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


#47

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


(Shreyas Zanpure) #48

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?


(Alex Sherwood) #49

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.


(Shreyas Zanpure) #50

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.


(Vladislav Kozub) #51

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.


(Alex Sherwood) #52

The prices in our app are indicative, they’re there for your reference but the price may be different when your order is completed. When we execute your order it’s made using the live market rate & exchange rate - based on our best execution policy which you can read here.

We explain this at the bottom of each security’s page -

We’ve considered this & decided not to offer it, due to the high cost. There’s more details about our plans here.


#53

Just to poke my nose in here.
I do not expect FREETRADE to be the cheapest.
I consider Product, Service, Price. Based on these 3 considerations my choice is FREETRADE. With everything still at an early stage and improvements on the way that bodes very well for FREETRADE.
I’m self employed and profit is a clean and healthy word, certainly not a dirty word.
I want FREETRADE to be profitable and viable to deliver a great product forever.
Oh and I also love to pay taxes, it means I’ve made profits and I desire a safe and progressive society.


(Shreyas Zanpure) #54

Are you planning to show live prices? The likes of Saxo Bank, whom I use as my broker might charge me for every trade, but atleast it’s a flat fee. They allow me to top up accounts with different currencies. This way I avoid Fx fees. In any case, I feel I have been misled. The world is moving towards true transparency. Starling offer free fx conversion, and they actually do. Transferwise states right off the bat that they charge 0.35% for conversion. I know where I stand. Your advertising should state that Basic trading accounts are free, but buying overseas stocks in not free. In any case, I will keep looking. I assume the word “Free” in FreeTrade is not free. I was under the wrong assumption that trading is free with you guys, and you make money from ISA and other instruments. Any platform that requires me to read their “pricing” structure is not transparent enough. Your welcome email does not point me to the pricing document either.
Lastly, consider this as constructive feedback. In case you feel you can offer “free” trading in the truest sense. Any sane person wanting to buy a stock will buy it at current price. Any noob investor will not want to wait hours before his trade is executed.


(Alex Sherwood) #55

We already provide live prices for US stocks. We’d certainly like to provide live prices for stocks / ETFs etc. that trade on UK exchanges.

In actual fact Starling are simply passing on the rate that they’re given (the MasterCard rate), just like us. They’re not giving you the interbank rate either.

This is what we do too (although it’s not a ‘charge’, it’s our rate).

Thanks for you feedback here, we’ll consider it carefully :raised_hands:


(Shreyas Zanpure) #56

Good for you. Tax and trading are totally separate things. I have no interest in how FreeTrade stays profitable. It’s not my business. It’s their business. They can decide what to charge and where to charge. My post is around transparency. Stock prices not being live means I will be buying at the wrong price. No pricing structure mentioned anywhere in welcome e-mail or when you sign up gives you a false utopian feeling about next-gen free stock trading. What they are really offering is freemium. You can defend all you want, but I find lack of transparency a bit cheeky. A great product does what it says on the tin. Not give you the tin and charge you differently based on which content you use from the tin. Be upfront with your pricing structure, even before the customer signs up on your waiting list.


(Shreyas Zanpure) #57

In actual fact Starling are simply passing on the rate that they’re given, just like us. They’re not giving you the interbank rate either.

Can you please elaborate on this? If they state they will give Mastercard rates, then that’s what they do. That’s certainly better than my other account with HSBC which charge 2.75% for conversion and give me a bad rate. Transferwise give you the mid-market rate, which would deviate from Mastercard based on live prices. But I pay the fee, which is why I only use the for remittance. I have not researched much, but unless I am a bank, I do not see why anyone would offer interbank rates, which banks use for exchanging currencies within themselves.


(Alex Sherwood) #58

The interbank rate is generally considered the base rate. Revolut claim to give you this rate, for example but they may be absorbing a cost in order to do so.

My point is that there is a markup on top of the base Interbank rate that almost everyone (certainly every UK retail stockbroker), passes onto their users, even if they don’t increase the rate themselves. This is what we do too, we don’t add our own markup to the rate that we receive.

I hope that makes sense!


(Alex Sherwood) #59

We’ve just published a blog post explaining how our exchange rate works. Let me know if you have any questions!

Currently, placing a US trade is no different than for UK stocks. We send the order to whichever LSE market maker gives us their best price the fastest.

When the market maker sends us the prices for US stocks, the conversion from dollars to pounds is baked into the price. We don’t control the exchange rate — we just pass it on to our customers.

Currently the rate we get is the spot price + 0.45% . We display that in the order confirmation screen on the app and our pricing schedule, and we pass that rate directly to you.

As we add more execution venues we’ll have more control over the FX conversion and should be able to offer better FX rates.


#60

I use Saxo as well and they don’t show live prices by default either, although it’s available for a monthly fee.


(Kenny Grant) #61

I took this comment to mean you make some small profit on every USD purchase because of the fx rates (which sounds fine to me, it is as you say one of the ways you can make some money), but in this article linked it says:

When the market maker sends us the prices for US stocks, the conversion from dollars to pounds is baked into the price. We don’t control the exchange rate — we just pass it on to our customers.
Currently the rate we get is the spot price + 0.45% . We display that in the order confirmation screen on the app and our pricing schedule, and we pass that rate directly to you.

Which implies that none of that fx rate benefits freetrade. Perhaps it is worth clarifying in the article if freetrade does make some money from fx rates. I couldn’t find a reference to that in the article.


(Alex Sherwood) #62

Thanks, it was my comment that wasn’t as clear as it could have been. As the blog post says, we don’t make money from fx at the moment, I’ve edited my comment to clarify that now.


#63

Robinhood in the USA has done this for years and is now worth in excess of $5bn.


#64

Even Robinhood recognises that zero revenue per trade isn’t sustainable, so you’re not disproving @gl196 point by citing them.

The revenue we receive from these rebates helps us cover the costs of operating our business and allows us to offer commission-free trading. Robinhood earns ~$0.00026 in rebates per dollar traded. That means if you buy a stock for $100.00, Robinhood earns 2.6 cents from the market maker.


#65

But Robinhood (and others like Charles Schwab) is using their free trading as a “loss leader”, clearly. I don’t disagree that it’s not sustainable, but it’s a way to quickly build up a userbase to whom you then up-sell lucrative products.

Business 101.


#66

Welcome to the community and hopefully you’ll stick around.

I think this is a great point and suggestion that Freetrade could take on board, especially given the number of first time investors that may be attracted to them. The welcome email would be enhanced by the inclusion of the pricing schedule for sure. Freetrade are receptive to feedback so you may well find this change implemented soon.