Buying US ETFs in a Rakuten Account: Confused

[daoud]

I made the probable mistake of buying Vanguard US ETFs in my Rakuten NISA. I know where I went wrong, sort of, but I still don’t understand the fees and wonder if anyone else does.

I’m a longtime online investor, but new to online investing in Japan. With the Rakuten account newly opened I spent hours trying to get clear information about fees for non-domestic buys. FX fees were easy to find and looked OK, but a clear statement about fees for US equities was impossible to find. After more than an hour of clicking around the closest I came was this:



I wasn’t sure I understood what a ‘contract price’ (約定代金) meant, but in an hour of searching it was the closest I’d come to anything comprehensible, and it seemed not bad, if it applied: 0.486% tax included; minimum fee $5.40 tax included; maximum capping out at $21.60.

Went to the buy screen and checked exchange rate and the price for a VTI buy and they were fine, price per share to the penny that listed in a US Ameritrade account open on another computer. Made the buy, made another buy of BND (listed FX the same and again the price per share identical to what Ameritrade was showing), and went to bed.

Woke to find how bad it had been:






Those yellow lines at the bottom are what happened. In both cases the number of shares (数量) and share price (単価) are correct, and the $/¥ FX rate of 109.52 is fine. What is not fine is the 受渡代金, delivery price, i.e., the actual cost of the transaction.

Should be I would have thought simple math:

VTI: 43 X $140.639 X 109.52 = ¥662,320, not ¥697,917.

BND: 51 X $78.86 X 109.52 = ¥440,475, not ¥478,593.

If you run the numbers that works out to an instant loss / fee of ¥35,597 or 5.37% on the VTI buy and ¥38,118 or 8.65% for the BND.

To add to my confusion my 資産合計 (Total assets) report on the front page of the account said this:



I.e., an instant bath for ¥61,109 or 5.54%, not the ¥73,715 or 6.68% shown on the two buy reports combined.

And to add to my confusion further that same 資産合計 report now, 28 hours later, during which time the US market has not been open and the FX rate has hardly moved, says this:



I’m not complaining that for incomprehensible reasons I’m now down only ¥5,439, but I have no idea what has or is happening. I can read Japanese passably well and the Rakuten site isn’t saying.

Can anyone shed light on any of this, beyond that I almost certainly was an idiot for thinking I could buy ETFs listed on the NYSE through a Japanese broker without getting screwed, I mean?

[adamu]

I don't use Rakuten so I've not looked into it in detail, but 成行 means market order, so it could be that they took a 5% buffer to make sure your order goes through in case of a market rise. When the order went through without requiring the full 5%, the figures were updated to the actual amount. Just an idea.

[daoud]

Thanks, adamu. That makes a lot more sense than anything else I've come across or thought of. Would account roughly both for the evaporating money at the beginning and the mysterious cash infusion this morning. I still find the whole business disquieting and am not pleased that there's simply no way to find out what happened on the Rakuten site, but your reply makes sense, and I hope that's what happened. Either way, much appreciated.

[RetireJapan]

I don't use Rakuten so I've not looked into it in detail, but 成行 means market order, so it could be that they took a 5% buffer to make sure your order goes through in case of a market rise. When the order went through without requiring the full 5%, the figures were updated to the actual amount. Just an idea.

That makes a lot of sense. I tend to do limit orders which is why I maybe haven't run into this issue (or just haven't been paying attention)

[adamu]

http://faq.rakuten-sec.co.jp/faq_detail.html?id=2111089

米国株式の注文成立による場合
本日中の成行買注文を行った際、約定単価によっては、買付代金不足が発生することがあります。
・成行買付時の必要購買余力
取引時間中　　直近値×1.03×株数＋手数料
取引開始前　　前日（直近）終値×1.03×株数＋手数料

So it looks like they require available funds 3% above the market price + fee for a market order. Don't know how to reconcile that with your 5% and 8% figures though...

[daoud]

Much appreciated again, adamu. I had missed that despite scrolling through and clicking on several things in that Q&A section. Great call and great catch. I still can’t make full sense of the order details as they went through but I’m pretty sure you’ve nailed it, or most of it, anyway, with the market order idea. That quote from the faq is good corroboration.

I’ve always done market orders at online brokers elsewhere and not thought much about it, & I don’t think it ever would have occurred to me that that was the culprit. I’m grateful for you catching it and taking the time to post. I think I’ll follow Ben and stick to limit orders for anything like this in the future, in the hope of saving palpitations.

Fwiw my ‘total assets’ on the login page is now showing just about what it should less the fees for two 米国 buys. Used to other platforms in other countries I’m still not happy about the difficulty of getting clear answers in easy-to-find places on Rakuten, but it’s looking pretty close to correct now.

[adamu]

I’ve always done market orders at online brokers elsewhere and not thought much about it, & I don’t think it ever would have occurred to me that that was the culprit.

FWIW I went through a similar confusion myself in November when starting to consider using market orders to avoid failed limit orders. The conclusion then was to just use limit orders with a limit of for a few dollars over the market price - except in exceptional circumstances your order will be matched against a lower offer anyway.