I maybe missing something, but isn’t it better to open an account in the currency of the most traded stocks? Eg. I live in the UK so I open an account in a domestic currency even I mostly trade stocks on the US stock market. I bought a stock on the US market last year for 100, and I pay £90. After a year, the share price hasn't changed (it's still 100), but the exchange rate has changed and when I sell it I will get $100, but it will be only £70 in my account. FX risks can’t be prevented by opening an account in domestic currency.
I don’t see any advantages of opening an account in the local currency (if you mostly trade stocks on the US stock market), in fact, after introducing this fee, I see only disadvantages.
when people in the UK buy a US stock at the moment there is no fx fee, the new fee coming in means that there will now be a fee to do that. So to avoid that fee you want to buy US stocks in US dollars. You are talking about FX rates changing over time which doesn’t change.
yes, I think we both understand it, many people have bought USA stocks in a currency other than US dollars and now they are stuck as when they go to sell them there will be a fee which they can’t avoid. So they want to have an account in the currency they trade with but it’s too late now.
The risk is present either way. If you open the account in USD, once you sell your stocks and ask for reimbursement to your bank account you will get the money in your domestic currency (euros, pounds etc).
Also I find it hard to have a stock that doesn’t move after a couple minutes let alone after one year.
Finally fx can work both ways, I had plenty of cases where I was making a loss on the price and an overall gain because of the fx.
The fx fee only applies if the dividend is paid in a different currency from that of you account.
If your account is in pounds and the dividend is paid by a company that has the stocks.in pounds, there is no fee because there is no fx conversion
If the dividend is paid in USD and is only a few cents, you’re assuming that they work out the amount in GBP first and then deduct 0.15% from that heavily rounded amount, resulting in a disproportionate fee. However, what they will actually do is adjust the spot exchange rate by 0.15% and then round afterwards. I think this approach is very unlikely to make a noticeable difference to very small dividends.
For example, if you receive a dividend of 0.06 USD and the spot exchange rate is 1.4 then that’s 0.042857 GBP, which I assume is rounded down to 0.04 GBP. In the future, the spot exchange rate will be increased by 0.15% (in this example to 1.4021) resulting in 0.042793 GBP, which is exactly 0.15% less, but will still be rounded down to 0.04 GBP. That’s my interpretation of the email you received.
Of course, they could just reduce the 0.042857 by 0.15% to get the same result of 0.042793! The important thing is that they have to apply the percentage before they do any rounding to avoid skewing the results.
However, I suspect that they’ll use the artificially increased exchange rate and show it everywhere that an exchange rate is currently displayed. To the casual user, it won’t be obvious that anything has changed.
Personally I have no objection against the fees per se, but only if we have a properly functioning app. Once fees appear and the app still lacks some necessary functionality, then there are other better platforms.
Makes sense now.
