Want to invest in US stocks but afraid of the hassle? First, understand the true nature of the omnibus account.

Many new investors in Taiwan, when first encountering the overseas stock market, find themselves confused by various professional terms. Among them, “Cross-Agency Delegated Trading” (複委託) is the most common introductory topic. What exactly does “Cross-Agency Delegated Trading” mean? Why do so many people use it to buy US stocks? This article will start from zero and analyze the operational mechanism, cost structure, and how to determine if it suits you.

Understanding Cross-Agency Delegated Trading: Taiwan’s “Agent” System for Overseas Stock Investment

Simply put, Cross-Agency Delegated Trading is “trustee buying and selling of foreign securities.” When you place an order through a domestic broker’s Cross-Agency Delegated account, it does not connect directly to the US stock exchange. Instead, the domestic broker forwards your order to a partner overseas broker, which then executes the trade on the foreign market.

This “intermediary transfer” process is the origin of the name “Cross-Agency Delegated Trading” — your order passes through multiple handovers rather than a direct route. With a Cross-Agency Delegated account, you can easily invest in stocks, ETFs, and bonds in markets like the US, Japan, Hong Kong, and China, with funds priced in TWD, eliminating worries about foreign exchange.

In Taiwan, using Cross-Agency Delegated Trading to buy US stock ETFs has become the most mainstream method for retail investors, with trading volume far surpassing other channels.

Why Choose Cross-Agency Delegated Trading? Pros and Cons at a Glance

Main Advantages: The top three features appreciated by novice investors are — settlement in TWD, no need to handle foreign exchange remittance; overseas dividends are directly transferred back to the domestic account; tax issues are handled by dedicated staff at the broker, saving many hassles. Additionally, you do not need to interact with overseas brokers’ English interfaces; all customer service is in Chinese, making learning very easy.

Hidden Costs: The convenience comes with higher transaction fees. Compared to overseas brokers charging below 0.1%, Cross-Agency Delegated Trading typically costs between 0.1% and 1%. Also, the range of investable products is limited; margin trading and short selling are not supported, and features like “automatic dividend reinvestment” are unavailable.

Who is most suitable for Cross-Agency Delegated Trading? If you are a long-term investor with few trades per year and each transaction involves a significant amount, Cross-Agency Delegated Trading is more than sufficient. However, if you trade frequently or want to try advanced operations (like margin, short selling, options), it may become a bottleneck.

Overseas Brokers vs Cross-Agency Delegated Trading: Which is More Cost-Effective?

This table clearly shows: for beginners, the safest choice is Cross-Agency Delegated Trading. But as your trading frequency and capital grow, the cost advantages of overseas brokers become more apparent.

The Four-Step Process of Cross-Agency Delegated Trading

1. You place an order: via Taiwan broker’s app or website to buy US stocks
2. Broker forwards: the Taiwan broker transmits the order to an overseas partner broker registered on US exchanges
3. Overseas execution: the overseas broker matches and executes the trade on the US market, then reports back to the Taiwan broker
4. Synchronized update: your account immediately shows your holdings, with stocks held in trust by the broker

Note that the “holdings” you see are registered under the broker’s name, but you hold full beneficial ownership. This custody system is common and legal in international markets, so there is no need to worry about fund safety.

Breakdown of Cross-Agency Delegated Trading Fees: Don’t Be Fooled by Hidden Costs

Commission Fee

This is the most direct cost. Domestic brokers charge about 0.1% to 1% of the transaction amount. Most also set a minimum fee, usually between $25 and $50 USD. Recently, some brokers have eliminated minimum fees to attract market share; Cathay Securities is a pioneer in this reform.

Exchange and Tax Fees

These are levied by the overseas markets and cannot be avoided:

• US SEC fee: 0.00278% of the sale price
• Transaction Activity Fee (TAF): $0.000119 per share, with a maximum of $5.95 per order
• Other exchange fees: vary by market, e.g., Hong Kong charges 0.00015% of transaction value

Dividend Tax and Overseas Income Tax

Dividends paid by listed companies are subject to a 30% withholding tax, which can be reclaimed but involves cumbersome procedures. For overseas investment income, if your basic income does not exceed NT$6.7 million, generally no tax applies.

Currency Conversion Fees

When buying USD on the day, you need to prepare USD in advance, involving exchange rate spreads. Different brokers have different fixed rates, which is another hidden cost. Some banks (like Taishin) waive cross-border remittance fees, but most banks charge handling fees.

