Hatch Review

Company Background & Regulation

Hatch is a distinctive player in the online brokerage space, positioned as a go-to platform for New Zealand investors seeking access to the US stock market. Founded in 2019, the company has quickly established itself as a leading choice for Kiwis aiming to diversify their investment portfolios with US equities. Hatch is headquartered in Auckland, New Zealand, and it is a wholly-owned subsidiary of Kiwi Wealth, which is part of the larger Kiwi Group Holdings Limited. This ownership structure provides Hatch with the backing and stability of a well-established financial institution, thereby enhancing investor confidence.

Regulation is a pivotal aspect of any brokerage platform, and Hatch operates under the stringent regulatory framework of the Financial Markets Authority (FMA) of New Zealand. The FMA licence number is not publicly disclosed, but its regulatory oversight ensures that Hatch adheres to strict standards regarding transparency, financial security, and customer protection. This regulatory compliance is crucial, especially for investors who prioritise the safety of their investments and the integrity of the platform they choose to trade with.

Hatch's regulatory adherence also extends to its client fund protection measures. As a registered financial service provider, Hatch is required to segregate client funds from its operational funds. This segregation ensures that client assets are protected and are not used for the brokerage’s operational expenses. Moreover, Hatch clients benefit from the compensation schemes that are in place under the FMA's regulatory framework, although specifics about compensation limits are typically determined on a case-by-case basis by the regulatory body.

While Hatch focuses primarily on the US stock market, it offers a unique proposition by allowing New Zealand investors to hold US stocks and ETFs directly. This feature is facilitated by Hatch's CHESS-sponsored US holdings, which provides an additional layer of security and transparency as investors can confirm their share ownership directly with the US market. This level of transparency is rare and highly valued among investors who want to ensure their investments are secure and verifiable.

Trading Fees & Spreads

Hatch adopts a transparent and straightforward fee structure, which is a significant advantage for investors who seek clarity in costs associated with their trades. The primary trading fee is a flat charge of NZ$3 per trade for US stocks and ETFs. This fee structure is particularly appealing to retail investors who prefer a predictable cost model without the complexity of variable spreads. However, it is important to note that Hatch also applies a foreign exchange (FX) fee when converting New Zealand dollars to US dollars, which is essential for trading on US markets.

Unlike many other brokers, Hatch does not offer leverage, meaning all trades are conducted at a 1:1 leverage ratio. This approach may limit the potential for higher returns that leverage can offer, but it also significantly reduces the risk of substantial losses, making it a safer option for risk-averse investors. The lack of leverage is a strategic decision by Hatch to cater to a specific investor profile that prefers to invest rather than speculate.

Hatch does not impose any overnight swap rates, as it does not offer leveraged trading or margin accounts. This absence of swap fees can be beneficial for long-term investors who are not concerned with the short-term holding costs that typically accumulate in leveraged trading. The simplicity of the fee structure aligns well with Hatch's target audience of buy-and-hold investors who focus on long-term capital appreciation rather than short-term trading gains.

When compared to competitors, Hatch's fees are competitive, particularly for investors primarily interested in US equities. Traditional brokers may offer a wider range of markets, including forex and commodities, but often at higher costs or with more complex fee structures. However, Hatch's focus on US stocks and ETFs, along with its user-friendly platform, offers a niche advantage that distinguishes it from other brokers. The lack of access to the New Zealand Exchange (NZX) could be a limitation for some investors, but for those specifically seeking US market exposure, Hatch provides an efficient and cost-effective solution.

Trading Platforms & Tools

Proprietary Web Platform

Hatch offers a proprietary web platform designed with simplicity and modernity in mind. This platform is particularly user-friendly, catering to both novice and experienced investors. The web interface provides direct access to major US stock exchanges such as NYSE and NASDAQ, enabling investors to trade a wide range of stocks and ETFs. The web platform does not support complex trading operations like futures or options, focusing instead on straightforward stock and ETF trading. Its clean design and intuitive navigation make it easy for users to conduct their trading activities efficiently.

Proprietary Mobile Platform

The mobile platform by Hatch mirrors the web version in terms of functionality, ensuring a seamless transition between devices. Available for both iOS and Android, the app allows investors to manage their portfolios on the go. The mobile platform features real-time market data, the ability to place trades, and check portfolio performance, all within a streamlined interface. Although it lacks some of the advanced charting tools found in more robust trading apps, it compensates with its focus on ease of use and accessibility, ensuring investors can execute trades and monitor the market with just a few taps.

Charting Capabilities

While Hatch’s platform provides basic charting capabilities suitable for most retail investors, it does not offer the advanced technical analysis tools found in more sophisticated trading platforms. The charting tools available are straightforward, allowing users to view historical price data and basic technical indicators. This simplicity is in line with Hatch’s focus on providing an accessible experience for Kiwi investors looking to trade US stocks and ETFs. For those requiring detailed technical analysis, third-party charting software would be necessary.

