My first share purchase on Fidelity - confused!
Discussion
I've just made my first share purchase through Fidelity, and I'm confused at the outcome. Hopefully you knowledgeable guys can show me where I'm missing the point!
So I wanted to take a punt on Superdry (SDRY). The company fundamentals seem good, but it has suffered falls recently, most notably on Thursday when the market seemed to over-react to a slightly mixed report and it lost about 19% on the day. I reckon the falls may have bottomed out, so I've decided to invest and take advantage of the cheap price.
I've used my entire ISA allowance for this year, so I had to sell £1,000 worth out of a fund to create the necessary funds in the ISA. This morning that sell had completed, and my cash balance showed £1,000 available to invest. Happy days.
Lying in bed this morning, I therefore decided to bite the bullet. The SDRY price closed at 1170p yesterday, so I put in a limit order (before market open) of £1,000 at or below 1300p.
Now that the market has opened and the deal has gone through, I'm confused at what Fidelity has done. The transactions are as follows:
My cash balance is now showing £104.57 available to invest.
So my questions are:
The stamp duty makes sense to me. It's 0.5% of (75 * 1175p), rounded up to the nearest penny.
The amount on the purchase transaction sort-of makes sense if you accept the cash-out value of £881.02. This, plus £10 dealing fee plus £4.41 SD equals £895.43. But as I say, the cash-out value looks a few pennies light to me (not that I'm complaining!).
I'm a bit miffed because I wanted to invest £1,000, and now I'd have to do another deal (another £10 fee) to make up the difference.
What went wrong, or am I just misunderstanding something? I don't think I've done a limit order before, so maybe there's some subtlety I'm unaware of? Does Fidelity only buy shares in multiples of 25, say?
So I wanted to take a punt on Superdry (SDRY). The company fundamentals seem good, but it has suffered falls recently, most notably on Thursday when the market seemed to over-react to a slightly mixed report and it lost about 19% on the day. I reckon the falls may have bottomed out, so I've decided to invest and take advantage of the cheap price.
I've used my entire ISA allowance for this year, so I had to sell £1,000 worth out of a fund to create the necessary funds in the ISA. This morning that sell had completed, and my cash balance showed £1,000 available to invest. Happy days.
Lying in bed this morning, I therefore decided to bite the bullet. The SDRY price closed at 1170p yesterday, so I put in a limit order (before market open) of £1,000 at or below 1300p.
Now that the market has opened and the deal has gone through, I'm confused at what Fidelity has done. The transactions are as follows:
| Cash Out for Buy: | £881.02 |
| Buy SDRY: | 75 units @ 1175p - £895.43 |
| Dealing Fee: | £10.00 |
| Stamp Duty: | £4.41 |
My cash balance is now showing £104.57 available to invest.
So my questions are:
- 75 multiplied by 1175p is £881.25. This doesn't exactly match the cash-out of £881.02. Why?
- Why didn't it spend more of my £1,000? Surely it could have bought more shares?
The stamp duty makes sense to me. It's 0.5% of (75 * 1175p), rounded up to the nearest penny.
The amount on the purchase transaction sort-of makes sense if you accept the cash-out value of £881.02. This, plus £10 dealing fee plus £4.41 SD equals £895.43. But as I say, the cash-out value looks a few pennies light to me (not that I'm complaining!).
I'm a bit miffed because I wanted to invest £1,000, and now I'd have to do another deal (another £10 fee) to make up the difference.
What went wrong, or am I just misunderstanding something? I don't think I've done a limit order before, so maybe there's some subtlety I'm unaware of? Does Fidelity only buy shares in multiples of 25, say?
Edited by Dr Mike Oxgreen on Tuesday 15th May 10:03
TooLateForAName said:
What are their fees on the isa? Have they just made sure that you have enough cash in there to pay whatever fees will be due in the year?
Fidelity will do an automatic sell to cover fees, so I don't think it's that.NickCQ said:
Looks like the system took £1,000 and divided it by 1,300p (your limit price) to get 75 shares (rounding down).
Then it bought 75 shares for you at the market price.
i.e. it fixed the number of shares ordered rather than the amount invested. Makes some sense but as you say, annoying.
Aha! You might be right, although I'd have expected it to buy 76 shares rather than 75. But your explanation does seem plausible, i.e. Fidelity's limit order algorithm is a bit simplistic.Then it bought 75 shares for you at the market price.
i.e. it fixed the number of shares ordered rather than the amount invested. Makes some sense but as you say, annoying.
Next time I buy I'll wait until the market's open and see what it does differently.
I suspect dealing of individual shares is a new service on Fidelity, because I haven't noticed the facility before about a week or so ago. So it'll take a few iterations to get used to how things work on this platform.
The more I think about this, the more I think NickCQ is right.
When Fidelity puts the order into the exchange, I guess they probably have to specify a quantity on the order rather than a value. The exchange will then execute the order for that quantity if the price meets the limit during that day.
And the only "safe" quantity for Fidelity to specify in advance is indeed based on the order value divided by the limit price.
Maybe this is just the way limit orders have to work. As I say I've never done one before so I'm learning!
When Fidelity puts the order into the exchange, I guess they probably have to specify a quantity on the order rather than a value. The exchange will then execute the order for that quantity if the price meets the limit during that day.
And the only "safe" quantity for Fidelity to specify in advance is indeed based on the order value divided by the limit price.
Maybe this is just the way limit orders have to work. As I say I've never done one before so I'm learning!
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