You can a lot of the time now. A number of brokers etc. only charge the interbank rate. FX spreads have come down massively and for most major currency pairs should be down to 10 bps.
I think they said once that the fee was taken by a third parties they used before the Invest platform was finished. I’m assuming going forward most or all of that is revenue.
Way back when there was a post saying Freetrade charge the 0.45% to cover third-party costs, and that when they move to their own platform they’ll be able to look at lowering or evening dropping the fee.
It’s apparent to me now that they’ve decided to keep the fee as-is to generate some revenue (evidence for: on invest platform and no change, and pitch deck lists as revenue).
On balance, I think I’m OK with this.
I’m personally OK with this too. Would be good in the to allow multiple currencies to avoid a doue charge but I understand the need to make revenue.
It would be great if a Plus account “removes” or replaces this fee
Hey, just to clear this up as it has been communicated before but appreciate not everyone has read all our blogs etc.
Prior to launching fractional shares, all US stock orders were routed to London Stock Exchange market makers. That’s the same way all UK orders are executed.
The LSE market makers quote US stocks in GBP. Embedded within that quote is an FX conversion. The rate includes a 0.45% spread over the spot rate. It wasn’t very visible for users as we could only show the GBP price quoted and received on the contract note (the LSE market maker earns the FX conversion fee on these trades).
Now, we are routing US orders directly to the US markets via our US clearing broker Drivewealth. All this happens in USD now, so we need to convert your GBP to USD and get it to the US before the trade settles. We do the FX conversion for you now, so the contract note reflects the buy or sell price in USD (previously it was GBP) and shows the FX rates and fees more transparently. The FX rates and fees have not changed, except now we earn the fee instead of the LSE market maker.
Hope that all makes sense.
Thanks for clearing that up Adam.
Considering this fee is a source of revenue, do you plan to allow users to hold balances in multiple currencies to avoid conversion fees? Is FT allowed to hold cash balances in other currencies for customers?
Multi-currency accounts is something we’ll certainly look at in the future. Lots of other things to get out the door first.
The next big milestone on the currency front will be EUR-denominated accounts for our European expansion.
Multi-currency accounts is something we’ll certainly look at in the future.
EUR-denominated accounts for our European
I agree that this is definitely more important than USD balances for UK customers.
0.45% is actually pretty decent… most banks hide this rate in the spread and pretend they don’t have fees. GBP -> USD on TransferWise is something like 0.35% and it’s their business to make this as cheap as possible so I’m pretty comfortable with that cost.
The one thing that does get me a bit more upset though is when I want to sell one US stock in order to purchase another, and then I end up paying the exchange rate twice… without create a multi-currency account you could consider creating a sell-buy flow maybe… not sure it’s worth it though, and would probably be pretty confusing.
Other option is to sell US stock and choose to keep proceeds in USD but I don’t know what the law is around keeping USD inside an ISA wrapper, I thought I read somewhere that you can’t.
People don’t trade forex because there is a fee, but to take advantage of the fluctuations in exchange rates.
I agree multi-currency should be an option to avoid having to pay an FX fee multiple times. On a £10k buy and then sell, it’s almost £45 in fees each way. Interactive Investor have multi-currency options and Trading 212 do not charge a FX fee from what I understand.
Trading 212 is free I have bought several stocks where I have seen an immediate upside which may even suggest the exchange rate is in favour of the investor and not the platform. I did start at free trade but your costs are to high and not free
Trading 212 definitely charge FX fees, fairly average ones. They make their money on the spread, which freetrade don’t. Noone does this for free
Indeed. The difference between Freetrade and 212 isn’t fees, it’s transparency, and Freetrade is winning hands down.
The amount of CFD platforms out there. With so many players in that space, business must be really good
PS: in order to conceal my emotional stance on the subject I shall refrain to post an emoji or a gif
“costs are too high” - 0.45% is nothing. If you’re putting £1k into stocks and making little enough back for £4.50 to mean anything, then you are doing something wrong.
Wow that’s an arrogant and foolish reply.
It’s call free trade if you think £4.50 is free you are simply Replying .
Can I borrow a £4 as it won’t cost you.
Have a nice day
yes, it’s called free trade because the trade is free.
the fx conversion is not free, but is small enough that it shouldn’t matter.
Why reply to argue ?
Are you bored ?
Lets recap and look back at my original post where I stated I saw an immediate upside on 212 when investing.
Now Adam and Kierzy reply’s where seen to be smart and helpful, highlighting spreads and transparency.
Your reply was how we could spend a grand and be thankful we only paid £4.50 in costs.
Great minds like Jack Boogle (INDEX = FUNDS) and Warrant buffet: no introduction needed hate fees and would not pay £4.50 to invest a grand.