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.
Robinhood in the USA has done this for years and is now worth in excess of $5bn.
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.
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.
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.
Please do correct me if I am wrong.
It may be my misconception and if it is please forgive and correct me so I may get to improve. As far as I can understand it, trades are always made through a market maker in an exchange, right? Market makers do play a key role and are not just an option we can choose to use or not, right?
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.
So hopefully this isn’t a cause for concern.
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?
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
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…