Brokers to invest in USD securities at competitive exchange rates?

SouthLondonUser

I am interested in buying US securities, including US government bonds, in USD. My question is: what brokers do you know of which offer competitive exchange rates? Ideally I’d like an ordinary trading account (ie no ISA, nor SIPP, no CFD etc) with:

• the option to keep cash in USD; H&L, for example, automatically converts proceeds (eg dividends or coupon payments) into GBP applying a 1% markup on the exchange rate); instead, what I want is to be able to decide myself whether/when to convert from one currency to another; and
• the option to wire money in and out of a linked USD account using a currency broker like TransferWise to get better rates, or, alternatively, an account which offers decent exchange rates itself.

So far the best one I have found seems to be the Italian Fineco, on which there are some threads, which ticks all the boxes above and has a website in English for UK customers: https://finecobank.com/uk/online/trading.html
Do you know of others?

Those I have checked out so far are:

• IG charges 0.3% https://www.ig.com/uk/investments/share-dealing/costs-fees#foreign ; all the others are quite more expensive, at least for me who won’t be placing £600k orders. However, IG doesn’t offer government bonds.
• H&L charges from 1% to 0.25% but doesn’t let you keep a foreign exchange account, as explained above https://www.hl.co.uk/__data/assets/pdf_file/0005/9674978/important-info-overseas-shares.pdf
• Interactive Investor charges more (from 1.5% to 0.25%) but lets you keep funds in a foreign account (ie you decide when/how to exchange) https://media-prod.ii.co.uk/s3fs-public/pdfs/rates_and_charges_uk.pdf ; however, I can only fund my GBP account, i.e. I cannot send USD to my II account, I must send GBP and then convert with them at their rates (they confirmed as such via email)
• AJ Bell charges 1% https://www.youinvest.co.uk/dealing-account/charges-and-rates
• Saxo charges 1% http://support.saxomarkets.co.uk/customer/portal/articles/1831489-what-is-the-fee-to-convert-cash-into-a-different-currency-
• HSBC and Barclays: I looked at their websites but couldn’t honestly understand much
• Selftrade has a charge of 0.95 to 0.30% on overseas securities; I’m hoping it’s not on top of a currency converison fee, but not clear: https://selftrade.co.uk/informational/investing-with-us/our-fees
• Iweb charges 1.5% https://www.iweb-sharedealing.co.uk/products/share-dealing-account.asp

Thanks!


PS Of course it goes without saying that the cost of currency conversion is not the only cost: one must also take into account the commission on each trade, annual fees, etc.

Voyager2002

I think that Fineco is the best for what you say you want. Note, however, that their trading platform only carries a rather limited list of securities: I have often been unable to find what I want to buy on it, and they have suggested that I use telephone dealing instead. The charge for a trade by telephone is very much more than for using their dealing system.

SouthLondonUser

Thanks. I imagine that any cash held at Fineco, regardless of the currency, is protected by the Italian, not the British, deposit compensation scheme (up to EUR 100k).

Odd that something so apparently banal and vanilla is done on better terms through a foreign broker!

SouthLondonUser

FYI Interactive Investors confirmed that US government bonds can be bought over the phone only, subject to a commission of GBP 40 + the markup on the exchange rate I mentioned previously.

Voyager2002

SouthLondonUser wrote: »

FYI Interactive Investors confirmed that US government bonds can be bought over the phone only, subject to a commission of GBP 40 + the markup on the exchange rate I mentioned previously.

Ouch!

I am sure that they offer some Bond funds that would invest mainly in US Treasuries, and that could be bought for far less.

SouthLondonUser

Voyager2002 wrote: »

Ouch!

I am sure that they offer some Bond funds that would invest mainly in US Treasuries, and that could be bought for far less.

Sure. Funds and ETFs. But I don't want those - I want bonds with specific maturities, which repay in full on a given date, as I'm likely to need the money then.

londoninvestor

SouthLondonUser wrote: »

[*]the option to wire money in and out of a linked USD account using a currency broker like TransferWise to get better rates, or, alternatively, an account which offers decent exchange rates itself.

On this, bear in mind that dollars are more expensive and fiddly to move around than (say) euros. Your SWIFT transfers can easily incur charges, whereas euros generally move fee-free and frictionlessly, at least within SEPA.

You can reduce the chance of SWIFT intermediary fees if both ends of the transfer are with a major bank (for example, Lloyds to Barclays is likely not to incur an intermediary fee, because the banks will have a direct SWIFT relationship and not need an intermediary).

