We processed our first dividend!


(Rob Sexton) #1

On the subject of small cheques, we processed our first dividend yesterday from Carnival.

We had elected to receive our dividends through the CREST settlement system, however as we have discovered certain companies, including Carnival, don’t use this. So instead we received a cheque for a whopping 75p!

Given the cost involved in processing a cheque, we haven’t rushed to cash it in and have instead funded the dividend from our corporate account - still toying with what to do with the redundant cheque. Maybe we should frame it like @Cgwinning!


The latest on the rollout
(Vladislav Kozub) #2

So if you had 100,000 customers of which 500 owned a bit of Carnival, would you received 500 cheques of different values or a single check you could cash into your corporate account at a later date, and credit customers from your own account meanwhile? If so, would that be a manual process?


(Rob Sexton) #3

Fortunately because we hold your shares in a nominee company, we’d just get one cheque covering everyone. Otherwise it would be an absolute nightmare.

But yes, if people are going to send us cheques frustratingly there’s going to be a manual process involved.


#4

Don’t worry we forgive you as you were not writing out the cheque :smile:

Talking about cheques, I have a cheque issued in $ and I have no use for it. Cashing it is to expensive.

Maybe frame it and then auction it off for chartity as Freetrade’s first dividend.


#6

Similarly I have about 7 shares in Barclays held in nominee that I always forget about until the 7p dividend letter turns up, as I have instructed reinvestment then one day I look forward to the letter telling me I now have 8 shares … will be a while


#7

What’s the name of the ‘nominee company’? I smell the makings of another blogpost…


(Cameron Chisholm) #8

This is it, isn’t it?

Freetrade Nominees Limited


(Calum McWhir) #9

Yes!


(Georgi) #10

Hello guys,
I have been following your road for a long time and want to get my hands on a freetrade account already :smile:
My question to you is will the app have the option for dividend reinvesment?
As I see there would be an option for purchasing parts of a share and would be great if you can just reinvest the dividends straight into the issuers.


The latest on the rollout
(Tommy Lowe) #11

Hey @Geo0rgi!

They have it on the roadmap, but this won’t be available at launch.

We won’t have this feature at launch; for now, dividends will be paid into your Freetrade account as cash. However, it’s a priority on our roadmap. It’s a cool way to maximise your compound interest.

Check out their recent dividend blog post for more:


(Georgi) #12

Thats great news.
Even the fact that there will be one in the future sounds very good to me.
Also not entirely sure about the registration process.
For the fellow UK residents from EU like me can I register with my ID card and a proof of adress?
Im from Bulgaria and do not have a passport only have an ID card interested to how are you going to proceed with that.
Cant wait to see the final product , looks very promising.


#13

Hi Georgi - good to meet you!

From what you mention, you’ll just need your Bulgarian personal number to open an account.

To open an ISA later though, you’ll need your NI number too.

https://intercom.help/freetrade/getting-started/national-identification-information-for-non-uk-nationals


(Georgi) #14

Thank you for the fast answer.
Cant wait to start using your platform.
It is going to be great if you provide things like % return of one’s portfolio and a pie chart of the holdings in the portfolio.
Currently using Degiro and quite annoyed by the lack of those things there.


#15

Hi Georgi, we’ll have rate of return percentage on your portfolio from launch. However, we’re also planning many more analytics features as we iterate.


(Justin T) #16

interesting to get an update on dividend volumes during testing from the Freetrade team.

I saw you received your first payment via cheque. If your receiving some via cheque and some electronic then what kinda timeframes are you expecting to be able to process payments in? Waiting for payment can be frustrating! My HL holdings pay on due date but other brokers pay 2 or 3 working days later! Annoying when you’re looking to reinvest.


(JamieP) #17

I completely agree, waiting for money for which you are entitled to can be really frustrating! :tired_face:

We’re working on automating the dividend processing as much as possible to ensure dividends are paid on pay date. As mentioned above by Rob, we’ve elected to receive dividend distributions via Crest (the electronic system used for settling shares and cash). Providing there are no reconciliation issues, these should be received and allocated to beneficial holders on pay date.

From an operations perspective, there are some fairly legitimate reasons for delays in dividends posting……

It’s hard to believe but some companies still insist on sending out cheques rather than allowing for some type of electronic transfer. In these cases, a dividend might take a little longer to process as we are at the mercy of the postal service.

There are other factors that can cause delays in payments such as agreeing market claims for unsettled trades over the record date or having to FX a foreign currency into GBP.

Crest depositable interests (foreign stocks with a tradable line in the UK e.g Apple, Verizon, IBM) will nearly always distribute a day late as the payments are paid in the local market first and then sent on to Crest.

2-3 days delay in some cases may not be that unreasonable but I think it’s important that any delays can be justified and are the exception. :smiley:


(Justin T) #18

Completely agree and don’t mean to pick at the most minor of issues, but :

If you had a reconciliation break I’d be worried as the nature of your universe suggests Crest settlement for every stock in the beta version. Therefore you should reconcile every day according to the rules and therefore you’d never have a break… especially considering you’re reconciling your ex date position not live current position. So you have time in hand to resolve breaks before pay rate.

Claims will be automatically ‘agreed’ as the days of residual settlement are (just about) over and crest will pay all claims on pay date (CDI issue aside). Given you need to reconcile cash daily you’d identify incoming/outgoing payments anyway (and know beforehand given you have data regarding your ex and record date positions). Feels like I’m knit picking. I understand. Just not sure claims are a valid reason for delay. I wager HL have many claims but still pay on pay date.

Post and cheque issues - completely agee. It’s 2018 and it’s madness this issue persists. We all in the industry need a good slap. I include myself.

CDIs are a funny mention as I understood you’d offload all US (international) trades to a local party and trade the local quoted stock rather than any form of ‘interest’. You’re pitch deck suggested a chunky portion of your margins came from this very process. If you trade and settle CDIs won’t your total settlement message cost outweigh the commission you make?


(JamieP) #19

Some valid points but the examples I listed were general issues to help explain why a 2-3 day delay in a dividend might occur elsewhere, I wasn’t looking to get our excuses in early. :wink: I anticipate that most of these examples will not be relevant to Freetrade given the nature of our universe and the systems we have in place.

Some brokers may opt to pay dividends on a contractual basis and then reconcile any cash differences afterwards. We’re not looking to take this approach, instead opting for an automated approach where a few exceptions are investigated and addressed on pay date. :sunglasses:


(Denislav) #20

Small question, as you hold our shares in a nominee company (which is you). Do you plan to offer a way for users to have their name on the CREST instead of the company or is the process too complicated to deal with? :slight_smile:


(JamieP) #21

An interesting idea but we’re trying to achieve a super efficient operations model. :muscle: Although there are some benefits, offering sponsored member services or individually named member accounts does add extra layers and can require additional administration.

Ownership of client assets is maintained on a book level and reconciled daily to ensure there are no errors, this is pretty standard within the industry. :grinning: