Investing in stocks listed on NYSE

mageliken

As a little bit of fun, I'm looking to invest a sum of money in a company listed on the NYSE.

I already have a S&S ISA subscription with Charles Stanley Direct, but looking around it seems that X-O.co.uk and SVS Securities might be more economical as I don't anticipate doing many trades.

With that said, I can't find NYSE companies available through X-O.co.uk or SVS - other than in the form of Contracts For Difference (CFD) which I have to admit I don't understand too well. A couple of years back I invested in AOL through Halifax and I don't recall having to do this as a CFD.

Could anyone advise whether or not CFDs are a good idea and/or a platform that would allow me to purchase stocks listed on the NYSE? I'm currently trying to find out if Charles Stanley Direct might allow me to purchase NYSE listed stocks to keep it inside my ISA, but this isn't a priority.

bowlhead99

The zero-frills UK execution-only brokers like svsxo.com and x-o.co.uk offer trades for six quid a go, but are not going to give you access to buying on the NYSE. They offer UK listed stuff only.

If you want international listed stocks you need a broker with access to international markets. I have US stocks with TD Direct and Youinvest, both of whom are reputable (I think TD is the better broker but it depends what you want). I guess you could probably use Halifax too, but bank products are [generalising] not as competitive as dedicated stockbrokers or investment platforms.

You don't need to use CFDs. SVS do have a CFD trading product, completely separate from their execution-only share service, which at a glance seems to be powered by IG Markets. For you, CFDs are not a good idea, as they are an advanced product with leverage which you don't understand. Shares are much more straightforward and plenty of places do them, just not the no-frills brokers.

Actually having mentioned IG above, IG are a decent company and provide access to markets through CFDs, spreadbets and more recently, actual shares. I've never used their regular share facility which is relatively new, but am a spreadbet customer and their systems are decent. They offer US shares from 2c per share ($15 minimum).

http://www.ig.com/uk/shares-trading-costs

plunt

bowlhead, one thing to note with IG share dealing is i noticed you can offset your margin requirements against actual shares you hold.. so im starting to think that may be a nice way to use the tied up equity...

Thrugelmir

mageliken wrote: »

As a little bit of fun, I'm looking to invest a sum of money in a company listed on the NYSE.

Are you prepared to do the paperwork that goes with them in order to receive the dividends?

plunt

surely its only one document to submit in order not to get double tax'ed (W-8BEN)

http://www.hl.co.uk/shares/buying-us-listed-shares

westy22

mageliken wrote: »

With that said, I can't find NYSE companies available through X-O.co.uk or SVS - other than in the form of Contracts For Difference (CFD) which I have to admit I don't understand too well. A couple of years back I invested in AOL through Halifax and I don't recall having to do this as a CFD.

Are you absolutely sure that you don't mean CDI rather than CFD?

A CDI is a Crest authorised version of an international stock which can be traded freely within the UK. Completely different to a CFD.

IronWolf

There are two things you need to be aware of with CFDs, firstly they are usually leveraged, but you don't have to use leverage if you dont want to. Secondly you don't actually own the shares, and you have counterparty risk with whoever wrote the CFD. If they go bankrupt you may find you've lost your money, regardless of how the actual shares you are tracking have done.

I would generally avoid, its quite easy to find a broker that deals on NYSE.

bowlhead99

plunt wrote: »

bowlhead, one thing to note with IG share dealing is i noticed you can offset your margin requirements against actual shares you hold.. so im starting to think that may be a nice way to use the tied up equity...

Nice idea to allow you to maximise your leverage, but if someone asks you for margin and you give them a pile of shares which can lose 30% of their value within a week, you may set yourself up for double-whammy of a market decline causing a cfd or spreadbet margin call at the same time as your shares took a hammering and no longer provide the old level of margin they used to. So a cash top up for your margin could be painful if you've never provided enough cash margin in the first place.

Thrugelmir wrote: »

Are you prepared to do the paperwork that goes with them in order to receive the dividends?

The only thing needed to access the dividends at the lower tax treaty withholding rate would be a US tax form (which for individuals is pretty straightforward declaration of your tax status), either a W8 or the brokers internal proprietary equivalent.

These sort of forms might become pretty much part of standard account opening procedures going forward, given financial institutions will soon need to do more and more documentation to support reporting of accountholders to more and more international governments.

A lot of people who want to invest in a few US listed stocks just for "a bit of fun" as OP puts it, are not looking for solid boring dividend payers, but start-ups, tgrowth stocks etc. I have Amazon and Yelp for example and they could charge me 90% withholding tax on the dividends for all I care.

mageliken

Thanks all for your very helpful responses.

Yes I'm sure it's a CFD in this case, and I'm inclined to agree with the general consensus and avoid these given my lack of understanding.

I don't anticipate I will be trading frequently in the short term, my initial idea is to buy and hold. I'm looking closely at YouInvest and IG now (thanks bowlhead99).

They seem fairly similar to me in terms of fee structure. YouInvest at £9.95/deal and 1% FX charge however IG charge a minimum $15/deal (2 cents/share) and and 0.3% FX charge. IG also have an inactivity fee after 24 months, but I don't think this would be an issue.

I'd be interested to know if anyone has any thoughts about YouInvest vs. IG? My current thinking is to opt for IG with the lower exchange rate?

bowlhead99

If you are just doing a one off short term trade with small amount of play money, a percent for the round trip fx fees is not going to make an appreciable difference to the amount of pounds profit or loss. If it is a big trade and you are going to keep reinvesting proceeds in lots of other foreign stocks over time, then the fx might become a bigger component.

Weighed against that is the fact that Youinvest has a full funds platform and can give you a pension etc and could supplant Charles Stanley as your ISA provider if you liked them, offering a full suite of collective investments as well as the shares and ITs which IG have got.

mageliken

Thank you bowlhead99, as always another good consideration.

I've gone ahead and created an account with IG, but have noticed that they charge a small monthly fee for access to the NYSE prices data feed. Is this typical of providers? I'm not sure I recall such a charge with Halifax.