www.x-o.co.uk terms & conditions

MrMartyn

I'm looking for a suitable online platform/broker to enable me to trade shares & ETFs (possibly within an ISA that I would transfer into from my old cash ISA). With this in mind, I've been studying the terms & conditions for x-o.co.uk and saw the following:

"7.12 Where a transaction involves the sale of securities within the Account and the
party buying such securities does not for any reason pay the relevant
settlement monies on the appropriate settlement date, we may in our absolute
discretion repurchase the securities in question and we will not be liable for
any losses or costs you may incur as a result of this."

I don't understand this. It seems to be saying that if I sold some shares and the buyer failed to pay, then the broker (x-o.co.uk) could buy some more of the same shares. Why?

If the buyer fails to pay then surely I (or the broker) do not need to pay money to get those shares back? (I could be wrong, but I would assume that the buyer does not actually own the shares until he/she has paid for them?)

Or... do they mean that they would buy shares in the same company from a different seller (not the buyer who failed to pay)? If so, then why would they want to buy more shares to replace those I was trying to sell?

Wherever they buy the shares from, would they expect me to reimburse them the cost of buying those shares? If I'm trying to sell shares then it's because I want rid of them, so why would I want to buy more of the same? Doesn't make any sense to me!

Can anyone explain this?

Thanks.

Disclaimer: I am not an expert. My comments are my opinions only and should not be taken as advice. Any information I post may or may not be correct, and should therefore not be relied upon as fact. If you act on anything I post here you do so entirely at your own risk. I do not accept any liability.

masonic

Why don't you ask them what it means?

It seems to me that this is probably just an academic curiosity, rather like the 'unpaid shares' thread you started a few weeks ago.

Thrugelmir

MrMartyn wrote: »

[/INDENT]I don't understand this. It seems to be saying that if I sold some shares and the buyer failed to pay, then the broker (x-o.co.uk) could buy some more of the same shares. Why?

If you read the condition properly it says repurchase not buy some more. In the process X-O would charge a brokerage fee and stamp duty (if applicable) plus any other costs incurred by them.

bigadaj

Still love the disclaimer at the end of the post, such irony when viewed in relation to the preceding question or statement!

masonic

bigadaj wrote: »

Still love the disclaimer at the end of the post, such irony when viewed in relation to the preceding question or statement!

It is rather intriguing. For the avoidance of any doubt, it is not a signature, as those are preceded by a horizontal line, so the OP seems to be manually adding it to each post. In any case, nobody can say they weren't warned

bigadaj

masonic wrote: »

It is rather intriguing. For the avoidance of any doubt, it is not a signature, as those are preceded by a horizontal line, so the OP seems to be manually adding it to each post. In any case, nobody can say they weren't warned

Damn, that formed the core of my investment strategy!

MrMartyn

Thrugelmir wrote: »

If you read the condition properly it says repurchase not buy some more. In the process X-O would charge a brokerage fee and stamp duty (if applicable) plus any other costs incurred by them.

Thanks for your comment. I suppose "repurchase" does seem to suggest buying back the same shares. But why do that?

I can understand that in the event of the buyer failing to pay for the shares, they might need to be re-registered back into my name (or into x-o.co.uk's nominee account's name), and that there could be an admin fee for that. But...

1) Is that not different to actually buying the shares (which would include a fee for the value of the shares in addition to admin costs)?
2) Who are they buying the shares from? (Surely the buyer doesn't now own them if he/she failed to pay for them?)
3) What if the share price has moved higher after I had committed to selling them at a particular price?
4) Wouldn't it be easier for x-o.co.uk to just say "Sorry, the buyer failed to pay. You've lost those shares."?
5) What benefit would x-o.co.uk get from making me buy back the shares? (Their trading fee maybe?).

This doesn't make much sense to me!

Thanks.

Disclaimer: I am not an expert. My comments are my opinions only and should not be taken as advice. Any information I post may or may not be correct, and should therefore not be relied upon as fact. If you act on anything I post here you do so entirely at your own risk. I do not accept any liability.

masonic

MrMartyn wrote: »

This doesn't make much sense to me!

Well, the only people who can truly enlighten you are x-o themselves, so I'd repeat my suggestion to ask them. However,

- The term in the conditions empowers them to repurchase the shares at their discretion, and
- There is provision for late settlement when shares are traded, so
- It is entirely feasible for a second trade to be made in lieu of payment rather than go through whatever drawn out process is involved when one side of a trade runs into difficulties

MrMartyn

masonic wrote: »

Well, the only people who can truly enlighten you are x-o themselves, so I'd repeat my suggestion to ask them. However,

- The term in the conditions empowers them to repurchase the shares at their discretion, and
- There is provision for late settlement when shares are traded, so
- It is entirely feasible for a second trade to be made in lieu of payment rather than go through whatever drawn out process is involved when one side of a trade runs into difficulties

Thanks for your comment. I did originally think about asking x-o.co.uk, but I wasn't sure if there might be the potential for a conflict of interest, so I thought I'd ask on here instead. I am not accusing x-o.co.uk of any wrongdoing. I have since emailed them to ask about the clause (7.12) in their terms & conditions, and I now await their response.

What you say is interesting. Could you please explain (maybe give an example) what you mean by your third point ("It is entirely feasible for a second trade to be made in lieu of payment ...")?

Thanks.

Disclaimer: I am not an expert. My comments are my opinions only and should not be taken as advice. Any information I post may or may not be correct, and should therefore not be relied upon as fact. If you act on anything I post here you do so entirely at your own risk. I do not accept any liability.

Thrugelmir

MrMartyn wrote: »

This doesn't make much sense to me!

Nor do your questions to me. As the eventuality is extremely low of such an occurence. As with many contracts there are a multitude of terms and conditions that are there to protect the service provider from pecuniary loss in the event of unforeseen circumstances.

masonic

MrMartyn wrote: »

What you say is interesting. Could you please explain (maybe give an example) what you mean by your third point ("It is entirely feasible for a second trade to be made in lieu of payment ...")?

Is this a wind up? I'm not sure how I could make that statement any simpler. Instead of following the course of action in the second point, they follow the course of action in the first point.