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

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.

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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.

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!

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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.

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

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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.

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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.

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

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.

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.

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.

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Exactly. I now look at them as TradeForLess (which depends on what and how much you are buying) rather than FreeTrade. It’s basically swings and roundabouts. Since for an instant order I seem to be buying shares from a market maker instead of the actual exchange (Might be my misconception), I am at the mercy of the pricing from market maker. That introduces an unknown variable.

Market makers provide considerable liquidity on the “actual exchange” so chances are that you’re buying shares from market makers one way or another.

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Like most stockbrokers in the UK, we do execute orders through the RSP network. Here’s how that works -

As we explained in today’s blog post -

Sometimes trades can get rejected because the price quotes we get back from the market makers aren’t good enough based on the observable prices against big orders on the LSE order book.

This is part of our commitment to best execution, a regulatory requirement for execution-only brokers. :heart:

So hopefully this isn’t a cause for concern.

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It is up to the individual when choosing any financial product to read in full the terms and conditions as well as the pricing. If you can’t be arsed doing basic due diligence on something before you sign up then then I don’t see how the company are to blame. Having everything in a welcome email doesn’t make sense to me, surely you’ve already read that?

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A post was split to a new message: Making misleading statements

It’s overly complex and a pain to track. Please don’t go there.

Go to Freetrade.io and scroll down to the bottom. Pricing is in the footer with help and terms and conditions. Which, fun fact, is where you’d expect it to be

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No it’s not. Pricing is important and one of the first things people will want to know. So it belongs to the top links section. Not scroll down to the bottom of the page and see. You have entitled to your opinion as I am entitled to mine. Let’s end it there.

Well said Emma

I’ve seen some interesting comments on this (and Monzos) forum today…

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