The Hidden Costs of US Stock Trading | 2025 Custody vs Overseas Broker Cost Comparison

Want to trade US stocks in Taiwan but get confused by the fees? Don’t worry. This article summarizes the complete fee structures of two methods: using a local custodian bank (discretionary trust) and overseas brokers, so you can see at a glance how much you will actually pay in commissions and fees for buying and selling US stocks.

First, understand: Discretionary Trust vs Overseas Broker, who has cheaper US stock trading fees?

For Taiwanese investors, entering the US stock market mainly involves these two options. But the fee differences are significant, and choosing the wrong one could cost you several times more.

What is a discretionary trust? Why are the fees higher?

A discretionary trust means you indirectly buy US stocks through a domestic broker, because the process involves two layers of delegation (first to the domestic broker, then they delegate to an overseas broker), hence the name “discretionary trust.” The advantage is you can fund in TWD without currency exchange, but the downside is that US stock trading fees tend to be higher, usually between 0.25% and 1% of the transaction amount.

Pros and cons of discretionary trust:

• ✅ No need to open an overseas account, avoiding complicated procedures
• ✅ Deduct in TWD directly, with the domestic broker handling currency exchange automatically
• ✅ Regulated by Taiwan’s Financial Supervisory Commission, funds are protected
• ❌ Higher US stock trading fees
• ❌ Cannot leverage margin trading

Why are fees cheaper with direct overseas brokers?

Opening an overseas broker account to buy US stocks directly is like buying Taiwanese stocks through a local broker. Most mainstream brokers now offer zero-commission trading, but you need to handle currency exchange and remittance yourself, which is where hidden costs come in.

Pros and cons of overseas brokers:

• ✅ Low or zero trading commissions
• ✅ Fast trading, supports real-time order placement
• ✅ Margin trading available
• ✅ Wide range of investment products
• ❌ Need to exchange TWD to USD yourself
• ❌ More complex procedures

Complete breakdown of US stock trading fees

Fee structure for discretionary trust

Direct charges:

1. Trading commission (main cost)

   • Rate: 0.25% to 1% of transaction amount
   • Minimum: $25–$100 USD per order
   • Example: Buying $1,000 USD stocks at 0.3% fee costs $3, but if the minimum is $25, the actual cost becomes $25

2. Other miscellaneous fees (usually negligible)

   • Wire transfer fees, paper statement fees, dormant account fees, etc. (depending on broker)

Hidden costs:

3. Third-party regulatory fees (exchange fees + transaction activity fee)

   • Exchange fee: collected by the US SEC, 0.00051% of transaction amount, charged only on sell
   • Transaction Activity Fee (TAF): collected by FINRA, $0.000119 per share, minimum $0.01, maximum $5.95, charged only on sell
   • These are usually integrated into the broker’s fee and not listed separately

4. Dividend withholding tax

   • For stocks with dividends, 30% withholding tax applies (can apply for a refund)

Fee structure for overseas brokers

Trading-related fees:

1. Trading commissions

   • Most mainstream brokers now offer zero commissions

2. Third-party regulatory fees

   • Same as above (exchange fee + TAF)

Deposit and withdrawal fees:

3. Currency exchange fee

   • When converting TWD to USD at the bank, usually around 0.05%
   • Watch out for minimum fee limits (usually NT$100–NT$600)

4. Remittance fee

   • Banks charge different amounts for transferring funds from Taiwan to overseas brokers, typically NT$100–NT$900

5. Withdrawal fee

   • Some brokers charge around $10–$35 per withdrawal

6. Margin interest

   • Interest charged when using margin accounts

7. Dividend withholding tax

   • Same as above, 30% withholding tax (can apply for refund)

Mainstream discretionary trust brokers fee list

Mainstream overseas brokers fee list

Bank currency exchange remittance fee table

Actual cost comparison: discretionary trust vs overseas broker

Using the lowest fee institutions (Fubon at 0.25%, Mitrade with zero commission, Taiwan Bank for remittance):

（USD to TWD exchange rate of 1:30 used)

How to choose the most cost-effective way?

After comparing, you’ll find:

When trading less than US$6,000, discretionary trust is cheaper — because you save on currency exchange and remittance fees.

When trading more than US$6,000, overseas brokers become advantageous — especially if you trade frequently. For example, trading US$10,000 four times (buy and sell twice), discretionary trust costs US$100 in commissions (US$25×4), but with a zero-commission broker and a one-time remittance fee, total costs are about US$11.67, saving nearly US$90.

Core decision framework:

• Small investments + few trades → Discretionary trust is cost-effective
• Large investments + frequent trades → Overseas broker is better
• Need frequent access to funds → Discretionary trust is more convenient
• Want margin trading → Must use overseas broker

Summary

Taiwanese investors face trade-offs in US stock trading fees. Discretionary trust offers convenience and regulatory protection but comes with higher trading costs; overseas brokers attract frequent traders with low costs but require handling currency exchange and remittance procedures yourself.

Based on your investment amount, trading frequency, and cash flow needs, choose the method that suits you best. Making US stock trading fees manageable costs rather than unnecessary losses.