Spread difference?

sevenhills

I have just tried to find out how the different platforms compare. I looked at Hargreaves Lansdown and the price to buy Capita was 33.7, the price to sell was 33.81 to sell. That is now, when the markets are closed.

What is the buy price for the 'free' share traders?

How much does Interactive Investor, the free trading service, say is the price to buy Capita?

george4064

Not sure if you’ve got mixed up or the price was showing differently, but Friday’s closing price for Capita on HL shows as buy 33.81p and sell 33.70p..

Just remember that the price feeds for HL, II, AJ Bell etc all come from the price data feed from trades actually placed, so it’s always a good idea to see those actual transactions that have gone through. LSE Website here: https://www.londonstockexchange.com/stock/CPI/capita-plc/company-page then navigate to trade recap area.

I’m not sure what you are asking with regard to other platforms, are you asking if places like FreeTrade and Trading212 who offer commission free trading get the same bid/offer prices as a more traditional platform like HL?

sevenhills

george4064 said:

I’m not sure what you are asking with regard to other platforms, are you asking if places like FreeTrade and Trading212 who offer commission free trading get the same bid/offer prices as a more traditional platform like HL?

Yes.

A different share, one which is traded less often will have a wider buy/sell price. But do all platforms have the same bid/offer price?

george4064

sevenhills said:

george4064 said:

I’m not sure what you are asking with regard to other platforms, are you asking if places like FreeTrade and Trading212 who offer commission free trading get the same bid/offer prices as a more traditional platform like HL?

Yes.

A different share, one which is traded less often will have a wider buy/sell price. But do all platforms have the same bid/offer price?

Yes, in theory all platforms should have the same bid/offer price. However different websites will interpret the price data feed in slightly different ways so they might display different prices but when you go to actually get a quoted price they should be the same.

sevenhills

 

It sounds like you are saying there can be a difference?

The difference between the bid and ask prices is what is called the bid-ask spread. This difference represents a profit for the broker or specialist handling the transaction. So that is one way for the platforms to make some profit.

https://www.investopedia.com/ask/answers/06/bidaskspread.asp

According to Google the share price for Capita is -

Market Summary > Capita PLC

33.97 GBX

cloud_dog

sevenhills said:

What is the buy price for the 'free' share traders?

The problem with services like T212 (specifically) is that they batch buy/sell so you can never be certain of the precise price until they execute.

coastline

cloud_dog said:

sevenhills said:

What is the buy price for the 'free' share traders?

The problem with services like T212 (specifically) is that they batch buy/sell so you can never be certain of the precise price until they execute.

I don't know the precise answer but they've got to make money somewhere. So if a service is claimed " free " then you'd think the spread would be wider, eg...100p-95p
As far as I understand you need a broker who uses as many market makers as possible then you'd get something like 100p-99p or even better ? 
Platform providers normally have some notes explaining the situation . eg commonly known as " price improver " where they've used dozens of market makers to obtain a price. Then of course it's £10 to trade ? 

Barclays Price Improver | Barclays Smart Investor

DireEmblem

coastline said:

cloud_dog said:

sevenhills said:

What is the buy price for the 'free' share traders?

The problem with services like T212 (specifically) is that they batch buy/sell so you can never be certain of the precise price until they execute.

I don't know the precise answer but they've got to make money somewhere.

They make a profit from stock lending if you check out their website.

Similarly if you do your own research, a lot of brokers should have some details on 'best execution'.

It can all depend on where the broker routes the trade and the bid/ask spread from their partner broker, and the competition in the market.  Higher volumes of trading on stocks typically drive down the bid/ask spread.  You generally only need to approach market makers for lower liquidity stocks to get faster trade execution, otherwise you can wait for the auctions on the exchanges that try to aggregate buyers/sellers in bulk to get both sides a better deal.

Interactive Investor is not a 'free trading' service, and similarly with HL or other brokers, you should factor in all the costs in your comparison as you have said £10 a trade, but there is also platform costs as well.

I would include, additional trading fees, platform fees, execution times in your own review.

All the best.

Nebulous2

I'm not going to pretend I understand it, but free traders get paid for something called 'order flow,' effectively the broker they use gives them commission for sending business their way. There was some controversy about it, as it incentivises them to use brokers that pay the most, rather than those that give customers the best price. They also seem to put orders through in bulk, by which time the price may have moved. 

The article I read about this was from America, where awareness of the hidden costs is growing, and the model may be different here. 

DireEmblem

Nebulous2 said:

I'm not going to pretend I understand it, but free traders get paid for something called 'order flow,' effectively the broker they use gives them commission for sending business their way.

Please note that payment for order flow is illegal in the UK.

Thrugelmir

sevenhills said:

george4064 said:

I’m not sure what you are asking with regard to other platforms, are you asking if places like FreeTrade and Trading212 who offer commission free trading get the same bid/offer prices as a more traditional platform like HL?

Yes.

A different share, one which is traded less often will have a wider buy/sell price. But do all platforms have the same bid/offer price?

Platforms will have access to a number of execution venues. When you place your trade. The platform will offer you the best price that's currently available. Market markers make their money on the spread. If their not competitive then they won't transact any business.