Pending, Dealt, Settlement

Kendall80

Despite the user friendly nature of some of the online broker sites the process underneath seems very sluggish and antiquated.


When I purchase something I like to have it there and then not 4/5 days time (in some cases longer).


I realise in the long run such figures are irrelevant but they certainly impact upon my monthly finances as I lose out on the interest I would've earned over those days (in a 5% or 3% account)


That's about as much of a rant as i'm capable of but there you have it

Linton

Suggest you dont rant but rather think through what the process is and why delays are inevitable. I think you will find it remarkable that you can sit at a terminal and buy and sell funds/shares from around the world oblivious to an array of complications and risks.

You buying or selling a fund at your terminal initiates a complex stream of activity that ends up with individual shares being bought or sold by the fund manager to someone somewhere in the world who wants to do the reverse transaction at a price that is unknown in advance. And then there is a stream of activity by which payment flows in the reverse direction. All this must be accomplished in a way that avoids the risks of anyone failing to honour their side of any agreement. Only when these two processes have completed can you be allowed access to your money.

For shares all the platforms I have used give immediate access to the money when you sell for you to buy further shares although the money may not actually transfer for about 3 days. Here the platform is lending you the money to avoid any reduction in your activity. The cost of the loans presumably is built into the transaction charges.

westy22

May be true of fund trading but certainly not with shares, ETFs and ITs.

I can credit my broker account with a debit card and within about 10 to 20 minutes can purchase x amount of shares which are shown on my account within seconds and I benefit from any rises (or falls!) in that share price immediately.

Hard to think of any other thing I buy that is of such immediate benefit.

Kendall80

Thanks Linton I presumed as much. However there are other platform related delays.


For instance, my monthly investing direct debit is taken from my current account on the 3rd of the month even though the funds aren't purchased until the 10th of the month. Then those fund delays you mention above kick in. That could result in my money essentially earning nothing for upto 12 days. Now depending on the monthly investing amount that could result in a few pounds of lost interest. It may not seem much but you don't get rich by throwing away the pennies!


I shall minimise this time period by cancelling the direct debit and funding it manually via debit card in future.

le_loup

Don't forget that you probably get a cheaper dealing rate when you invest by monthly direct debit. And a debit on 3rd and purchase on 10th is to allow for BACS which takes 3 days and weekend that may take 2, 3 or even 4 days. You seem to have got yourself a good deal!

westy22

Kendall80 wrote: »

For instance, my monthly investing direct debit is taken from my current account on the 3rd of the month even though the funds aren't purchased until the 10th of the month. Then those fund delays you mention above kick in. That could result in my money essentially earning nothing for upto 12 days. Now depending on the monthly investing amount that could result in a few pounds of lost interest. It may not seem much but you don't get rich by throwing away the pennies!


I shall minimise this time period by cancelling the direct debit and funding it manually via debit card in future.

Many of these 'regular investment' deals are not worth the effort.

I monitor share prices carefully as soon as my DD has been credited to my account (usually a couple of days) and, if I see an attractive price point, I jump in and buy there and then rather than trying to save a few pounds by waiting for an unknown price several days in the future. I usually save far more by buying on dips than I would be saving in reduced trading costs.

Of course, if you were buying in £100 or so tranches then the economics of this may not be so viable.

Freecall

I remember the days when the vast majority of 'ordinary' investors would post a cheque with an application form to buy funds (they tended to be called unit-trusts in those days).

After about a week or so, an acknowledgement letter arrived with a certificate about a week after that.

You would get a price update sent to you once a year, although you could look up the prices in the newspaper in between times if you wanted.

When the time came to sell, you would post back your certificate and about a week later you would receive a cheque through the post which, when deposited with your bank, would take three days to clear.

For this service we were charged the spread of around 3%-5%

For some reason we never complained about it.

Happy days.

Kendall80

le_loup wrote: »

Don't forget that you probably get a cheaper dealing rate when you invest by monthly direct debit. And a debit on 3rd and purchase on 10th is to allow for BACS which takes 3 days and weekend that may take 2, 3 or even 4 days. You seem to have got yourself a good deal!

Days for a few electrons to whizz around some wires and satellites? ... and weekends off? These electrons are more fortunate than I am! Someone should shunt them to a higher energy level.


I've checked with my platform provider and it matters not how I fund the monthly investing as long as the amount is covered. There is no dealing rate as such.


Of course investing monthly itself permits a lower minimum and hence greater spread of investments, in addition to those I purchase separately.

le_loup

Kendall80 wrote: »

Days for a few electrons to whizz around some wires and satellites? ... and weekends off? These electrons are more fortunate than I am! Someone should shunt them to a higher energy level.

Sorry mate but I don't run the banking system.
Perhaps you can write to someone and get it changed.