@AJHY has done a great job above, and it looks like someone recorded the call, but as promised, here’s my take on the AMA session with @adam tonight:
Upcoming dates for the diary: This week will be busy – it’s crowdfunding week! Tomorrow share pitch deck for previous investors. Thurs campaign live (see details on website). Friday, AMA with new non-exec director, Perry Blacher, recently joined FT board. Next week AMA with Draper Esprit’s Chief Investment Officer and board member Simon Cook. Adam will be holding AMA every Tuesday whilst crowdfunding campaign is live.
Related to Crowdfunding (CF)
1.CF accompanying an institutional round. No – but plan to hold another VC round/series B. Maybe end of year early 2021.
2. Will this be the last CF? No. Last year hit cap, Draper Esprit (largest investor who are also invested in CrowdCube) are encouraging CF’s every year until IPO.
3. Valuation. Wait for tomorrow for deck (previous investors) and Thursday for more details.
Related to release of US fractional shares (USF)
4. Overview – shipped first 2/3 weeks ago, went well, now in public beta. Lots of discussion in community around USF as it’s a fundamental change to the way a lot of us have been using the app. Two main areas of feedback a) what does it mean for my shareholding, implications of fractions, legalities and practicalities, b) user experience on how USF work/transactional flow.
a. Security of fractions. How is share ownership recorded. Many think of a share as a share certificate, understandably. But share ownership is actually recorded in the books in a more fluid way. Analogy: you can measure shares differently, like water if you own half litre of water, you own half litre of water.
All client money in current account is all in the same pot – free trade software keeps track of actual ownership. Legally entitled to fractions in the same way as a full share. Whilst legacy brokers/stock market measures in whole shares, it doesn’t mean you can’t measure in smaller values.
5. Transferring shares – currently can’t do it, partially because other side are legacy stockbrokers who want to charge a fee. FT release, but not top priority. When released, you will need to sell the fraction before transferring whole shares.
6. Dividend fractions – DRIPs are fractional shares, this isn’t new. Now measurement of shares as fractions is being presented as the norm for the first time – inevitable there are questions.
7. £2 minimum – there used to be no minimum (1p), but when instant trades came lots of people started making 1p trades over and over again. FT believe in lowest possible, but operation reasons dictate a minimum and its value – currently £2 makes the most sense.
8. Drivewealth (DW). Feedback has been ‘spiky’ on working with DW. DW power many fintechs and FT have unique relationship – they are our US clearing broker (access-point to US market). They do not know who individual customers are – relationship is institution to institution. FT believe DW are the best on the market. DW are not baked into the app and could change to new clearing broker if required in future.
9. Payment for order flow – banned by FCA in the UK. Whilst in US, brokers get payment for order flow due to more relaxed rules. [Couldn’t quite make out Adams reply to “if FT, in accessing US market through DW, have to pay payment for order flow” Sorry!].
10. Transaction workflow – Decision was made to go with ‘buy by value, sell buy no. of shares’ was pragmatic choice to release a useable USF product. Currently testing new user flows. Product will change in June around this. FT aware that transaction workflow currently not 100% and work is active to improve this.
11. Ownership of fractions – “if holding full shares are called vanilla, are fractions synthetic?” Jargon does not help explain how stock ownership works. Ownership is ownership, no matter how the shares are measured.
All stock in world are dematerialised i.e. just an entry in a database. Each country has its own database. This database works on fractions and all names in that database [nominee account] legally own the shares. Nominee account and FT records are audited to ensure that free trade accurately and reliably records customer ownership.
12. If FT goes out of business, will shares be safe? Adam is confident in FCA regulations. Shares and cash held in a separate nominee account, separate to FT as an entity.
13. Who owns ‘odd’ fractions? Examples:
Sam owns 1.5, Viktor owns 1.5…FT nominee account would hold 3 shares.
