Keeping record of purchased NYSE stocks

MaxterMind

ColdIron said:

If you use one of the large established platforms the chance of them not having what you want to invest in is low. Does Trading 212 allow you to invest in funds (Unit Trusts/OEICs)?

I believe OEICs are not currently available.

bowlhead99

MaxterMind said:

ColdIron said:

If you use one of the large established platforms the chance of them not having what you want to invest in is low. Does Trading 212 allow you to invest in funds (Unit Trusts/OEICs)?

I believe OEICs are not currently available.

I don't expect they ever will be, with the model they have, because running an intermediary platform for open-ended funds requires different systems and processes from what they will use with exchange-traded instruments, and there's no easy mechanism to get fee income to support such an investment in infrastructure and people without incremental fees for their clients.   If you don't want to use open-ended funds because you are just looking at picking and choosing a few US shares as per your original post, no big deal.

Just a followup on yesterday's query on FSCS protection etc, I mentioned that if the broker goes out of business you could face a long wait and hassle to transfer your assets elsewhere to regain control of them. That would be expected to be relatively more complicated for Trading212 because many of their US sharetrading clients will hold 'fractional shares' for small amounts of value where a single share in e.g. Amazon common stock that T212 hold for clients is beneficially owned by several different clients who only want a few dollars or few hundred dollars exposure each, out of the $3000 stock value. By allowing fractional ownership (which most European brokers don't offer) they will make it relatively more difficult to extricate your personal holding at the end because (e.g.) Amazon's corporate share register only recognises T212 as the owner and not the 'fractional' owners who appear internally on T212's records. In order to have some other broker take over their client book and client assets, the liquidators / special administrator would need to move the business over to a new broker whose systems and processes could handle fractional ownership, which the majority of UK / European providers don't.  So, if they go out of business it could be quite a protracted process before you could be reunited with your assets.

MaxterMind

bowlhead99 said:

Just a followup on yesterday's query on FSCS protection etc, I mentioned that if the broker goes out of business you could face a long wait and hassle to transfer your assets elsewhere to regain control of them. That would be expected to be relatively more complicated for Trading212 because many of their US sharetrading clients will hold 'fractional shares' for small amounts of value where a single share in e.g. Amazon common stock that T212 hold for clients is beneficially owned by several different clients who only want a few dollars or few hundred dollars exposure each, out of the $3000 stock value. By allowing fractional ownership (which most European brokers don't offer) they will make it relatively more difficult to extricate your personal holding at the end because (e.g.) Amazon's corporate share register only recognises T212 as the owner and not the 'fractional' owners who appear internally on T212's records. In order to have some other broker take over their client book and client assets, the liquidators / special administrator would need to move the business over to a new broker whose systems and processes could handle fractional ownership, which the majority of UK / European providers don't.  So, if they go out of business it could be quite a protracted process before you could be reunited with your assets.

That's an interesting thought in relation to fractionals and certainly worth consideration.

Perhaps/presumably this risk would be reduced (or eliminated) if only whole shares are purchased, not fractionals?

bowlhead99

MaxterMind said:

bowlhead99 said:

Just a followup on yesterday's query on FSCS protection etc, I mentioned that if the broker goes out of business you could face a long wait and hassle to transfer your assets elsewhere to regain control of them. That would be expected to be relatively more complicated for Trading212 because many of their US sharetrading clients will hold 'fractional shares' for small amounts of value where a single share in e.g. Amazon common stock that T212 hold for clients is beneficially owned by several different clients who only want a few dollars or few hundred dollars exposure each, out of the $3000 stock value. By allowing fractional ownership (which most European brokers don't offer) they will make it relatively more difficult to extricate your personal holding at the end because (e.g.) Amazon's corporate share register only recognises T212 as the owner and not the 'fractional' owners who appear internally on T212's records. In order to have some other broker take over their client book and client assets, the liquidators / special administrator would need to move the business over to a new broker whose systems and processes could handle fractional ownership, which the majority of UK / European providers don't.  So, if they go out of business it could be quite a protracted process before you could be reunited with your assets.

