SVS Securities - shut down?

masonic

johnburman said:

Fully accepted masonic.  And that may explain how they make money, and answers my question
BUT there should be to no detriment to you.  Why?  See the Best Execution rules below with my emphasis.
So to put bluntly, why should I care where my stock is bought or sold, as long as I get the 'best' price? 

As a PS, I only buy/sell at best XO.  My reading of thie T&C s is that this is not really encouraged/liked by them.  I wonder why?
[e.g. they say Market (At Best) Order You place an Order to execute your transaction at the best possible price. This may be necessary if you want your Order to be executed in any event. However, certainly with less liquid products, you may receive a worse price than what you anticipated. We therefore strongly advise you to use this Order type with care.]

I agree that under normal circumstances it shouldn't really be to your detriment. You will get the reference price from the national exchange, whereas they will try to better that price through alternative channels and profit from any saving they can make at no loss to yourself. I mention the conflict of interest because order execution is not immediate, and I didn't see any requirement for them to synchronise the order they placed at the venue of choice with the reference price they obtained from the national market, so introducing a little extra delay could work further to their advantage in some cases, but obviously wouldn't be in your best interests. I have no idea whether they would ever do such a thing, but theoretically they could. I agree, at best orders would give them the least scope for any funny business.

johnburman

masonic thanks.  When doing XO transactions at best I check with the "national exchange" [LSE for me only] and the timing of the transaction there is the same as the deal.  so unless it is miliseconds, no delay.
The point is, I think, for a XO only client, buying at best, what we need is a sensible XO platform, CHEAP transparant charges, and a stable compnay regulated by the FCA or overseas regulator who is sensible, and stricter than the FCA and consumer focussed.  So who have we got:

De GIRO
Trading 212 (UK and Bulgarian regulated)
Fineco  (Italian regulator)

or in the UK only
X-O
iWeb
Share Shop

Trading 212 looks the best.  Awful website, but no commisison or extra hidden charges (no hidden FX charges they say), and dual regulation with FSCS cover.  Its not a newcomer to the scene and does do basis XO transactions, and if you want to do CFDs or FX they do that too.  

masonic

johnburman said:

Share Shop

Do you mean The Share Centre? If so, that's soon to be integrated into Interactive Investor.

johnburman said:

Trading 212 looks the best.  Awful website, but no commisison or extra hidden charges (no hidden FX charges they say), and dual regulation with FSCS cover.  Its not a newcomer to the scene and does do basis XO transactions, and if you want to do CFDs or FX they do that too.  

This would be my least worst option of the ultra-cheap ones (mainly due to FSCS protection) had it not been for my awful experience with them in regard to their ever-changing T&Cs.

manorhouse

This site is now becoming educational and i thank you two for that.
Not sure if i am reading correctly but i can not deal with Degiro without setting a limit ( which i prefer in most cases anyhow when  i use Iweb , bell or jarvis )
I would not have fancied Trading 212 so thanks for that , lets discus more of them .
Unlike myself a self thought plumber ( not the Plumbing had a good apprenticeship , and investing is a much harder way to earn a few bob )
But i enjoy the challenge .
Do you chaps work in the industry as your knowledge is deep.

bowlhead99

johnburman said:

Trading 212 looks the best.  Awful website, but no commisison or extra hidden charges (no hidden FX charges they say), and dual regulation with FSCS cover.  Its not a newcomer to the scene and does do basis XO transactions, and if you want to do CFDs or FX they do that too.  

manorhouse said:

I would not have fancied Trading 212 so thanks for that , lets discus more of them .

You say it's not a newcomer to the scene but it is a relative spring chicken, and the 'basic execution only transactions' are not the historic core of its revenue - the CFDs are (and historically they were big on FX trading too, and the UK holding company also had a Cyprus entity before restructure/disposal). They have only been doing straight (no margin allowed) execution only share purchases for a couple of years as you can see from old threads on here. Its UK operations only generated £4m of transaction income for the last reported financial year while the other £50m came from the Bulgarian part of the group where the market exposure sits, with the UK part acting as agent on a matched principal basis.  Overall they are not a massive operation with just £20m of client cash held at Dec '18.

When you look at the annual reports it seems relatively clear that you shouldn't think of them as a group that does basic XO transactions and also happens to do CFDs if you want it - it's more the other way round. Though you can get a non-leveraged straight XO account or ISA if you want it.