So it's useful to know which banks your chosen firms (both the securities broker and the FX broker) use for their USD accounts. For example, Transferwise unfortunately uses a fairly small US bank as agent.

short_butt_sweet

aj bell are going to reduce their FX charges from next month (according to an email they sent me - i can't see this mentioned on their website), to a tiered charge from 1% to 0.25%.

you might look at interactive brokers. i haven't used them, but they let you hold USD with them, and have very low FX charges. OTOH, their website is complicated, perhaps even user-hostile.

stphnstevey

SouthLondonUser wrote: »

I am interested in buying US securities, including US government bonds, in USD. My question is: what brokers do you know of which offer competitive exchange rates? Ideally I’d like an ordinary trading account (ie no ISA, nor SIPP, no CFD etc) with:

• the option to keep cash in USD; H&L, for example, automatically converts proceeds (eg dividends or coupon payments) into GBP applying a 1% markup on the exchange rate); instead, what I want is to be able to decide myself whether/when to convert from one currency to another; and
• the option to wire money in and out of a linked USD account using a currency broker like TransferWise to get better rates, or, alternatively, an account which offers decent exchange rates itself.

So far the best one I have found seems to be the Italian Fineco, on which there are some threads, which ticks all the boxes above and has a website in English for UK customers: https://finecobank.com/uk/online/trading.html
Do you know of others?

Those I have checked out so far are:

• IG charges 0.3% https://www.ig.com/uk/investments/share-dealing/costs-fees#foreign ; all the others are quite more expensive, at least for me who won’t be placing £600k orders. However, IG doesn’t offer government bonds.
• H&L charges from 1% to 0.25% but doesn’t let you keep a foreign exchange account, as explained above https://www.hl.co.uk/__data/assets/pdf_file/0005/9674978/important-info-overseas-shares.pdf
• Interactive Investor charges more (from 1.5% to 0.25%) but lets you keep funds in a foreign account (ie you decide when/how to exchange) https://media-prod.ii.co.uk/s3fs-public/pdfs/rates_and_charges_uk.pdf ; however, I can only fund my GBP account, i.e. I cannot send USD to my II account, I must send GBP and then convert with them at their rates (they confirmed as such via email)
• AJ Bell charges 1% https://www.youinvest.co.uk/dealing-account/charges-and-rates
• Saxo charges 1% http://support.saxomarkets.co.uk/customer/portal/articles/1831489-what-is-the-fee-to-convert-cash-into-a-different-currency-
• HSBC and Barclays: I looked at their websites but couldn’t honestly understand much
• Selftrade has a charge of 0.95 to 0.30% on overseas securities; I’m hoping it’s not on top of a currency converison fee, but not clear: https://selftrade.co.uk/informational/investing-with-us/our-fees
• Iweb charges 1.5% https://www.iweb-sharedealing.co.uk/products/share-dealing-account.asp

Thanks!


PS Of course it goes without saying that the cost of currency conversion is not the only cost: one must also take into account the commission on each trade, annual fees, etc.

What did you finally decide on and how have you found them?

stphnstevey

Interactive Investor charges more (from 1.5% to 0.25%) but lets you keep funds in a foreign account (ie you decide when/how to exchange) https://media-prod.ii.co.uk/s3fs-public/pdfs/rates_and_charges_uk.pdf ; however, I can only fund my GBP account, i.e. I cannot send USD to my II account, I must send GBP and then convert with them at their rates (they confirmed as such via email)

On their website:
https://help.ii.co.uk/system/templates/selfservice/ii/help/customer/locale/en-GB/portal/402800000001013/content/Auth-3074/Paying-money-into-your-account-by-bank-transfer

Which foreign currencies can I pay into my account?
Our Trading account can accept an electronic transfer of GBP sterling and the following foreign currencies from your private bank account:

US Dollars (USD)
Canadian Dollars (CAD)
Euros
Australian Dollars (AUD)
Hong Kong Dollars (HKD)
Singapore Dollars (SGD)
Swedish Krona (SDK)
Swiss Francs (SFK)
Good to know:

HMRC rules state that you cannot hold foreign currency in an ISA.

Although you can hold foreign currency in your SIPP, you cannot contribute to a SIPP in any other currency than Sterling.

Voyager2002

stphnstevey wrote: »

Which foreign currencies can I pay into my account?
Our Trading account can accept an electronic transfer of GBP sterling and the following foreign currencies from your private bank account:

US Dollars (USD)
Canadian Dollars (CAD)
Euros
Australian Dollars (AUD)
Hong Kong Dollars (HKD)
Singapore Dollars (SGD)
Swedish Krona (SDK)
Swiss Francs (SFK)
Good to know:

Note that the funds to be deposited MUST come from a bank account in the same name, so that would rule out using Transferwise or similar. Personally I do my currency conversions in my Fineco account and then transfer to/from my account with Interactive Investor. The fees for transfers in foreign currency are fairly hefty, but not as bad as the surcharges on exchanging currency within II.