Discussion
Comm free dealing is the new thing and there are several ways to do it but most revolve around either selling the collective flow to a dark pool so will have to exclude illiquid or volatile stocks that need hedging at pointnof end client transaction. Or using a fixed fee deal from a prime broker and likewise they won’t want illiquid equities that are only really traded by retail consumers.
With Stamp still being there the service isn’t much use to traders and of course your not guaranteed to be trading at true beat bid/offer but at the price the darknpool or prime broker is willing to pay for flow at. But for longer term portfolios of blue chips they are potentially very useful.
The key is that there is still a commission it is just that you no longer know what it is, it’s been buried in a manner that meets current regulatory guidance so there will be some ‘free’ services that are bending their clients over with the ruse and of course, it’s a race to the bottom and some of the firms aren’t going to make it so choosing one that has a real balance sheet and isn’t haemorrhaging cash is another thing to consider.
With Stamp still being there the service isn’t much use to traders and of course your not guaranteed to be trading at true beat bid/offer but at the price the darknpool or prime broker is willing to pay for flow at. But for longer term portfolios of blue chips they are potentially very useful.
The key is that there is still a commission it is just that you no longer know what it is, it’s been buried in a manner that meets current regulatory guidance so there will be some ‘free’ services that are bending their clients over with the ruse and of course, it’s a race to the bottom and some of the firms aren’t going to make it so choosing one that has a real balance sheet and isn’t haemorrhaging cash is another thing to consider.
Newky Brown said:
Thanks DonkeyApple
Interesting. He said it was all regulated and you obviously have to open an account and transfer funds to trade.
I guess then there is a danger then that if some of these firms go belly up, you could lose your cash?
Always check the regulated status of a firm for yourself. Even if it is regulated you want to confirm it is covered by the FSCS as that is a separate aspect. And then assuming it is then it’s still a pain in the proverbial to have money tied up in a firm that has administrators sorting it all out and so there is little upside to had I’m risking the faff in the first instance. Interesting. He said it was all regulated and you obviously have to open an account and transfer funds to trade.
I guess then there is a danger then that if some of these firms go belly up, you could lose your cash?
‘The legendary “Free Trade”! We’re revolutionising access to financial markets with this order type, but please be aware of the following features and risks:
A Basic order will be executed shortly after our Cut-Off Time for the respective market (see our Terms and conditions for more details). For example, in London this will be around 16:00 local time during every normal trading day. Other markets will vary. The relevant and most up to date Cut-Off Time will be shown in our mobile application.’
So what they are doing there is amalgamating client orders and filling at a single point in time and then splitting the trade out. The basic ‘end of day’ execution that has been used for donkey’s years to get costs as low as possible.
Nothing wrong with that at all. Just a bit archaic in this day and age when you can comm free physical dealing on a live basis.
In short it’s a thirty odd year old practice just wrapped in a super cool app.
Plus, if you think about it, your tiny order which would get filled instantly at the best price for its size is now being bundled up with all the others to make one huge order that will be filled at a much worse price because your going to be taking out a big chunk of the order book potentially as well as doing it at one of the more volatile times of the day. The reality is that the spread paid because your small order is executed as a massive amalgamated order could easily dwarf the most offensive of comm charges.
In short it’s a load of spin wrapped in a trendy app that could see you paying way over the odds in reality.
A Basic order will be executed shortly after our Cut-Off Time for the respective market (see our Terms and conditions for more details). For example, in London this will be around 16:00 local time during every normal trading day. Other markets will vary. The relevant and most up to date Cut-Off Time will be shown in our mobile application.’
So what they are doing there is amalgamating client orders and filling at a single point in time and then splitting the trade out. The basic ‘end of day’ execution that has been used for donkey’s years to get costs as low as possible.
Nothing wrong with that at all. Just a bit archaic in this day and age when you can comm free physical dealing on a live basis.
In short it’s a thirty odd year old practice just wrapped in a super cool app.
Plus, if you think about it, your tiny order which would get filled instantly at the best price for its size is now being bundled up with all the others to make one huge order that will be filled at a much worse price because your going to be taking out a big chunk of the order book potentially as well as doing it at one of the more volatile times of the day. The reality is that the spread paid because your small order is executed as a massive amalgamated order could easily dwarf the most offensive of comm charges.
In short it’s a load of spin wrapped in a trendy app that could see you paying way over the odds in reality.
Edited by DonkeyApple on Friday 29th November 16:52
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