A Complete Guide for Taiwanese Investors on US Stock Proxy Trading: Fees, Account Opening, and Trading Rules

Looking to invest in US stocks from Taiwan but only have a vague understanding of complex委託? Many investors face the same dilemma: should I open an account with a local broker for複委託 or go directly through an overseas broker? How big is the difference in fees? This article will clarify all your doubts in one go.

Core Concept of 複委託: Taiwanese Broker Places Orders on Your Behalf Overseas

The essence of 複委託 is simple: after receiving your order, the domestic broker forwards it to an overseas partner broker to execute on international exchanges. The formal name is “Agency Trading of Foreign Securities Business.”

For example, it’s like wanting to buy something in the US but not wanting to fly there yourself, so you entrust a friend living in the US to buy it for you. The difference is, your “friend” in this case is a licensed overseas securities broker, making the transaction more regulated and supervised.

With a 複委託 account, your investment scope is broad: US stocks, ETFs, foreign bonds, and even markets like China, Japan, Hong Kong, etc. According to statistics, buying US stock ETFs via 複委託 is the largest overseas investment method in Taiwan.

複委託 vs Overseas Broker: Balancing Cost and Convenience

Since both methods allow US stock investment, why choose 複委託? The key lies in balancing transaction costs and account opening difficulty.

Advantages of 複委託:

• Easy account opening, either in person or online
• TWD settlement, no need to handle foreign currency remittance
• Dividends paid directly into your domestic account
• Tax issues handled by professionals
• Suitable for investors with no English proficiency

Disadvantages of 複委託:

• Higher fees (0.1%-1%, with minimums of $25-$50)
• Limited investment products (mainly stocks and ETFs)
• No margin trading or automatic dividend reinvestment
• Possible delays in order execution

Overseas brokers have lower transaction fees (0.01%-0.1%) but higher account opening barriers, complex procedures, and mostly English interfaces. In simple terms, 複委託 is suitable for small, long-term investors; overseas brokers are better for frequent traders with larger capital.

How 複委託 Works: Four Steps to Understand the Entire Process

The trading process of 複委託 may seem complex but can be broken down into four stages:

Step 1: You place an order
Submit buy/sell orders via the Taiwanese broker’s app or platform.

Step 2: Broker forwards the order
The domestic broker transmits your order to an overseas partner broker (usually registered on US exchanges with direct order rights).

Step 3: Overseas execution
The overseas broker matches the order in the market and reports the transaction result back to the domestic broker.

Step 4: Settlement and account update
The domestic broker updates your holdings and cash balance. Note that, your stocks are held in the broker’s custody in name only, with you as the actual owner—a legal and common custodial system in international markets.

複委託 Fee Structure: More Than Just Commissions

Many investors only look at the commission rate, but the cost structure of 複委託 is more complex.

Main costs include:

1. Domestic broker’s commission: 0.1%-1% of transaction amount, usually with minimums. Recently, some brokers (like Cathay Securities) have eliminated minimums.

2. US exchange fees:

   • SEC transaction fee: 0.00278% on sales
   • Trading Activity Fee (TAF): $0.000119 per share, capped at $5.95

3. Tax and currency exchange costs:

   • 30% withholding tax on dividends (possible to reclaim, but complicated)
   • 複委託 uses fixed exchange rates, so currency fluctuations may affect costs
   • Some banks charge international remittance fees (Taishin Bank waives these)

4. Settlement time difference costs: Buying settles T+1, selling T+3, during which your funds are occupied.

Major Taiwanese brokers’ 複委託 fee comparison (for online orders):

• Cathay Securities: 0.10% (most favorable, no minimum)
• E.SUN Securities: 0.40% (minimum $35)
• Taishin Securities: 0.50% (minimum $35)
• Fubon, Yuanta, SinoPac: 0.5%-1% (minimum $25-$50)

While the rates seem close, there is room for negotiation, especially for large investments.

Seven Rules You Must Know About 複委託 Trading

1. Only limit orders are allowed; market orders are not permitted. You must set the buy/sell price in advance.

2. Account must have sufficient funds. No funds, no trade. Usually, excess funds are pre-deposited to account for exchange rate fluctuations and refunded afterward.

3. Margin trading is prohibited, but most brokers allow day trading.

4. Settlement is T+2 (trade date plus two days), but funds are settled T+1 (buy) and T+3 (sell).

5. Trading hours follow overseas markets: US stock market hours are 09:30am-4:00pm EST, which translates to about 21:30-04:00 (summer) or 22:30-05:00 (winter) Taiwan time.

6. Bank forex holidays affect transactions. Although 複委託 accepts orders 24/7, if the bank’s forex department is closed, remittance cannot be processed.

7. Exchange rate risk exists. 複委託 uses fixed rates, so investors cannot choose the most favorable exchange rate timing.

複委託 Account Opening Guide: Two Accounts Needed

Opening a 複委託 account is straightforward but requires two accounts: a domestic 複委託 account + a foreign currency account.

Eligibility: ROC citizens aged 18 or above.

Required documents:

• Double ID (ID card + health insurance card or driver’s license)
• Seal (needed for in-person application)
• Bank account copy (to prove funds)

Steps:

• Choose a broker
• Apply in person at branch or online via official website
• Inform staff of your broker code
• Select settlement currency (TWD or USD)
• Sign agreements
• Transfer funds into the 複委託 account to start trading

The entire process typically takes 3-5 working days.

複委託 vs Other US Stock Investment Methods

Besides 複委託, Taiwanese investors have other options:

Directly using overseas brokers: Fully autonomous trading, lowest fees (0.01%-0.1%), but complex account opening, English interfaces, and handling foreign currency yourself. Suitable for large, frequent traders.

US stock CFDs: Contracts for difference based on US stocks, similar to futures, supporting leverage and two-way trading. Very low fees (0.01%-0.015%) but high risk. Suitable for short-term trading or leveraged strategies.

Final Advice: Who Is 複委託 Suitable For?

Ideal 複委託 clients are: Infrequent traders, small to medium investment amounts, long-term holders, and those who want to avoid dealing with foreign currency and English. Its advantages are simplicity and peace of mind, but the downside is higher fees.

If you trade more than once a month or invest over US$50,000, opening an overseas broker account directly is more cost-effective. For low-cost, less complicated options, consider US stock CFDs as a supplement.

Core decision logic: Small capital + long-term + avoid hassle = 複委託; large capital + high frequency + English proficiency = overseas broker; short-term + leverage = CFD. These methods are not mutually exclusive and can be combined flexibly based on your investment needs.