To save rehashing some of my comments from other threads, here's a five-month old post of mine that might be of interest to you
https://forums.moneysavingexpert.com/discussion/comment/76515561#Comment_76515561

You've already addressed the 'best execution' part above, but as you move on to 'life after SVS', presumably it's not just about saving money but also about finding a well established and stable platform that won't be going bust and leaving your assets in limbo for another year or so while they go through administration. When you look at Trading 212, their USP is to not charge you any money for commission on the trades they place for you, and not to charge you an annual fee for holding your assets which you're trading even if you are doing it in an ISA wrapper. No doubt that's a good tool for customer acquisition, to have a mobile-led product that appears free to use. But if you don't want it to 'do an SVS', you should ask yourself how sustainable it is to run that sort of a business.at that sort of price. 

Really, the business of letting you trade without paying for it, if they're not skimming between the buys and sell prices, is only possible where it is bankrolled by another successful part of the business and they are allowing execution-only trading as a loss leader to get you in the door and sell you on that other profitable part of the business, the margined CFD side.  If their profits and client money held grew there in recent years due to favourable market conditions, that's something that could reverse in unfavourable conditions, and by promising that their customers can't lose more than they deposit, they take risk onto their own balance sheet if they can't close out a losing position in extreme markets.

Some of the other 'key features' of their accounts may not be of interest to you, such as allowing fractional share ownership so they can buy a share of Amazon at $2400 and let their customers just invest in a $100 piece of that share, which might be handy if the customer only has a few thousand pounds to invest and wanted a broad portfolio. You might not use that at all because you want to deal in whole units like a normal person. But, as the focus within this thread is pretty much 'wow, it's an amazing amount of hassle when a platform goes into administration', think how much hassle an administration scenario would be for a platform where each Amazon share held by the Bulgarian nominee company is beneficially owned by seven individuals from UK, Germany and Spain, and the special administrator of the Bulgarian entity is trying to move the assets over cleanly to one new broker platform, but finding that mostly the platforms competing for the business don't handle 'fractional shares'.

I am sure Trading212 is fine for investing small amounts of cash into the markets via an app for a bit of fun. I have a couple of thousand with eToro to just play about with like that. And a lot of novice investors only want to invest small amounts because that's all they have - they want to try stockpicking and they can't afford to do it on a real platform because a real platform costs more than a pound per trade and they only have £50 a month to invest.  But for investing real sizeable amounts that you would miss if you lost them or the business was disrupted for a lengthy period of administration? No way.

dont_look_now

Do the posters looking at ultra-cheap platforms do a huge volume of trades? Or is it just a habit of trying to cut costs wherever possible?

I don't trade very much. When I figure out what I'm paying for platforms per year (in dealing commissions + holding charges + anything else), as a percentage of total value of my investments, it's miniscule. Yes, if I could cut it further, without any serious downside, why not? But if there are real downsides, in terms of stability of the platforms used, it doesn't make much sense.

OK, perhaps other people trade more often than me. However, if they do, doesn't that make it even worse for them, than it would be for me, to be unable to trade some of their investments for an extended period?

manorhouse

This up fro DEGIRO THIS MORNING .

The point of posting is SVS were not as careful often a broker would ring and advised very risky aim investments .
I always thought just because they had bought in principle at a secondary placing and just wanted to shift .
( At a profit )
Degiro vs Svs ? UK vs Holland ???

New appropriateness tests for options and futures

Dear client,

In accordance with DEGIRO’s product governance, we are introducing new appropriateness tests for options and futures. Additionally, we are also adding new appropriateness tests for Structured Products. These tests are in place to verify whether the relevant products are appropriate for you to trade based on your level of knowledge in these products. You can find all the new tests on the “Product Settings” page under “Settings” in the trading platform. 

From the 4th of May onwards, you will be required to have passed the relevant appropriateness test if you want to trade a specific product group. If you are trading options, futures or structured products regularly, please take the time to complete the relevant test before 4th May. For every test, you have a set of 5 questions where you have to answer 4 answers correctly to pass the test. After the 4th of May, you will not be able to open new positions in options, futures or structured products without having passed the test for the corresponding product group. You will still be able to close existing positions in those product groups, even without having passed a test.

Kind regards,

DEGIRO

bowlhead99

manorhouse said:

The point of posting is SVS were not as careful often a broker would ring and advised very risky aim investments .I always thought just because they had bought in principle at a secondary placing and just wanted to shift .
( At a profit )
Degiro vs Svs ? UK vs Holland ???

UK regulations (which evolve from time to time) and the European equivalents have guidance on assessing appropriateness of a product type for an individual. Different firms will implement that in different ways with their own policies to meet their obligations - but if they can give you a 'test' (even if the answers to the test are in a FAQ or blog elsewhere on their own site), it is easier to defend themselves from criticism that they are allowing retail customers to access riskier or complex products (like structured products, derivatives including options or futures etc) without understanding the risks that might be faced.