However, if Sam has 1.5 in app, Viktor has 2 in app shares. FT nominee account would have to hold 4, so who has 0.5? FT have an account to own the remainder 0.5 [mods please confirm I have understood and represented this correctly/fairly].
14. Anyone can access US Fractional Shares Open Beta, just send an in-app message!
Related to Market/Growth/Business
15. Market Expansion – Viktor’s first AMA discussed expansion and his next will give more detail on this. Don’t have sufficient universe of EU stocks to launch in EU yet. EU expansion not as far as we would have liked due to other priorities (Invest platform, USF and more stocks).
16. Growth – what do you think are the reasons behind recent growth? It’s been amazing, and it’s all been community driven on word of mouth. Half through organic referrals – minimal ads. The rest through free share referral. This CF round will enable FT to focus on marketing to increase growth rate even more.
17. Revenue and business model going forward – campaign will release some financial information, as part of deck/Thursday/CF.
18. Revenue streams – nothing to share currently. Projections will be shared (in pack).
19. How to stay ahead of competitors – what happens if Hargreaves Lansdowne drops fees to £0 – FT believes in its better product and brand, aimed at a different market/demographic.
Related to premium account (Freetrade Plus)
20. After USF, the next most requested feature is order types – these coming next month. View upcoming deck (tomorrow/Thursday) for product visuals and more information.
21. Premium account. Target was 1st June, only a little behind this. Next month release Freetrade Plus. More details in the CF deck.
Common theme will be Basic for new investors, Plus for more experienced. Adding order types are complicated for new investors, have to focus on ‘what would a new investor want from FT’? This is the free account. New advanced features for ‘power users’ [my words] will be in Plus. Hopefully new users will learn and grow into FT Plus.
Basic account will get simpler. FT Plus will get more featureful.
Related to other feature releases
22. How large stock universe by year end – FT understand that releasing new stocks has slowed down whilst focusing on Invest platform. DW partnership will enable increased universe expansion…DW have universe of 3000 stocks to plug into [FT is currently c.617]. Adding stocks manually with all corporate actions, dividend, splits etc. is not scalable…DW will help with these. US will expand very soon, then it will be EU stocks turn.
23. Analysis and content updates – FT Plus (Premium account) will include more analysis and content features.
24. Voting rights for shareholders – voluntary corporate actions. Voting rights are not in product yet. We could integrate with new platforms that allow you to vote with ethical views for example. FT is new generation that can integrate with the new players easily.
25. UK fractional shares – working on it right now to release minimum viable product as soon as possible. DW makes US shares easier, FT have to do everything for UK; hence, more complication.
26. DRIPs – relatively trivial with USF functionality. Will ship, it but no date yet. Can currently reinvest div manually [subject to £2 min], but will make it automated.
27. Crypto – would be good to offer to customers but not priority, especially when options like EFT bitcoins are upcoming.
28. SIPP – working really hard to ship by September. Specialists in house working on it.
29. More ETFs – (Adam invests mostly in ETFs) unfortunately cannot offer US ETFs because EU regulation. Other market ETFs will be expanded. Operation reasons mean US universe will increase first, but more ETFs to come.
30. Freetrade web – On the roadmap. Please ask Ian at his next AMA.
Miscellaneous
31. Prices paid/spread – how close price paid is to live price. Spread discussion was hot last month. FT make no money on spread. FT have a best execution price policy. Some inescapable complications like short delays in transactions that look like a large spread/different execution price were highlighted by recent volatility. No-one gets the mid-price, its only representative. See blogs about spread and price execution policy/software. If software doesn’t think it is a fair price, the order will fail as protection! Apologies if lots of orders are failing, the system is there to protect customer.
32. More comms, especially during CF campaign. Adam and leadership team are available for Zoom calls during campaign. Many more AMAs planned.
33. Neat Merch – Viktor: “Team member grade swag is coming!”
Mods - feel free to edit anything above if it doesn’t reflect the intent of Adam’s answer.