla, Microsoft) and ETFs (eg. VOO, VTI) tradable on Rakuten Trade, there are some other US stocks that you may not find on Rakuten Trade.

As an example, as a REIT enthusiast, I have no access to stocks like Innovative Industrial Properties Inc (IIPR), which is a bummer.

[Note]: If you have a stock that you want to trade on Rakuten Trade, you can email your request to Rakuten Trade on the matter.

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(c) Cannot store currency in USD 

For time being, it is also not possible to keep our funding in USD on Rakuten Trade. 

Instead, all transactions are automatically converted into their respective currency:

  • When you buy US shares, your capital in MYR will be automatically converted into USD.
  • When you sell your US shares, your sales in USD will be automatically converted back into MYR. 

As I mentioned in the previous section, the transparency in conversion rate is very convenient, especially for long-term investors. But this is a big issue for active traders. 

Why so? 

Simply put, the loss in conversion rate whenever a buy and sell order is being executed. Let me explain:

So, let’s say you are an active daytrader. You bought 5 units of Apple shares at $168.40, with an exchange rate of RM4.21050 – 1USD. Your total capital required would be: 

  • 5 units * $168.40/unit * 4.21050 = RM3,545.24 (excluded commissions for simplification)

Rakuten Trade US share trading conversion rate (buy)

Now, let’s say Apple’s share price hit $169.00 during the day. You decided to sell all 5 units of Apple shares for profit. By selling, your USD is automatically converted back to MYR at a rate of RM4.18050 – 1USD. 

  • 5 units * $169.00/unit * 4.18050 = RM3,532.52 [-RM42.72]

Rakuten Trade US share trading conversion rate (sell)

Instead of making a profit for selling at a higher price ($169.00), you’d actually make a loss of RM42.72 by selling. This is because there is a spread in exchange rate during currency conversion, very much like what you see when you try to exchange for a different currency in a money-changer.

Simply put, daytraders will need to cover for the loss in currency conversion for every trade taken on Rakuten Trade (by aiming for a higher Target Profit). This is not like Tiger Brokers (or most other foreign brokers), where we can hold our funds in multiple currencies. 

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(d) No short selling and margin trading

Short selling and trading with margin are not available on Rakuten Trade too.

Essentially, this means that the only direction that you can execute on Rakuten Trade is for a stock to go up in price. Also, you are only able to trade US stocks with the cash that you have in your Rakuten Trade account without access to margin facilities.

While this may turn off some stock traders, it shouldn’t be an issue for most long-term investors.

Regardless, having all these features will certainly help Rakuten Trade serve the needs of different retail participants in the market.

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(e) No fractional shares

Rakuten Trade also does not offer fractional shares. Fractional share allows investors to buy a portion of a stock that is less than one full share. (eg. Paying $17 to buy 0.1 unit of Apple share instead of 1 full unit of share of $177)

Now, I am certainly nitpicking on this one, because many foreign brokers also do not offer fractional shares. However, I think it’d be amazing if Rakuten Trade can offer fractional shares for fellow Malaysian users.


Who should use Rakuten Trade to trade US stocks?

While imperfect, Rakuten Trade has offered something that all local brokers failed to do: Access to the US stock market at a truly affordable fee via a Malaysia-regulated platform.

In my opinion, Rakuten Trade is a great option if you are:

  • Seeking for a Malaysia-regulated broker to invest in the US stock market.
  • Looking to access the US market at a truly affordable fee.
  • Looking for a user-friendly platform to invest in the US stock market.

At the same time, it may not suit people that are:

  • Active day traders that require market execution (instead of limit order) or more advanced execution features.
  • Traders that need access to margin and the ability to short sell stocks.
  • Investors or traders that want exposure to more exotic stocks which are not within Rakuten Trade’s list of tradable stocks.

In short, unless you are an active trader, chances are you’ll like what Rakuten Trade has to offer.


Rakuten Trade Referral Link for New Users

Rakuten Trade Referral Link

If you are keen to open a Rakuten Trade account, consider using my referral link below! For that, you’ll get:

  • 1000 Rakuten Trade (RT) points worth RM10 to offset your brokerage fee.
  • + 150 RT points when you deposit a min. of RM5,000 within 5 days.
  • + 150 RT points when you transfer your shares from other brokers to Rakuten Trade.
  • + 1x brokerage fee rebate when you place your 1st trade within 30 days after your account is activated.

Aside from that, Rakuten Trade users get +1 RT point for every RM2 brokerage paid! Click HERE for the full T&C on RT points

Open a Rakuten Trade Account Today!


Trading perks on Rakuten Trade

As a Rakuten Trade user, there are many perks offered on top of a user-friendly experience:

Use RT points to offset brokerage fee:

RT points are points rewarded to you when you open an account or execute trades on Rakuten Trade.

With these RT points, you can offset your brokerage fee.

Use RT points to offset brokerage fee
Use RT points to offset brokerage fee

 


Summary: Is Rakuten Trade a good platform to invest in the US market?

As a whole, Rakuten Trade has offered Malaysians a game-changing manner to invest in the US stock market via a locally-regulated broker.

An affordable fee structure, user-friendly interface, and transparent conversion rate should convince many investors to forgo the need to open a foreign brokerage account (and experience all the hassle of funding & withdrawals).

Unless you are an active day trader or you require access to less familiar stocks, I am sure you’ll be happy with what Rakuten Trade has to offer.

If you are keen to open a Rakuten Trade account, consider using my referral link below! For that, you’ll get:

  • 1000 Rakuten Trade (RT) points worth RM10 to offset your brokerage fee
  • + 150 RT points when you deposit a min. of RM5,000 within 5 days
  • + 150 RT points when you transfer your shares from other brokers to Rakuten Trade
  • + 1x brokerage fee rebate when you place your 1st trade within 30 days after your account is activated.

Aside from that, Rakuten Trade users get +1 RT points for every RM2 brokerage paid!

Open a Rakuten Trade Account Today!


How to sign up to trade US stocks via Rakuten Trade

(A) How to sign up for US stock trading if you are new to Rakuten Trade:

Step 1: Sign up for Cash upfront account

If you are new, you’ll have to sign up for a Rakuten Trade Cash Upfront account.

Consider using my Rakuten Trade referral link by clicking the button below, and you’ll get 1000RT points (RM10) which can be used to offset your brokerage fee! 

Open a Rakuten Trade Account Today!

If you need help, click HERE for my step-by-step guide to open a Rakuten Trade account. 

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Step 2: Get your Rakuten Trade account within 2 working hours

Your Rakuten Trade account will be activated within 2 working hours. 

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Step 3: Log in to your Rakuten Trade account and apply for Foreign Stock Trading

Log in to your Rakuten Trade account either via the website or Rakuten Trade’s iSpeed app. You can locate the Foreign Trading activation button easily within the Rakuten Trade platform.  

Activate Foreign Equity Trading Account on Rakuten Trade

Step 4: Submit your application for US stock trading

Spend 1 minute to share some info required to trade the US stock market. Then, submit your application. 

Activate Foreign Equity Trading Account on Rakuten Trade

Step 5: Your Foreign Trading account will be enabled within 2-3 working days


(B) How to sign up for foreign trading if you are an existing Rakuten Trade user:

If you are an existing Rakuten Trade user, just follow Step 3 to Step 5 above and you’ll be good to go!


Disclaimer:

This post contains affiliate links, which afford No Money Lah a small referral (and in return, support this blog) if you sign up for an account using my referral link.