That's an interesting thought in relation to fractionals and certainly worth consideration.

Perhaps/presumably this risk would be reduced (or eliminated) if only whole shares are purchased, not fractionals?

My guess is that even if you personally only purchased whole shares (meaning your personal record of ownership of the underlying assets was not complex) the issue is that fractionals is a service that thousands of their clients will have taken advantage of.

Meaning that (for example) you might have 5 Tesla shares but another client would have 4.28 shares and another client 0.117 shares and another client 128.383 shares and another client 12.22 shares, so altogether T212 are holding 150 shares for nominee clients and when the administrators are looking for other broking businesses with the appetite to take on the assets and the clients, they will only really be able to look at the very small pool of European brokers who offer the ability to handle fractional slices of shares - unless they have the resources to somehow going to buy all those clients out of their fractional ownerships to leave them with whole number of shares like you have yourself. 

So the list of potential brokerages able to take on the business is filtered down to a very small number, if any.  This would inevitably make for a protracted process while you sit around twiddling your thumbs being disappointed that you don't have access to sell your shares because of your broker having gone out of business and going through a special administration/ liquidation process. The longer it takes, the greater the chance of losses or opportunity costs as a result of price movement in the underlying assets while everything is snarled up in red tape and admin.

MaxterMind

bowlhead99 said:

My guess is that even if you personally only purchased whole shares (meaning your personal record of ownership of the underlying assets was not complex) the issue is that fractionals is a service that thousands of their clients will have taken advantage of.

Meaning that (for example) you might have 5 Tesla shares but another client would have 4.28 shares and another client 0.117 shares and another client 128.383 shares and another client 12.22 shares, so altogether T212 are holding 150 shares for nominee clients and when the administrators are looking for other broking businesses with the appetite to take on the assets and the clients, they will only really be able to look at the very small pool of European brokers who offer the ability to handle fractional slices of shares - unless they have the resources to somehow going to buy all those clients out of their fractional ownerships to leave them with whole number of shares like you have yourself. 

So the list of potential brokerages able to take on the business is filtered down to a very small number, if any.  This would inevitably make for a protracted process while you sit around twiddling your thumbs being disappointed that you don't have access to sell your shares because of your broker having gone out of business and going through a special administration/ liquidation process. The longer it takes, the greater the chance of losses or opportunity costs as a result of price movement in the underlying assets while everything is snarled up in red tape and admin.

Thank you for this It's certainly an interesting avenue of thought which I had not previously considered.

bowlhead99

MaxterMind said:

bowlhead99 said:

My guess is that even if you personally only purchased whole shares (meaning your personal record of ownership of the underlying assets was not complex) the issue is that fractionals is a service that thousands of their clients will have taken advantage of.

Meaning that (for example) you might have 5 Tesla shares but another client would have 4.28 shares and another client 0.117 shares and another client 128.383 shares and another client 12.22 shares, so altogether T212 are holding 150 shares for nominee clients and when the administrators are looking for other broking businesses with the appetite to take on the assets and the clients, they will only really be able to look at the very small pool of European brokers who offer the ability to handle fractional slices of shares - unless they have the resources to somehow going to buy all those clients out of their fractional ownerships to leave them with whole number of shares like you have yourself. 

So the list of potential brokerages able to take on the business is filtered down to a very small number, if any.  This would inevitably make for a protracted process while you sit around twiddling your thumbs being disappointed that you don't have access to sell your shares because of your broker having gone out of business and going through a special administration/ liquidation process. The longer it takes, the greater the chance of losses or opportunity costs as a result of price movement in the underlying assets while everything is snarled up in red tape and admin.

Thank you for this It's certainly an interesting avenue of thought which I had not previously considered.

On the SVS Securities thread where people have been waiting over a year and are only now gradually getting access to their assets at the new broker to allow them to liquidate their assets or transfer them to a provider of their own choosing, there are a lot of disgruntled clients who had never previously imagined there would be any problem, and used the service because it was cheap.  The service they were offering to execution-only clients was straightforward, but they also had a mix of other clients including advised clients, a large proportion of the FX clients were based in China etc. 

