SVS Securities - shut down?

manorhouse

What is the catch with Robinhood? The big catch is that Robinhood sells the data that you are trying to purchase a stock to high frequency traders so that the HFT can buy it before you and sell it to you at a higher price. This Robinhood is stealing from the middle class to give to the ultr wealthy.
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This is what you find in a few places online.
I place limits on buys and sells so does it matter ?
Do all / some of the other brokers do the same ?

manorhouse

FinecoBank Multi-Currency Trading Account*

I just read another review , i have an acc with Degiro, Fineco seem to have a slightly better rating .
I have a big holding in lonmin ( from uk list days ) these are just trapped in Degiro as they do not trade JSE.
Are they just as safe as degiro ? same protection ?
Whats not to like , i read they are very big .

johnburman

Manorhouse says realy interestingly:
What is the catch with Robinhood? The big catch is that Robinhood sells the data that you are trying to purchase a stock to high frequency traders so that the HFT can buy it before you and sell it to you at a higher price. This Robinhood is stealing from the middle class to give to the ultr wealthy.

Now is that right?  If it is it goes against the "best execution" rules surely?

BUT
I have been looking at the changes to the T&C of my Trading 212 account and they can now lend my stock at any time.  Yes they must "return" it to me before i sell, but that does involve a risk to me - what if, despite all the security obtained the recipient goes bust or can not give Trading 212 back my shares?
So
1  this perhaps explains why they can deal for me at no commisison (Yipee - what a lovely phrase); and no extra costs I have discoved 
2  means that the risks for me are higher than otherwise.  So I will 100% make sure that my total holdings, and therefore total theoretical losses, are uner £85k.  So it looks like in time I may be using RobinHood and other "no commission" companies outfits 

Here is a question though.  I am an ordinary XO client,: why woudl I not use a Nil commisison broker?  Why would I want to pay for a "platform" or "custody" fee.  For what; for what benefit?

 
 

bowlhead99

johnburman said:

I have been looking at the changes to the T&C of my Trading 212 account and they can now lend my stock at any time.  Yes they must "return" it to me before i sell, but that does involve a risk to me - what if, despite all the security obtained the recipient goes bust or can not give Trading 212 back my shares?

If brokers lend out stock, they will generally obtain security for it (e.g. a pledge of bonds of the equivalent value and intend to get more security for it over time if the equity value has gone up). However, if the recipient goes bust and 'all the security obtained', as you say, isn't enough, there can be a real loss. Some brokers offer different account types (with different fee models or levels of service) where you can optionally have an account where all your stock is in custody at all times with no stock lending allowed.  Degiro for example offers that as an option while I don't think Trading 212 does. 

T212 also has the 'fractional shares' concept where you may have partial or fractional shares on some stocks, which is nice if you just want to buy a tenner's worth of Amazon instead of paying £2000 at a time, but not good if you are trying to extricate yourself from their platform and take your stocks elsewhere (in the normal course of business or in the event of failure)

Here is a question though.  I am an ordinary XO client,: why woudl I not use a Nil commisison broker?  Why would I want to pay for a "platform" or "custody" fee.  For what; for what benefit?

If they are giving you a service and charging you enough money for that service to make a profit, the platform may be more likely to survive into the longer term which is good for customers who don't want to find themselves in a 'shut out for a year while the affairs of the failed firm all get sorted out' as happened at SVS.

While they have 'side income' they can offer you free services and hope they can up-sell you in time. If you don't succumb to that temptation you can get a really cheap service as the other punters go for those other services and generally allow them to make money to keep giving you the basic service for free.  

If they are not charging you a conventional fee for the service of acquiring assets and looking after them for you, and are instead relying on cross-subsidising the services  you want with the income from other types of services (CFD, FX and crypto trading etc) or by having their owners bankroll their operating losses while trying to grow market share, then the longevity of the service you're receiving may be more precarious.

Most of T212's group revenue in their last annual report came from CFDs and similar products, and while choppy markets (e.g. Corona, Brexit etc) may make for higher volumes and more income, they are taking risk onto their own balance sheet (through guaranteeing stop losses etc) and recent years have seen brokers/traders in some markets wiped out due to high volatility making their clients come unstuck (as happened to a bunch of FX trading platforms when the CHF unpegged itself from EUR in an unexpected move a few years back).

johnburman

bowlhead99 posits a good post.  As i say use these new "kids on the block" nil commission brokers with care.  And never invest more than £85k in any one account, but nil commission is a hell of a draw to simple XO clients.  Yes they may convince me to be a day trader (although their website is so poor there is no chance - there is no 15 second buy/no buy [or sell] period for one known price) 

Thrugelmir

johnburman said:

 there is no 15 second buy/no buy [or sell] period for one known price) 

A good reason to pay a small trading charge. When buying or selling £5k or £10k of a stock knowing what price you are trading at is invaluable. Marketing plays to people's inherent weaknessess. "Free"  being a classic ploy over the years. 

johnburman

Here is a thought.  In a post the following was said:
The US market was already a cheap place for trading compared to the UK average,  
Now what I want to know is why?  The UK has some of th elargest and oldes brokers in the world and a very old and established stock exchange...but why are they more expensive than the USA.

bowlhead99

johnburman said:

Here is a thought.  In a post the following was said:
The US market was already a cheap place for trading compared to the UK average,  
Now what I want to know is why?  The UK has some of th elargest and oldes brokers in the world and a very old and established stock exchange...but why are they more expensive than the USA.

US overtook UK as a financial centre last century and is the 'home of capitalism' these days, and there are huge economies of scale when investing large amounts for large numbers of people.  In Europe we have historically had more socialism and people have not needed to manage their own retirement accounts and fund healthcare etc from investment returns in the same way. 

The US has had companies offering cheap brokerage online longer than we have, and has five times the population even if the members of their population only had the same desire to invest as is seen in Europe. The little guy hoping to get rich off Wall Street is part of the American Dream (tm)

pafpcg

johnburman said:

The UK has some of the largest and oldest brokers in the world and a very old and established stock exchange...but why are they more expensive than the USA.

There are other ways of maintaining and growing a business in a competitive environment over decades than just offering the "cheapest".

This could vary from not having a truly competitive environment by forming a cartel (to exclude interlopers with an offering with which the cartel members cannot compete) to offering such old-fashioned things as "good value", reliability, "my father was at school with your father" and "would you fancy a afternoon at Henley?".

Actually, I was under the impression that the long-established brokers had been mostly bought-up by foreign finance houses, which might indicate that the simplest explanation is that there's a higher profit margin in the UK!

Thrugelmir

johnburman said:

Here is a thought.  In a post the following was said:
The US market was already a cheap place for trading compared to the UK average,  
Now what I want to know is why?  The UK has some of th elargest and oldes brokers in the world and a very old and established stock exchange...but why are they more expensive than the USA.

Think you are behind events. Most of the old brokerage privately owned houses were bought out many years ago.  

With around 80% of daily global trades conducted in just 110 stocks. There's plenty of small fish that volume processors have no interest in. Just not worth their bother. 

Besides which broking houses perform other usefull functions. Far from being reliant on trading activity for their income.