How to choose a broker: the order of checks matters more than a list of names

A broker is chosen not by its place in a ranking or by the bonus for opening an account, but to fit your own trading scenario: start by checking the licence and where the securities will be held, then calculate the cost structure for your own trading frequency, then verify access to the instruments you need, the tax support and — without fail — the cost and procedure of leaving for another intermediary. The order matters more here than the list of criteria: a tariff calculated before the licence has been checked is wasted time, and a tariff calculated without understanding what you buy and how often is guesswork.

Licence and depository: what is checked before the tariff

Brokerage in Russia is licensed by the Bank of Russia, and the regulator itself keeps the list of active professional market participants. A matching name and a handsome app mean nothing: what has to be checked, against the central bank's register, is the legal entity with which the agreement is signed. Separately, look at whether the company holds a depository licence or which depository it works with — it is there, and not "in the app", that the rights to your securities are recorded. The entry in the custody account is the proof of ownership; the trading interface is merely a way of submitting an order.

This is also the point at which to check that you are dealing with a broker and not an asset manager. A broker executes your orders; a discretionary manager takes the decisions itself. These are different agreements, different fees and different liability, although they are often sold in one office and by one person.

Costs: calculate for your own scenario, not from the shop window

A broker's commission is not one figure but a set of payments that add up. The calculation includes the broker's fee on turnover, the exchange fee, the depository charge, the minimum monthly payment when there are no trades, the charge for connected services and separate tariffs for over-the-counter transactions. Which of these turns out to be the main item depends on behaviour: for an investor who buys rarely and holds for a long time, the costs go almost entirely into fixed payments, while for an active trader they go into turnover-based ones. One and the same tariff can be cheap for the first scenario and expensive for the second.

A practical technique is to write out your expected year: how many transactions, for what amounts, in which market sections. Then run that scenario through the candidates' tariffs in full, together with the subscription fee and the depository. A comparison based only on the "commission per trade" line regularly gives the wrong answer. What the concept covers and how it is structured is explained in the glossary entry on the broker's commission, and the other terms in the agreement are convenient to check against the glossary.

Access to instruments: what you intend to buy

A tariff is meaningless if this broker cannot be used to buy the very thing the account is being opened for. Check access to the sections you need: equities, bonds and, separately, OFZ, exchange-traded funds, the derivatives and currency markets, over-the-counter trades. Find out how orders are executed in thinly traded securities and whether primary-market placements are available — for bonds this is often the decisive point, since buying at the placement and buying in the order book give a different final yield to maturity. We have covered the logic of selecting the securities themselves separately: for bonds and for funds.

For a non-qualified investor, some instruments become available only after the testing required by the law "On the Securities Market". The test is taken with each broker separately, and the result is not carried over automatically — on switching, the procedure will have to be gone through again.

Taxes and reporting

A Russian broker acts as tax agent for personal income tax: it calculates and withholds the tax on securities transactions itself, which takes most of the reporting work off the investor. The important details are whether the broker nets profit and loss across different accounts within the year, how it withholds tax when money is withdrawn and how intelligible its reports are. You will be reading the broker's report when filing a tax return, when carrying forward losses from previous years and when transferring assets, so whether the document can be exported and how complete it is are no small matter.

Ask separately about the individual investment account: whether the broker opens an IIS of the third type, which instruments are available on it and how the deduction is arranged. And about dividends — whether payments arrive in the brokerage account or the bank account, and with what delay; the dates of the nearest payments on your own securities are convenient to keep in the dividend calendar.

Infrastructure risk and the way out

The events of 2022 showed that the quality of an intermediary is tested not in calm conditions but at the moment when the chain of record-keeping stops working. That is why, with a candidate, you look at which depositories and which counterparties the settlements go through, whether there is dependence on unfriendly infrastructure and what happens to the assets if the licence is revoked — by law the securities remain yours and are transferred to another professional participant, but the speed and cost of the transfer differ radically.

Find out in advance the tariff for moving securities out to another broker and for submitting a transfer instruction: this is the price of your freedom to leave. A broker with a low commission per trade and a prohibitive transfer charge is a trap that closes quietly.

The sequence of actions

Step 1. Check the legal entity's licence in the Bank of Russia register and establish which depository is used. Step 2. Describe your year: instruments, frequency, amounts, sections. Step 3. Calculate the full costs at the candidates for this scenario, including the subscription and depository charges. Step 4. Verify access to the venues and placements you need, and the testing requirements. Step 5. Clarify the tax support, the IIS and the format of the reports. Step 6. Find out the cost of transferring assets out — before signing the agreement, not after.

What this article does not replace

An honest caveat: the site has no directory of brokers and their tariff plans, so it is impossible here to name a specific company or to compare specific rates — only to set out the mechanism and the order of the checks. Take the current terms from the broker's own tariffs and rules in the version in force on the date of signing, and the company's status from the regulator's register. The rules are changed unilaterally, and a notification is usually deemed delivered through the client's online account.