So any new broker being selected as a one-stop-shop needed to be able to provide all the services and have the appetite to take on all the customers - otherwise there is going to be an even lengthier process where different brokers cherry-pick which piece of the pie they want to take on.  No amount of moaning from execution-only clients that 'this should be pretty simple' as they were eventually migrating to the new broker's platform, was able to speed up the process.

You may feel that all you are doing is buying a whole number of shares to buy and hold with T212, at almost zero cost. So, they are not going to make much or any money out of you, and will hope to subsidise it with income from other sources and other parts of their business. T212 operates primarily in UK and Bulgaria with a variety of client types and makes most of its money from CFD-trading clients and also offers fractional share dealing.  You might not be using those services and may be a simple UK-resident investor with simple needs, but its other clients don't necessarily share your customer profile. So, all of what its clients want to do is going to be part of the consideration if it goes titsup and an administrator is trying to transplant the operation and dump it into another business, or perhaps carve up different customers within the overall client base and have them taken on by a multitude of different brokers who each fight over the scraps of what services are required for what assets by what customers.  A sh1tshow that takes a year to fix.

Of course, it might all be fine and the worst may not happen, in which case people would say I was making a fuss over nothing and writing me off as an idiot who chose to pay more money for the service I needed from a more established name with tens of billions under administration.

MaxterMind

I noticed on the online application for a stocks & shares ISA that it asks if dividends should be reinvested, held in the account, or paid into the bank account.
Presumably this is just a matter of personal preference? There are no glaringly obvious benefits/disadvantages to the three choices?

bowlhead99

Paying it into your bank account will take it out of the ISA. As the contents of an ISA are tax free, and there is a limit to how much you can put into an ISA in any one tax year, it doesn't make a lot of sense to take the dividends out of the ISA and put them into your own personal bank account, if you are likely to want to put them back into investments again in the future. However, if you are nowhere near the ISA subscription limit it won't be much of an issue taking it out, because you could easily put it back in again if you changed your mind.

Other than that, yes it's just personal prefererence:
If you want to reinvest the dividends back into the companies that they just got paid out from, then you could ask them to automatically reinvest dividends  (assuming the dividends received are going to be enough to buy at least one share); whether that's efficient or not depends on whether they charge for reinvestment and what the minimum fee would be, as some providers have a minimum fee that can be quite high in relation to a small dividend amount, even if it is discounted from the price of a normal trade. 

Other people would prefer to accumulate the dividends in the account and have it spare and available to pay fees, or lump it together with other new money they're adding to the account from time to time  and make their own decisions on what to invest the spare money into next.

If you want to spend the dividend income on buying groceries, you would be best to have the dividends sent to your bank account, because they don't sell groceries inside the ISA. So it comes down to what your objectives are.

MaxterMind

Thanks you once again bowlhead99 for clarifying some things for me - much appreciated.

Langtang

Very interesting thread, thank you. I know nothing about investing or share buying at all, but we will be inheriting c2500 shares in a major US Oil Co that were accumulated over 2 decades working for a company - buying shares monthly from salary and getting the equivalent number of shares from the company - with that company then being bought out later by a bigger US Oil Co ( the dividend from these had been used to top up my FIL's pension for the last 20 years, and we would have a plan to do similar in the years ahead).

The paper trail of when they were bought, how much was paid, how many free shares were given and the exchange rate of old company shares to new company shares have been meticulously documented in a simple spreadsheet by my FIL.

The explanation of how to figure out how much they are worth on average is a revelation, as I have always been under the impression that you had to figure out which shares you were selling, when you bought them, how much for and how much they are worth now to figure out if you're liable for CGT. It appears to be much simpler than that, so thank you.

I would probably have plenty of questions to ask in the weeks and months ahead but my initial one would be should I move some of these into a S+S ISA?

We will, of course, be speaking with a financial advisor over the next while and I am sure we will get invaluable advice from them, but it's good to get a feel for what others would do here.