Major online brokerage Matsui Securities Co. said Friday it will eliminate commissions on one type of margin trading in September but raise the interest rate on funds borrowed for those trades.
The move comes amid fierce commission-cutting competition among securities companies. It signifies a change in Matsui Securities' business strategy from relying on commissions to generating profits through interest revenue, industry analysts said.
The plan involves its popular "no-time-limit margin trades," for which Matsui sets no deadlines for repaying borrowed funds but charges interest.
At present, the brokerage charges commissions on the trades based on trading value. For example, it charges 1,050 yen for trades of between 500,000 yen and 1 million yen. The interest rate on the borrowed funds is set at 3.3 percent per year.
Beginning Sept. 4, Matsui Securities will get rid of commissions but raise the interest rate to 4.6 percent per year in line with the increase in market rates.
The new interest rate will be applied to existing contracts when they are extended beyond Sept. 1.