Eight Essential Rules for Cross-Agency Delegated Trading

1. Limit Orders Only: You can only set prices in advance; market orders for immediate execution are not available
2. Sufficient Deposit Required: Insufficient funds will prevent order execution, even if you place an order
3. Overfunding Usually: To hedge against exchange rate fluctuations, the actual reserved amount exceeds the transaction amount; the excess is refunded after settlement
4. Day Trading Allowed, Margin Not: Most brokers permit day trading but strictly prohibit margin trading and short selling
5. Bank Holidays Affect Operations: Cross-Agency Delegated Trading itself does not close, but when banks’ foreign exchange departments are closed, transactions cannot be processed
6. US Trading Hours: 9:30 AM to 4:00 PM US Eastern Time (Taiwan summer time: 9:30 PM to 4:00 AM next day)
7. Exchange Rate Risk Exists: Since fixed rates are used, there is a risk of exchange rate loss
8. Settlement Cycle: T+1 deduction for purchases, T+3 credit for sales (market settlement T+2)

Taiwan Cross-Agency Delegated Brokers Fee Ranking

Below is a summary of major Taiwanese Cross-Agency Delegated brokers’ electronic order fees (%):

Most Favorable:
Cathay Securities (0.10%, no minimum), E.SUN Securities (0.40%, $35 USD)

Mid-range Fees:
Fubon Securities (0.5-1%, $25 USD), Yuanta Securities (0.5-1%, $35 USD), Fubon Securities (0.5-1%, $35 USD), Yu-Fu Securities (0.50%, $35 USD), CTBC Securities (0.50%, $35 USD), Taishin Securities (0.50%, $35 USD)

Higher Fees:
KGI Securities (0.5-1%, $39.9 USD), Uni-President Securities (0.5-1%, $39.9 USD)

The differences are minor, but there is room for negotiation. If your capital is large or you trade frequently, negotiating discounts directly with brokers can save significant costs. Notably, Cathay Securities has eliminated minimum fees, making it the most cost-friendly choice currently.

Account Opening Process: Three Steps to Set Up a Cross-Agency Delegated Account

Step 1: Prepare Documents

• Double ID: original ID card + second ID (health insurance card, driver’s license, etc.)
• Seal: for signing documents in person
• Bank account copy: proof of funds

Step 2: Sign Agreement
Visit any domestic broker branch in person or apply online. Be sure to inform the broker of the broker code and choose the settlement currency (TWD or USD). You will sign a Cross-Agency Delegated Trading agreement.

Step 3: Transfer Funds and Trade
After successful account opening, transfer funds into the delegated settlement account. Cash and holdings in this account are entrusted to the broker. From this point, you can place US stock orders via the broker platform.

The account opening threshold is low; any Taiwanese individual over 18 years old can apply, with no minimum capital requirement.

Other US Stock Investment Channels Besides Cross-Agency Delegated Trading

Direct Overseas Broker Trading

Register directly with US-based brokers (e.g., FirstTrade) to buy US stocks, futures, options, ETFs, and more. The biggest advantage is zero commission, only paying exchange fees (negligible). The downside is high account opening barriers and primarily English interfaces, which are less friendly for beginners.

US Stock CFDs

CFD is similar to US stock futures, with US stocks as the underlying asset. Benefits include two-way trading (long and short), leverage support, and very low capital requirements. Fees are only 0.01-0.015%, with zero commissions, only spreads and overnight fees. Ideal for high-frequency traders and those with advanced needs.

Summary: Three Questions to Ask Before Choosing Cross-Agency Delegated Trading

Question 1: How often do you trade?
If less than 10 times a year, Cross-Agency Delegated Trading is sufficient. If you trade several times a month, overseas brokers may be more cost-effective.

Question 2: How much capital do you have?
Less than NT$100,000, the minimum consumption fee can eat into your returns. If you have sufficient funds and hold long-term, the convenience of Cross-Agency Delegated Trading outweighs the costs.

Question 3: Do you need advanced features?
If you only buy stocks and ETFs, Cross-Agency Delegated Trading is enough. For margin, options, or short selling, you need to switch to overseas brokers or CFDs.

In short, domestic Cross-Agency Delegated Trading is suitable for infrequent trading, simple investment goals, and long-term holding retail investors. It offers convenience at the expense of higher costs — a typical “pay for peace of mind” choice. When your investment habits change or your capital grows, consider upgrading to overseas brokers. The key is to find the most suitable investment tool for your current stage, rather than blindly following trends.