Stated as zero-fee investing but actually £8 more expensive on £1000 then my current Broker!

I believe we need to distinguish between two different points.

  1. One time FX fee - There can be argument how much is good e.g. 0.45 or 0.2 But I believe this would be required as freetrade is not bank
  2. Able to have USD balance - effectively multi currency account. I believe efficiency is missing here. I can understand this can be key revenue source specially for basic trades like typical cross FX positions. But still inefficient for scenario where user would like to keep reinvesting in USD & FX positions will not offset each other e.g. instant trades. Whoever supporting freetrade for FX may end up having good revenue share. Worth considering either flat monthly fee or less percentage if user would like to keep USD balance
1 Like

I think we need to recognise that it’s impossible to be the cheapest for every possible type of trade and still make money. There has to be some revenue and I think a charge of less than 1% on currency conversion is not unreasonable.

If your current broker works out cheaper for a particular trade you still have the option of using them

13 Likes

A revenue of zero pounds per transaction does not sound like a sustainable business model.

10 Likes

Quite a few users have raised this point so instead of saying freetrade not for you worth drilling down and understand what’s real problem .
Is problem per transaction cost?
Is problem one time FX?
Can multiple options not be provided depending upon different types of users?

Quite a few of us are investors and we would like freetrade to success but I think constructive conversation may be better idea rather than saying just use other broker(I agree tone wasn’t correct when point was raised though).
I appreciate there can’t be one size fits all but it seems there are quite a few who invest primarily in US markets and are concerned.

1 Like

Yes although this is partly what the Alpha level of account is for with a monthly fee. If you charge a monthly fee you have revenue regardless of the no of transactions, so £0 per transaction is sustainable.

If it costs freetrade a few pennies per transaction, and they charge say £15 a month + a low fx rate, they still come out ahead except in the most extreme cases (which they could add monthly limits to free trades for, I’m sure most would be fine with that, I know I would).

A USD account is an interesting idea for those who want to do trading in US shares only and only take the hit once for currency conversions. It would probably remove any controversy over fx spreads as they’re not on every trade. Have you posted an idea for this already? Strikes me as an Alpha feature, and one which would add a significant cost to freetrade in complexity and in fees for holding money in US accounts. Probably not something we’ll see in the near future for these reasons as there are so many other more pressing features to add and it’s pretty niche.

1 Like

There’s an Idea for USD accounts here - Storing currency in dollars.

4 Likes

Some historical context may be useful here:

Also, from the pricing model blog:
image

I think the issue for the OP is that this FX markup (which is a transaction cost) is distorting their frequent short term trading decisions, but for Freetrade they are building a model that caters for longer term, more infrequent, investment decisions.

Publication of the new Freetrade mission could be helpful here in the sense that this platform is not necessarily going to be the best for traders.

11 Likes

This will come up again. One day Freetrade will add access to other exchanges like the Euronext or the Xetra for which we need €uros, or the Tokyo Stock Exchange and then we’ll need the Yene, or Australia, and so on and so on…

Challenging… To find a balanced, sustainable, competitive offer.

As for today I am yet to find in DE GIRO the option of tax shelterd products like an ISA. In the long run, for those who mainly buy and hold, the ISA may probably be a better solution.

As for those who actively pursue a more active approach… It will depend on the success they manage to achieve. Is it whort it to have an ISA where .45% is paid in FX per trade with no tax due? Or is it better to pay taxes above the 11k threshold?

Disclosure: I love taxes :heart_eyes:
They pay for schools, hospitals, roads, politicians, etc

8 Likes

Nobody loves taxes. If you do you need to seek urgent medical attention :money_mouth_face:

I used to be on degiro and I’ve been caught out before. They have a very large number of fees for all sorts of actions. Freetrade is very straightforward. Also degiro don’t offer an ISA, plus they don’t seem to have the same ambitions as freetrade (eg fractions, SIPPs etc).

5 Likes

Oh but I do.
Without them my parents would have been unable to send me to school, or get me medical care when I need it.
Without taxes I wouldn’t be able to write this post. I’m thankful to those who pay them for they provide a remarkable social service

But that’s beside the point.

14 Likes

I think that a third subscription package with no FX fees will eventually be needed to keep investors with relatively larger USD accounts on the platform. This can easily be priced at £15/month or more and will result in lower FX revenues but higher recurring subscription revenues

3 Likes

I do agree that a tiered pricing model would make the FX conversion more palatable for those who execute large trades, for example depending on the size of the trade:

< USD $1,000 = 0.45%
USD$1,001 - USD$5,000 = 0.35%
USD$5,001 - USD$10,000 = 0.25%
USD $10,001 and above = 0.2%

2 Likes

Forgive me if I’m mistaken. If I understand correctly, Freetrade doesn’t charge custody fees, right?

DeGiro does. Here’s DeGiro’s custody fees schedule.

7 Likes

I love taxes. I hate paying them.

3 Likes

That pricing structure gives me a headache. Dividend processing fee???

4 Likes

First post here, but I post regularly on Monzo community. I see some familiar names here. I am appalled at the hostile response OP @adamlll received. What he has posted is a fact that is true to his requirement. If Freetrade is advertising as zero fee investing, then it needs to be zero fee. Otherwise how are they are different from legacy banks and institutions that charge hidden fees? My post from Monzo community about Freetrade.

I have noticed that FreeTrade do not seem to allow fractional shares. I bought 2 Tesla shares ($320 each), which should have cost $640. However I wanted to use up the entire balance of $650. I was expecting to see fractional shares (2.00x). However I still got 2 shares, but each were bought at $324 instead! Also they say $1 fee for instant buy, but ended up charging £1? The prices do not seem to be live, but delayed quotes like MarketWatch.
Anyone else experienced this?

1 Like

Just to clarify, we’re not charging a fee here, we’re simply applying a conversion rate when you buy / sell US stocks. We’re working on a blog post at the moment which will explain in more detail.

I’ve just checked in the app & this is incorrect - we display the currency for the Instant order fee in pounds.

6 Likes

I wish I had taken screenshots. If the price of the share is 320 dollars, and the price at which it’s bought is 324 dollars, then I am buying the stock at a higher price. Either you need to show live prices, or charge what is shown on the screen. Also you should enable integration with debit cards. I have Transferwise which allows me to hold US dollars, which would allow me to save FX fees.

1 Like

Hey Shreyas, welcome to this community! :wave:

What you are implying means that Freetrade should offer completely free service, which is not a sustainable business model since they pay salaries to staff and need at least some return on investment :slight_smile:

All of the Freetrade’s fees are listed here. You will not be expected to pay anything else other than what has been transparently shared prior to the launch. The pricing schedule is also available in the app and on the website.

You are correct, fractional shares are not yet available but Freetrade has set their target to offer these in 2019 alongside several other major additions to the services they provide.

This represents a 1.25% difference. 0.45% is the FX payable and the remainder is most likely the intraday fluctuation (which can change in a matter of seconds) and it is out of Freetrade’s control. Also, Tesla is quite a volatile stock and tends to jump quite significantly.

9 Likes