Order Types, Alerts, and Integrations

Hatch supports standard order types including market and limit orders, which cater to the needs of most retail investors. Currently, there is no support for more complex order types such as stop-loss or trailing stop orders. The platform does not offer native alert features, which means investors must manually check their portfolios for updates. Hatch does not directly support API or algorithmic trading, nor does it integrate with third-party platforms, reflecting its focus on a straightforward, user-friendly trading experience rather than advanced trading strategies.

Account Types & Minimum Deposit

Standard Account

Hatch provides a single standard account type for individual investors, which simplifies the decision-making process for account selection. The standard account offers access to over 3,000 US stocks and ETFs, direct from major exchanges like NYSE and NASDAQ. This account type supports fractional share trading, allowing investments from as little as $1 NZD, making it accessible for investors of all sizes. There is no minimum deposit requirement, which removes barriers for new investors looking to enter the market.

Demo Account and Islamic Account

Currently, Hatch does not offer a demo account, which could be a limitation for those wishing to try the platform before committing real capital. The absence of a demo account means potential users must rely on available educational resources or reviews to understand the platform’s functionality. Additionally, Hatch does not offer an Islamic account, as its focus is predominantly on the New Zealand market and its compliance standards. Investors seeking Sharia-compliant trading options may need to consider alternative brokers that cater specifically to these requirements.

Deposit Methods

Hatch simplifies the deposit process by offering straightforward methods for funding accounts. Investors can deposit funds via bank transfer, with the platform supporting New Zealand Dollars as the primary currency. The absence of more diverse funding methods, such as credit/debit cards or e-wallets, aligns with Hatch’s focus on serving the New Zealand market where bank transfers are a common and trusted method. This simplicity, however, may limit the immediacy of funding for some investors, as bank transfers typically require a few business days to process.

Markets & Instruments

Hatch provides a focused investment environment primarily targeting investors interested in US equity markets. The platform specialises in offering a wide range of stocks and exchange-traded funds (ETFs) listed on major US exchanges such as the New York Stock Exchange (NYSE) and NASDAQ. This allows investors to tap into a diverse pool of over 3,000 US stocks, making it a significant choice for those seeking exposure to the robust US market.

While Hatch does not offer the breadth of asset classes seen with some global brokers, its focus on US stocks and ETFs is notable. Investors can engage in trading fractional shares, a unique offering that allows participation in high-value stocks with minimal capital outlay. This feature is particularly appealing for those looking to invest in expensive stocks with the flexibility to start from as little as $1 NZD.

Despite its strong offering in US equities, Hatch does not extend its services to other asset classes such as cryptocurrencies, commodities, or forex. It also lacks access to the New Zealand Stock Exchange (NZX), which may limit its appeal to those interested in the local stock market. However, for investors focused on US markets, Hatch’s direct access to NYSE and NASDAQ, combined with its competitive pricing structure, makes it an attractive option.

Safety & Security

Safety and security are paramount at Hatch, reflected in its robust regulatory framework. The platform is regulated by the Financial Markets Authority (FMA) of New Zealand, ensuring compliance with strict financial standards aimed at protecting investors. Hatch employs a fund segregation policy which ensures that clients' funds are held separately from the company's operational accounts, providing an additional layer of security for investors.

In terms of cybersecurity, Hatch implements comprehensive measures to safeguard user data and financial transactions. While they do not offer negative balance protection, their 1:1 leverage policy inherently limits the risk of incurring more debt than the initial investment. The company's commitment to cybersecurity is evident in its adoption of industry-standard encryption technologies and regular security audits to protect against data breaches and cyber threats.

Who Is Hatch Best For?

Hatch is ideally suited for investors who are primarily focused on accessing US equity markets. Its platform is tailored for those who wish to invest in US stocks and ETFs without the complexities associated with broader market access. The availability of fractional shares makes it particularly appealing to novice investors or those with limited capital who want to diversify their portfolios by investing in high-value US stocks.

Experienced traders who prefer a straightforward, no-frills platform will appreciate Hatch’s simple and modern user experience. The platform is designed for ease of use, with a proprietary web and mobile interface that allows seamless navigation and trading. However, due to its limited asset class offerings, it may not be suitable for traders seeking exposure to a wider array of financial instruments or those interested in engaging in leveraged trading.

Hatch is also a compelling choice for New Zealand residents who prefer to invest in international markets while maintaining regulatory oversight from a local authority. Its focus on the US market, combined with competitive pricing and robust security measures, makes it a strong contender for Kiwi investors who prioritise simplicity and direct market access.

• Ideal for investors interested in US stocks and ETFs.
• Suitable for those looking to invest in fractional shares with minimal capital.
• Great for New Zealand residents seeking a locally regulated platform.
• Not ideal for traders seeking exposure to cryptocurrencies or forex markets.
• Less suited for investors wanting access to the New Zealand Stock Exchange.
• Inappropriate for those seeking leverage or broader asset class offerings.