Want to invest in US stocks through delegated trading? First, understand these trading rules and fee structures.

Many novice investors are thinking about how to quickly enter the US stock market, and the cross-border entrusted account has become the most common method chosen by Taiwanese people. But before opening an account, you must understand: how does a cross-border entrusted account actually work, what are the costs, and what trading restrictions exist? All these factors directly affect your investment returns.

The Essence of Cross-Border Entrusted Accounts: The Client’s Order, Then Re-Entrusted

The full name is “Trustee Buying and Selling of Foreign Securities Business.” It sounds complicated, but the core concept is actually very simple.

You want to buy US stocks but don’t want to open an overseas account yourself or deal with remittances and foreign currency issues. So, you open a cross-border entrusted account with a Taiwanese broker, and the broker then forwards your order to an overseas partner broker for execution—your order is transferred once, hence called a “cross-border entrusted account.”

Through this method, you can invest in stocks, ETFs, and bonds across multiple markets such as the US, Japan, Hong Kong, and China. In Taiwan, using a cross-border entrusted account to buy US stock ETFs is the most traded investment method and the most popular entry point for beginners.

Cross-Border Entrusted Account vs Overseas Broker: Which One Should You Choose?

Core Advantages of Cross-Border Entrusted Accounts

Settling in TWD, saving currency exchange hassle; dividends paid directly back to your domestic account; tax issues handled by professionals; psychologically more reassuring because you trade through a familiar Taiwanese broker.

Obvious Disadvantages of Cross-Border Entrusted Accounts

Fees are much higher than overseas brokers; limited product variety; cannot automatically reinvest dividends; order execution may be delayed.

For long-term investors with sufficient funds and low trading frequency, a cross-border entrusted account is fully adequate. But if you plan to trade frequently or invest large amounts, choosing an overseas broker will be more cost-effective.

Key Differences Between the Two Methods

Overseas brokers can open accounts online, with low commissions (below 0.1%), full product offerings, and support margin trading; cross-border entrusted accounts require physical branch visits to open, higher fees (0.1%-0.5%), limited products, and prohibit margin trading.

Overseas brokers quote in USD or other foreign currencies, while cross-border entrusted accounts settle in TWD, which is more convenient. However, overseas broker orders are executed faster, whereas cross-border entrusted accounts may have delays due to transfer processes.

How Does a Cross-Border Entrusted Account Complete a Trade Step-by-Step?

Understanding the trading process helps you anticipate possible delays and risks:

Investor places order → You submit buy/sell orders via the Taiwanese broker app

Order forwarded to overseas broker → Taiwanese broker transmits your order to an overseas partner broker registered on US exchanges

Market matching and execution → Overseas broker directly places the order on the US stock market, completing the actual buy/sell

Result reporting and account update → After execution, the overseas broker reports the result back to the Taiwanese broker, and your account is updated accordingly

After execution, stocks are stored in the broker’s overseas custody account. The shares you see are actually held in the broker’s name, but you enjoy all rights. This custody system is very common and legal in international markets.

How Much Do Cross-Border Entrusted Account Fees Cost? Five Cost Sources

Don’t think it’s just one fee; the cost structure of cross-border entrusted accounts is more complex than you might imagine.

Broker Commission Fees

Domestic brokers charge about 0.1%-1% of the transaction amount, with a minimum fee usually between $25 and $50 USD. Recently, some brokers have eliminated minimums—for example, after reforms by major brokers, costs have become more affordable.

US SEC Trading Fees

The US Securities and Exchange Commission (SEC) charges 0.00278% on stock sales. This fee is usually deducted at the time of exit.

Exchange Fees

Different exchanges have different fee standards. Generally, both buy and sell sides pay about 0.00565% of the transaction value, plus an additional trading fee of 0.0027% for each side.

TAF Trading Activity Fee

Charged when selling stocks, at $0.000119 per share, with a cap of $5.95.

Exchange Rate Spread

Cross-border entrusted accounts settle in the broker’s fixed exchange rate, which involves a currency spread. Different brokers quote different rates, which is an additional hidden cost.

Tax Considerations

Dividends are subject to 30% income tax, which can be reclaimed but involves complicated procedures. Overseas income is only taxed if the basic income exceeds NT$6.7 million and the basic tax exceeds the regular income tax. The formula is: Basic tax = (Basic income – NT$6.7 million) × 20%.

