FX fee confusion

Hi FreeTrade,

I have some confusion around your commission (FX fees) calculations and valuations. Additionally the restrictions of 1 image in posts is rather annoying.

1. First of all do you keep any money from these FX fees or does it all go to a 3rd party who does the currency conversion for you?

The base FX rate always seems to be at the crappiest exchange rate regardless of time e.g. Trade at 20:31 (see fig 1), contract note says Base = $1.384, actual FX rate fluctuated between 1.38412 and 1.38422 (see fig 2 & 3), even if I take the midpoint that is still 1.38417
The actual cost of the shares is (0.02727597 * 251.87)/1.38417=£4.96326215
Therefore your actual commission or FX fee is 4.99 - 4.96326215 = 0.02673785
Therefore % commission is (0.02673785 / 4.99)*100 = 0.53582866 or 53bps and not 45bps claimed

And this is not the only example, I have many examples like this one.

2. Where does your FX base rate actually come from, and why is it always the worst value for that minute?
3. Is the FX fee always in whole pennies, e.g. If actual value is a fraction e.g. If 0.0542 do you always round up e.g. To 0.06, or does it follow normal rounding rules?
4. If you do always round up who keeps the difference between 45bps claimed fee and the actual fee (in whole pence) charged - does it go to you or your 3rd party supplier?

The reason i ask is if you place many small trades (few pounds each) the effective commission/fee will be a lot higher than 0.45% and lot higher than placing 1 larger trade.

5. Does the "current value" displayed in fig 4 take into the account the costs of liquidating the position (i.e. Including the 45bps FX fee) - or is purely spot price of shares at the base FX rate?


6. Does the "Avg. Price per share" take into account the all fees (e.g. commissions, FX fees, stamp duty) to enter position and any fees to exit position (e.g. FX fee)?

7. Why is gain/loss showing £1.22 (fig 4) when 
	a. total costs = £13.98
	b. Change in value is 15.14 - 13.98 = 1.16
	c. %change is (1.16/13.98)*100=8.2976%

If the gain/loss doesn’t take into account all fees for entry & exit - it is not a true reflection of the gain/loss associated with the investment.

8. When placing limit orders why is 10% of the limit I specified put into reserve that will never be used to buy any shares (fig 5) - this is in effect reducing my buying power for upto 3 months after which it auto cancels, in effect a 10% cash penalty for placing a limit order. Why can't they actually buy the shares at what ever the current exchange rate is upto the full value of the reserve instead of reducing it i.e. In this example why can't they buy shares all the way up to £100 instead of £90 (factoring in any fees)?


9. Can you explain how this 3rd party provider for FX & fractional shares actually works, I understand this is it illegal to get payment for order flow in the UK whilst in the USA I think the commission free brokers like Robin Hood use this method. How does it actually work for FreeTrade when trading on US stocks, how do you get the best execution price, how is this achieved and how fast does it happen? 
10.  How does FreeTrade make it's money when dealing with UK shares?

For the contract notes, can you put in the actual value of shares in the Base Currency e.g. In fig 1 it would be useful to see the actual $ spent on shares.
For the investment summary in fig 4 it would be useful to see current value and avg. Price per share in Base Currency i.e. $ values - when buying these shares the price is listed in the base currency so it is easier to compare with existing position.

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As it says in the “anti social network”

When the product is free… you are the product

I can’t see the original post, the formatting on mobile is unreadable.

You’ve heard of Freemium right? There is a big difference between offering some services free with premium features behind a subscription (Plus, ISA, SIPP & JISA nudge nudge @adam) and what you’re taking about see Google / Facebook.

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Freetrade isn’t free, well, unless you only buy common UK stocks

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So firstly you’re weird formatting makes it almost impossible to read on mobile but I can take a crack at some of these but really you should be emailing hello@freetrade.io -

  • 1 - This is likely something they won’t disclose. As a private company they don’t have too.
  1. The FX partner

  2. How would you suppose the charge you 0.42p?

  3. See bullet point 1

  4. Current value displays … the current value.

  5. Includes fees occurred but not fees due when you sell. Why would it, that wouldn’t be the current value.

  6. Don’t know. Email FT

  7. Don’t know what you’re even talking about. If you place a limit order they need to make sure you have fund to execute your order.

  8. US stock partner is Drive Wealth, they have information on their website.

  9. ISA, PLUS & SIPP.

I suspect based on your question that you’re planning on swing trading / day trading (I might be wrong) but FT has not been built with this kind of activity in mind.

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NeilB

I get that you’re an investor “in” freetrade but calling another user weird is not cool my dude
I’ve enough experience in building businesses and leading people that makes me believe that you, don’t fully understand what fremium means or how it impacts revenues
If you truly believe that day trading/ swing trading is not what FT is aiming at you should perhaps look at their latest round of tiktok ads… might change your mind. Basically what I’m saying is that if you are taking their marketing spiel as gospel it’s not healthy…
Also for real, someone being critical of a platform you endorse is really not an attack on you!
And, if only FT took some of these thing ALL of us (you included) collectively are highlighting it would be a killer platform/company etc. At the moment there’s some stuff that needs ironed out

And lastly, without even the slightest hint of irony, I really actually appreciate that you wrote and some of the information you shared here. You see… I think reading responses like yours is valuable even if I don’t share them.

Oh and just for the fun of it, i just wonder how much value FT is actually realising and who pockets that profit when it’s users act as customer service reps… and isn’t that food for thought?! :scream::sunglasses::grinning::thinking::thinking::thinking:

I called the formatting weird. It’s almost impossible to read on mobile. Your post has been up for days without a reply and this might go some way to explain it.

I don’t use TikTok. I have seen enough investor presentations and heard the CEO talk about his vision for the company. I believe I understand it well enough thank you.
M

I don’t know what I wrote that made you feel as though I felt attacked. I don’t - but thank you for your concern.

Thank you :kissing_heart:

You don’t know how little I value my own time! :joy::joy:

Honestly I’d rather more user were like you, I think some would look at a calculator and ask where the :rocket: emoji is!

3 Likes

Hes talking about the font format as it is weird to read if not impossible.

1 Like