Investor Taiwan Wants to Trade US Stocks, Facing the First Question of Choosing the Most Cost-Effective Method

Involving US stock proxy trading commissions, foreign exchange costs, trading frequency and multiple other factors, slight carelessness means spending unnecessary money. This article will deeply analyze the cost structure of two mainstream methods of investing in US stocks to help you make the wisest decision.

Two Paths for Taiwan Investors to Trade US Stocks

To buy US stocks in Taiwan, there are essentially these two channels:

Option A: Through Domestic Broker Proxy Trading

Proxy trading’s full name is “entrusted trading of foreign securities business.” Simply put, you open an account with a domestic broker (such as Fubon, Cathay, etc.), and this domestic broker acts as your agent to place orders in foreign markets. Because the order has to go through the domestic broker layer, it’s called “proxy trading.”

The advantages of this approach are obvious: trade directly in New Taiwan Dollars, the broker handles foreign exchange conversion for you, no need to deal with foreign currency accounts yourself. But there are drawbacks too—complex procedures mean commissions aren’t cheap, generally ranging from 0.15% to 1%.

Option B: Open an Overseas Broker Account Directly

Skip the domestic intermediary and open an account directly with a US stock broker yourself. It’s as simple as using a domestic broker to buy Taiwan stocks. Currently, mainstream overseas brokers have already reduced trading commissions to very low levels, with even zero-commission options available.

But this approach also has costs: you need to convert New Taiwan Dollars to US dollars yourself, then wire the dollars overseas, during which banks charge foreign exchange fees and wire transfer fees. For small trades, these hidden costs may be higher than proxy trading commissions.

The Real Cost Structure of US Stock Proxy Trading Commissions

When trading US stocks via proxy trading, the actual costs you pay include two parts:

Part 1: Fees Directly Charged by the Broker

1. Trading Commission: This is the main expense. The rate is typically 0.25% to 1% of the transaction amount, varying by broker. But be careful about minimum charge traps—most brokers charge at least $25 to $100 per order.

   Example: Buying $1,000 in US stocks, at 0.3% rate should be $3, but with a $100 minimum restriction, the actual cost becomes 10%. This is very damaging for small investors.

2. Other Service Fees: Wire transfer fees, account maintenance fees, etc., relatively minor.

Part 2: Costs Hidden in Commissions

1. Exchange Fees: Fees collected by the US Securities and Exchange Commission (SEC), only deducted when selling, at a rate of 0.00051% of transaction amount, collected by brokers for payment.

2. Trading Activity Fee (TAF): Collected by FINRA, also only deducted when selling, calculated per share at $0.000119 per share, minimum $0.01, maximum $5.95.

Proxy trading brokers usually directly incorporate these two fees into commissions without separately listing them.

Cost Structure for Overseas Brokers

When trading US stocks with overseas brokers, the fee structure is completely different:

Broker-side Fees:

• Trading Commission: Most mainstream brokers have eliminated commissions, but a few still charge
• Financing Interest: Only incurred when using margin to buy stocks
• Foreign Exchange Fee: When converting TWD to USD at the bank, usually 0.05% of exchange amount, but with minimum fee restrictions (approximately 100 to 600 TWD)
• Wire Transfer Fee: Wiring from Taiwan to overseas broker, ranging from 100 to 900 TWD across banks
• Withdrawal Fee: Some brokers charge $10 to $35 when withdrawing

Market-side Fees:

Exchange fees and trading activity fees (TAF) are the same as proxy trading, but have less impact for overseas broker users since trading commissions are already zero.

Additionally, regardless of which method you use, you must pay 30% withholding tax on dividend-paying stocks.

The table below summarizes the fee list for both methods:

Overview of Major Proxy Trading Broker Rates

Below are the proxy trading commission standards for major Taiwan brokers in 2025:

Comparison of Major Overseas Broker Rates

Bank Foreign Exchange and Wire Transfer Fee Comparison

Real-World Comparison: Proxy Trading VS Overseas Brokers

Using the lowest-cost combination to calculate. Setting conditions:

• Proxy trading using Fubon Securities (0.25% commission with no minimum fee)
• Overseas broker using Mitrade (zero commission)
• Foreign exchange using Bank of Taiwan (0.05% rate, minimum $120 fee)
• Exchange rate at 1:30

Key Findings:

When a single transaction amount exceeds $6,000, the cost advantage of overseas brokers becomes apparent. But this comparison has an important premise—it only accounts for one transaction.

If you’re a frequent trader, the situation is completely different. For example, if the same $10,000 is traded 4 times (buying and selling twice each):

• Proxy trading cost: $25 × 4 = $100
• Overseas broker cost: $0 × 4 + $11.67 (one wire transfer) = $11.67

Now the gap is significant.

How Should You Choose? Investor Decision Guide

Based on the above analysis, selection criteria should consider:

Scenarios for Choosing Proxy Trading:

• Capital amount between $1,000-$6,000
• Very few transactions (only trade a few times a year)
• Don’t want to deal with foreign currency conversion
• Want fund safety with domestic regulatory protection

Scenarios for Choosing Overseas Brokers:

• Single transaction amount exceeds $6,000
• Frequent trading (multiple times per month or more frequently)
• Not afraid of dealing with foreign exchange yourself
• Want more investment tools and faster execution speeds

Choice for Large Capital Investors: Once capital exceeds $20,000, the disadvantage of US stock proxy trading commissions becomes very obvious. At this point, choosing an overseas broker can save substantial trading costs.

Summary

US stock proxy trading commissions appear simple but actually involve multi-layer costs. Regardless of which method you choose, the key is to make decisions based on your own trading habits and capital amount, rather than being misled by a single rate figure. The optimal plan for small investors and frequent traders is completely different—the key is finding the path that suits you best.