Eight Key Rules for Cross-Border Entrusted Trading

Only limit orders are allowed
Market orders cannot be placed; you must set a target price beforehand.

Sufficient deposit required for execution
Orders can be placed, but insufficient funds will prevent execution. Due to exchange rate fluctuations, you generally need to deposit more than the actual transaction amount; the excess will be refunded after the trade.

Trading hours are limited
US stock trading hours are 09:30 am to 4:00 pm US time. During daylight saving time in Taiwan, this corresponds to 21:30 to 04:00 the next day; during standard time, 22:30 to 05:00.

Margin trading is not supported
Cross-border entrusted accounts prohibit margin trading, but most support day trading.

Bank holidays affect remittances
The broker’s cross-border entrusted account does not close on holidays, but if banks’ foreign exchange services are closed, remittance cannot be processed.

Settlement time lag
Buy transactions settle on T+1, sell transactions on T+3, but the actual delivery date is T+2.

Conditional orders are not supported
Advanced conditional order functions are unavailable.

Account currency must be specified in advance
You need to decide whether to settle in TWD or USD beforehand; it cannot be changed midway.

Complete Process to Open a Cross-Border Entrusted Account

Step 1: Prepare necessary documents
Two IDs (original ID card + passport or residence permit), secondary ID (health insurance card or driver’s license), stamp (required for in-person applications), bank account copy (to prove funds).
The account opening requirement is being a Taiwanese resident aged 18 or above.

Step 2: Sign agreement with broker
You can choose to visit a local branch in person or apply online via the broker’s website. During application, inform the staff of the broker code and select the settlement currency (TWD or USD).

Step 3: Transfer funds to start trading
Once the account is successfully opened, transfer funds into the entrusted settlement account. The broker will handle custody of stocks and funds.

Major Taiwanese Cross-Border Entrusted Brokers Fee Comparison

While fee structures are similar across brokers, differences exist. Here are the electronic order fee rates for major brokers:

Fubon Securities 0.5%-1%, minimum $25 USD;
Yuanta Securities 0.5%-1%, minimum $35 USD;
Cathay Securities 0.1%, no minimum;
SinoPac Securities 0.5%-1%, minimum $35 USD;
KGI Securities 0.5%-1%, minimum $39.9 USD;
Yu-Fu Securities 0.5%, minimum $35 USD;
CITIC Securities 0.5%, minimum $35 USD;
Uni-President Securities 0.5%-1%, minimum $39.9 USD;
Taishin Securities 0.5%, minimum $35 USD;
E.SUN Securities 0.4%, minimum $35 USD.

In practice, the differences are minor, and many brokers offer discounts through negotiation. Compared to overseas brokers, these costs are still relatively high, so frequent traders may not prefer them. Currently, Cathay Securities, having eliminated minimums, is one of the most competitive options.

Note that total costs consist of two parts: fees charged by the domestic broker and fees charged by the foreign exchange or overseas broker. Buying US stocks is relatively cheap, but costs for investing in Chinese or Hong Kong stocks can reach 1%-2%.

Cross-Border Entrusted Accounts Are Not the Only Option

Direct purchase through overseas brokers
US-based brokers offer commission-free US stock trading, only charging exchange fees (negligible). However, account opening is more difficult, with platforms mostly in English, requiring some proficiency.

Trading via stock CFDs
Contracts for Difference (CFDs) based on US stocks support two-way trading with leverage, allowing both long and short positions. The minimum capital requirement is much lower than buying actual stocks. Fees are only 0.01%-0.015%, with no commission—only spreads and overnight fees. Suitable for high-frequency traders or investors with special needs (e.g., leverage).

Are You Suitable for a Cross-Border Entrusted Account?

Suitable investors:
Low trading frequency, simple investment targets, long-term holding plans, unwilling to deal with the complexity of opening overseas accounts, sufficient funds but not very large total investment.

Unsuitable investors:
Frequent traders, need multiple investment tools, sensitive to costs, willing to handle overseas account matters themselves.

Cross-border entrusted accounts offer convenience and peace of mind, but at a higher cost. If you are new to overseas investing, it’s the easiest option; but if trading becomes frequent or amounts grow, you can consider upgrading later. The key is to find the best balance between cost and convenience based on your own situation.