UK guidance is here:
https://www.handbook.fca.org.uk/handbook/COBS/10/2.html

However, whether a product type is appropriate for an individual (e.g. you have enough understanding of what a share is and what a share price is, to be allowed to buy shares) is quite different from calling you up and saying we have a truckload of these halfpenny AIM shares which might rocket, I'm sure you don't want to miss out, how many can I put you down for? But if you say you want to get bulletins on what new IPOs are available, it's fine for them to email or call you when one comes up. 

Separately from the 'appropriateness' rules for different product types, when it comes to promoting and recommending stuff or even allowing the purchase of it on a public website, there are a whole bunch of rules about investments which are subject to restrictions on retail distribution (e.g. non-mainstream pooled investments  or non-readily realisable securities or speculative illiquid securities and so on) where financial promotions are not allowed.

The FCA rules are easy to find in plain English so you can find out what the rules are but it doesn't mean that UK operators breaking the rules from time to time (or routinely) don't exist - they may exist and be under investigation or they may exist but the FCA doesn't know they need to be investigated.  Likewise you can expect that other countries have companies breaking the rules too, but the difference is that the rules in those countries might not be so obvious to you as they are not always easy to find in plain English, and if you want to complain or be compensated for a problem, being a non-local and not speaking the native language won't help your position. 

For what it's worth, the rules in the Netherlands for what firms are supposed to do when running a brokerage business are broadly consistent with what the UK rules are - that's why 'passporting' of regulatory permissions around the EU is allowed and customers can choose to buy their services from service providers across EU internal borders. It is feasible that this could change in the longer term when the UK has extricated itself more fully from the EU, because although we want EU business, maybe we won't want it enough to prioritise it over other political or economic ambitions.

johnburman

All noted and of course you are correct.  BUT which country's Regulation and framework  protects the consumer in real life better?  UK or Holland..or are they equal?

bowlhead99

johnburman said:

All noted and of course you are correct.  BUT which country's Regulation and framework  protects the consumer in real life better?  UK or Holland..or are they equal?

Frankly the best thing I could recommend to you is to read all the regulation and framework documents published by the Netherlands together with the published history of compliance cases and first hand accounts of business failures in that country that you can find via the regulator, media, personal finance blogs etc etc. Then you can decide for yourself whether you think the regulation, framework and practical application of the rules are consistent, better or worse than what you know about the UK. There is little comfort in concluding that the regulations are broadly consistent, without that real-world day to day experience of the Netherlands financial sector and legal practice.

If you find that research process difficult because you're not familiar with the Netherlands financial sector, legal practice, business liquidations or the language spoken in the country, perhaps you could apply that concept (i.e. the fact that it's difficult doing detailed research on legal nuances in foreign countries) to how you would propose to assert your rights if your Netherlands broker of choice succumbs to fraud or business failure.

Will you have an English-speaking creditors' committee to whom you can introduce yourself and moan about why it is taking a long time and how much you should get back? Would you do as you have been able to do in the case of SVS, and complain to your MP that the regulator and compensation scheme is not adequately protecting you as well as it should? He would probably tell you that it is not his problem, as the failed business is outside his jurisdiction and he no longer has any colleagues who are MEPs.

The takeaway should be that while we can tell you that financial regulation is supposed to be consistent across the EU for the free movement of people and services, we cannot handhold you through the practicalities of how the equivalent of a 'special administration' is going to work after a business failure in a foreign country. Fortunately, Netherlands legal system is based on civil law (i.e. like French or German law, based on written laws and codes) rather than evolving as common law in the UK and USA where the rules are 'whatever is customary, based on case law'. So theoretically you 'should be able to find out' how stuff works once you've learned to speak Dutch, but may need to read plenty of case law and accounts of 'what really happened in the example of ABCXYZ NV', to actually understand nuances.

What I would suggest is that if a business failure follows your choice to have your assets held by a custodian in a foreign country to save you a few pounds of fees, then if something goes wrong and you don't like it, you only have yourself to blame. Technically, you have the business to blame, and you might have a regulator to blame for not helping you more effectively - but that is scant comfort.

It is like getting hit by a truck on a pelican crossing when the light is red for the truck - you can see the truck coming rapidly towards you and you know there's a possibility that he might not stop, but you don't hurry across because you have right of way and it's his fault if he hits you. When you are in hospital you can blame the trucker and his employer and the council or whomever, but practically, you can blame yourself for voluntarily exposing yourself for the risk and hassle, rather than hastily moving out of harm's way.

In a nutshell, that's why I haven't got meaningful amounts of money with brokerage services in other countries.