Firm says waitlist for its new feature has been one of its largest ever
Wealthsimple has announced a major addition to its self-directed investment platform following what it says was unprecedented demand.
The firm is offering margin trading to eligible clients as the next step in its trading strategy, with more than $40 million in margin balances already accrued. With its analysis of the market showing that Canadians were trading on margin with $38 billion in 2024, a 50% year-over-year increase, the potential for a share of the market is clear.
Allowing eligible clients to use their existing portfolios to borrow funds to expand their investments has brought together the firm’s technology, financial expertise, and competitive low fees, to offer an alternative route to margin trading, which already has several major players including RBC, Questrade, Interactive Brokers Canada, and moomoo.
But Wealthsimple’s VP of product, Swapnil Parikh, says that margin trading is not for everyone, with risks that determined how low the firm was prepared to lower its bar to entry without creating additional risk.
“Through beta testing and user feedback, we devised a quick-yet-rigorous approval process to get eligible clients up and running, with no physical paperwork or branch visits required,” he said. “We also built in a margin health tracker, which gives them a clear and constant gauge of their account’s risk level. It updates daily, and if an investor were to approach the red zone before a margin call, we send them clear next steps on what to do.”
Parikh added that the firm will be providing educational materials on topics such as margin, margin calls, and margin vs. cash accounts, to give clients a better understanding of what’s involved in trading on margin.
The last year has been a significant one for Wealthsimple as it continued to focus on Canada and work towards a potential IPO after selling its US and UK operations in 2021. And in November, the J.D. Power 2024 Canada Wealth Management Digital Experience Study ranked the firm as number one among self-directed platforms ahead of RBC and CIBC.
