Fund pricing when trading - platform rounding?

tg99

Anyone know to what extent fund platforms / brokers are allowed to round a fund price when executing oeic / unit trust fund trades? For example the price as calculated by the fund manager’s custodian / administrator may be 100.053 but the fund platform uses 100.1.....obviously not a major difference but can be if doing a large size trade.

dunstonh

Some platforms round the display to 2dp but behind the scenes will go to 4dp on trades. Are you sure your platform is rounding on trades as well?

tg99

dunstonh wrote: »

Some platforms round the display to 2dp but behind the scenes will go to 4dp on trades. Are you sure your platform is rounding on trades as well?

Yep. Guess I will call them and ask them to clarify. (I know when buying units some round the number of units given to the nearest two decimal places for example but they still use the full unrounded price when doing so.)

grey_gym_sock

i've found that iweb do some slightly odd rounding of fund prices, which i haven't seen on other platforms.

specifically, where the price of 1 unit exceeds £100 (e.g. for many vanguard funds), then they round the unit price (in £) to 2 decimal places, though the fund manager is using 4 places. the rounding can work for or against the investor - i.e. they round to the nearest 2 decimal places, not systematically to the worse price.

the number of units you buy/sell/hold is rounded to 4dps (as i'd expect).

greenglide

Hmm. I noticed recently that on moving from TD to HL that one of my dividend payments increased by 1p when the dividend amout per share and the number of units held was the same.

The rounding of 1.5 pence was rounded down by TD but up by HL. What I don't understand is that I had always thought that the calculation of the payment amount was done by the company paying the dividend?

bowlhead99

greenglide wrote: »

The rounding of 1.5 pence was rounded down by TD but up by HL. What I don't understand is that I had always thought that the calculation of the payment amount was done by the company paying the dividend?

But let's say HL's nominee company might have a total of 10 customers with 3 shares each, all hoping to get their 5.5p a share from Investee Company X (16.5p each), so Investee Company X pays the broker's nominee company £1.65 for the 30 shares and it's done with the process. HL has received exactly the right amount of money, but is not done, as it can't pay any of the customers exactly 16.5 pence each, and will have to figure out some rounding.

However TD's nominee company might have 11 customers with 3 shares each getting 5.5p a share from Investee Company X, which is £181.5p for the 33 shares, and then Company X can only send whole pennies to the corporate intermediary / nominee so will need to decide whether they are going to pay TD £1.81 or £1.82, and either way TD will end up with a different amount of money per share than the exact 5.5p which HL got. So at TD, one extra person in 11 gets an extra half penny or maybe misses out on a half penny.

If you hold accounts with the two brokers you might be person #6 at one and person #8 at the other, and you might be lucky and get the 17p or unlucky and get the 16p with both of them or maybe it will even out and you get 17 at one and 16 at the other.