It could potentially have been third party or counterpart risk paper based in intermediate covers on stocks. So maybe it was liquidity of the intermediary I guess the time between the trade settling that cash has to be available temporarily. But it it were that I’d expect people to have just said instead of providing bullshit responses or reasons like Fx which is not true at all.
Some people would have lost shit loads, of course there’s finger pointing someone is to blame and free trade provides a service. Just like freetrade Fx provider aparently, will probably face legal action from either freetrade or other providers.
Reading some of the comments here, along the lines of “freetrade are in the ring here too because they’re only allowing sells not buys”. People forget that multiple messages across multiple platforms yesterday explained that freetrade have had the volume of fx trades severely restricted with pretty much no notice.
They therfore decided that they had to allow all sell orders to try to avoid trapping people in to falling stocks like other platforms have done to their users lately, which could be accommodated with the restrictions imposed on them.
What annoys me is the threats directed at Freetrade. I expect most claiming to have lost money really mean they didn’t gain from buying shares. Not the same thing at all.
You could still sell, hence you couldn’t lose any money because you always had the option to sell.
I don’t want to get roped into this, but my original point was more aimed at how it’s a shame Freetrade have gained these customers in this toxic, political market and face potential backlash for something out of their control.
Let’s just wait this whole thing to simmer down I guess
And 99% of those don’t realise that shares that jumped opened with those gains already. They wouldn’t have been buying at Thursday’s closing price.
GME, for example, ended up 70% yesterday…but if you executed a buy order at 2:30pm - you would actually be sitting on a loss now.
Freetrade have handled it as well as they could have done. They are clearly an ethical platform and this is not remotely comparable to what T212 or RH did. It’s the opposite - they got screwed by the big boys too.
Hopefully they resolve this over the weekend - I wish the team the best of luck.
I choose to believe Freetrade on this, rather than speculation based on incomplete facts (you were not party to these discussions). They said:
Hours before the market open, our partners suddenly decided to severely limit the rate of how many FX conversion trades they choose to support. They gave us no notice, no opportunity to work this out together in advance, which impacted our ability to uphold our standards for you.
So from Freetrade’s perspective, it is about FX - US transactions cannot happen without it. We can speculate on what made that provider shut down transactions, but bear in mind it is just one provider, so the capacity of London FX markets doesn’t really matter and it’s quite possible it was as simple as unprecedented demand and protecting clients who pay bigger fees for fx than free share trading.
I’m sure FT is looking into all the options here but a solution won’t be simple unless this provider can provide more capacity.
Viktor and FT team, thanks for the transparency and updates. I just got a notification of the refund. I am willing to forgo the refund. Please continue to develop the app and maybe switch/get a better primary FX provider but what you are doing to support the retail investors is what makes me most happy!
P.s I’m not speaking for anyone else - if you have been impacted then it’s within your right for a refund.
Good on you, Anil. I understand that people are angry, having potentially large sums of money tied up in extremely risky stocks, but equally think it’s a shame that so many threats etc are being fired at Freetrade for something which is most likely out of their control. From time to time these things will happen (Freetrade are certainly not the only ones), and they are showing how much they care about their customers.
How significant a contribution are fractional trades to the current daily volume @Viktor? I could imagine that you may be seeing lots of smaller transactions in the likes of GME for example, and if this is the case would switching temporarily to whole shares only purchases make a difference? Good luck to you and the team this weekend.
I also agree that FX has nothing to do with this; FX markets are the most liquid and efficient (not blaming Freetrade here since this is what they have been told).
But it has been widely published in the media this week that the Central Clearing Counterparty in the US (DTCC) increased the margin deposit requirements overnight for all the high volatile US stocks (volatility is built into the risk models).
I’m not sure people care to pay attention to this but the Clearing Broker has to front the settlement via deposit margin calls from the CCP against all trade transactions to cover clearance and settlement (it takes two days to settle the trades) and they cannot use client money for that due to regulation.
Normally DTCC will request a very low deposit cash margin call from the Clearing Broker but this increased ten fold this week.
So RobingHood to avoid having liquidity issues since they do their own clearing blocked buying on those stocks:
And for the other small platforms that uses a Clearing Broker. Well the Clearing Broker could not afford or was not willing to cover the increased deposits margin requests from the CCP and also also blocked buy trades on those stocks:
Hence why is this going to be any different with FreeTrade?
It’s Clearing Broker (Barclays?) could have also decided not to take the additional cost and risk on their books by blocking buying on US stocks particularly if they didn’t have the ability to easily block specific stocks within their clearing services systems.
People are saying this is a conspiracy theory. Not it is not it is all over the news it is just putting some scrutiny on official press releases. It’s a bit of a Black Swan event.
It would have been great to see DTCC coming under scrutiny by the financial press a bit I mean did the increased volatitlity really called for a ten fold increase in margin requirements? But this will never happen they are a monopoly in clearing and settlement on US stock markets.