Interactive Investor Bid Offer spreads

Arch01

I noticed an old thread on this forum from 2011 raised by someone asking for advice on why Bid / Offer spreads are so large with interactive Investor (II).  I carefully read through the thread but it meandered off topic before the original question as answered.  I have the same question again, the II bid / offer spreads are so large I'm on the verge of switching to another platform such a Halifax Share Trading.  II's own answer to this question focused on the fact that share price volatility drives wider spreads (yep) but didn't answer why their spreads are much wider than other platforms for the same stock.  Here are a couple of examples amongst many:
Lindsell Train Investment Trust.  Bid / Offer.  II is £1,100 / £1,200 (spread of 13.64%).  London Stock Exchange and other platforms such as HL is £1,190 / £1,210 (spread of 1.68%).  So trading with II means I'd need a 13% total return before I started to make a nominal return!
Personal Assets Investment Trust.  II is £430 / £450 (spread of 4.65%). LSE, HL, etc are £450.5 / £451 (spread of 0.11%).

bowlhead99

When you say the spreads are so wide, presumably that is just when you are looking at a free price feed or stock information screen (and currently it is out of hours so the values may be garbage).

When you actually place a trade during market hours you will get a 15s time window in which to accept or reject a price, and they will generally be getting those quotes from the same market makers as HL, AJB, etc etc. Likewise if you place a stop or limit order out of hours, once the market opens they are unlikely to place a trade for you outside the standard bid-offer spread unless your trade is bigger than normal market size, because you would be able to go back to them later and pull them up on it saying they didn't get you anywhere near best execution based on other published trades around that time.

If you are trying to trade several hundred PNL shares at £400 each then you might find you are unable to get a firm quote within the standard bid-offer spread published on london stock exchange  website (given markets are relatively quiet in the summer holidays and only a couple of hundred thousand pounds worth of PNL shares changing hands today) and might have to accept a worse price, but remember the bid offer prices (unless you are actually requesting a firm quote at the moment of placing the trade) are always 15 mins out of date and at the start of the trading day it can take a while before the delayed-published bid-offer price starts to move.

masonic

I've never experienced larger than expected spreads when trading. Are you just looking at the indicative spread? To evaluate properly, you need to compare the price you get through II with published trades from an LSE feed at approx the same time. It has been remarked in several other threads that some platforms widen spreads considerably when markets are closed.