Share Dealing Costs

switch76

I want to buy shares on the NASDAQ. Can you tell me what these foreign exchange costs mean? Is it when buying or selling or both?

1st Stockbroker:
Foreign currency conversions are required to facilitate the settlement of international transactions and include a spread, which can vary from time-to-time, applied to the Available Exchange Rate*.The current spread is 1%.

2nd stockbroker:

The foreign exchange rate for all currency conversion is based on the bid/offer exchange rate to which we apply a spread based on up to +/- 1.75%, applied at the time of execution.

Fergie76

Sign up to company like this: http://www.h-l.co.uk/

switch76

Fergie76 wrote: »

Sign up to company like this: http://www.h-l.co.uk/

How does that help? They don't allow you to buy international shares.

DavidHayton

Hi Switch76,

stockbroker #2 sounds like TD Waterhouse. I use them to trade Canadian stocks. The 1.75% is applied both ways! I think that this is expensive, to be honest. However, they do allow you to hold foreign currency in the account, so I can sell (say) Canada Life, collect CAD dividends and buy (say) Barrick Gold without incurring any further FX fees. However, if your aim is to eventually repatriate the money to the UK then it will cost you 3.5% "round trip"

Best wishes
David

Lokolo

I know the first one is Halifax/iii, but I don't know how it works...

switch76

Wow you two are good to guess the stockbroker from a quote. :T

I had my ISA with Halifax and wasn't happy with the administration fee of up to £100 a year.

This year I went with TD Waterhouse and just noticed the foreign exchange fee. I believe I can't hold foreign currency within an ISA so the 3.5% fee will be on every share.

When you sell, is it 1.75% of the sale value? That will cost more if the shares have gone up.

For Halifax, what does the spread mean? Is a 1% spread, 1% charge each time or 0.5% each time or something else?

Fergie76

switch76 wrote: »

How does that help? They don't allow you to buy international shares.

Alright, calm down.

Totton

1/2% up to £200 per year ISA fee at Hargreaves Lansdown unless you only hold funds!

atypical

switch76 wrote: »

When you sell, is it 1.75% of the sale value? That will cost more if the shares have gone up.

It would be on the sale value. It says "applied at the time of execution".

switch76 wrote: »

For Halifax, what does the spread mean? Is a 1% spread, 1% charge each time or 0.5% each time or something else?

It's essentially just a 1% charge.

Have you checked out Selftrade? There's a £42 annual charge.

"We give you access to 10 countries and 24 Exchanges across Europe, North America and Canada to trade in global household names, and all at our standard online and telephone dealing fees. All are traded and settled in sterling, so investing in overseas companies is just as easy as it is for UK ones."

There's a proviso:

"The price you will be quoted will be based upon the stock’s ‘home’ market price subject to a variable factor to cover the Market Maker’s costs and risk, in relation to both holding the position and the foreign exchange exposure."

Not sure how that 'variable factor' would compare to a 1% spread.

switch76

The 'variable factor' does sound like they're trying to hide something. There's no way to tell whether or not it's a good deal compared to the others.

I was hoping spread meant the same as range in statistics and be the difference between the selling and buying exchange rates. The charge would then effectively be only half the quoted amount. Is the 1% for Halifax charged when you sell as well?

atypical

switch76 wrote: »

The 'variable factor' does sound like they're trying to hide something. There's no way to tell whether or not it's a good deal compared to the others.

You could call to ask for more info/some quotes so you have an idea.

switch76 wrote: »

I was hoping spread meant the same as range in statistics and be the difference between the selling and buying exchange rates. The charge would then effectively be only half the quoted amount. Is the 1% for Halifax charged when you sell as well?

The spread is the difference between the selling and buying rates. 1% is added to either side (at least that's my understanding, I've never thought about it this way) so it doesn't work out as half.

switch76 wrote: »

Is the 1% for Halifax charged when you sell as well?

Yes, for every trade. I don't think you'll find a provider that doesn't charge this way. Whenever there's a currency conversion there's going to be a cost involved. Whether buying or selling doesn't matter.