Variation in spread across brokers

27th Mar '21 by ricardomontalban

15 comments 672 reads

Hello, I am looking to reduce dealing costs and have been researching various ISA providers - iWeb look very cheap on the face of it £100 one off charge then £5 per trade - however - I was going through the shares they trade in to check that I could "transfer-in" my current shares from current provider and I noticed that their spread seems quite big.

Solid State (LON:SOLI) for example has a buy price of £9.20 and sell price of £8.70 - I had maybe naively assumed that the spread would be the same across all providers that have a custody charge but this doesn't seem to be the case - and it makes finding the best value providers much less straightforward.

I am running a "NAPS" type portfolio so should only have 40 trades per year max - I don't know whether its worth the hassle of switching providers if the face value can be skewed by these wider spreads. Currently with Fidelity who are great but not the cheapest (£10 per trade, 0.35% custody charge).

Does anyone know of a comparison site that somehow factors in spread variation to account charges, or of a cheap provider with tight spreads?

Richard

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gus 1065

27th Mar '21

Hi Richard.

Happy to defer to someone more knowledgeable than me, but I think most of the online broker platforms will have similar execution spreads on the grounds that their retail execution is pretty automated and they basically show the trade to whoever is making a market (the MM) in a particular share (usually 3 or considerably more for more liquid stocks) who then bid on the trade (buy or sell) depending on the position of their book. The platform takes its commission (£10 in the case of Fidelity) on the trade and the MM makes something from the spread. The spread you see quoted by the platform is a derivative of what the MMs are showing at any particular time.

In theory, as the platforms are simply passing through best execution from the MMs, the execution price at any point in time should be the same (assuming the platforms are all talking to the same MMs). You can try and get better execution if you use a less automated service (call a broker in person who then contacts the MM and negotiates a tighter deal) but these tend to charge higher transaction commissions. Also can help to place market orders inside the spread at a level you would be happy with - risk is you may not get filled and the price moves away from you. As I say, happy to defer to someone who has better insight/experience on how the process works.

Gus.

brballs

I use a similar discount broker x-o.co.uk . They also sometimes quote wide spreads like you mention. However if you put in a request for quote, you will almost always get a price within the spread. Taking your example for Solid State (LON:SOLI), I see all trades yesterday ranged between £8.81-£8.94. This was likely the "real" spread, if you put through a market purchase/sale yesterday.

sharw

It looks as if you got those prices today - very often when the market is closed some sites end up with silly spreads depending on when they captured the closing price. The clue is there for you to see on the iWeb site - "last updated 16 55"

I use iWeb, x-o and ii. It is very rare that prices differ. They always quote the official market spread and you often get within that. If you are buying 1000 shares quoted at, say, 90 - 94 and you can buy at 93, the discount is normally with all three brokers because it is the MM who offers the discount even though the broker will claim that "they" saved you £10.

Rusty2

My understanding is the spreads can vary because brokers/platforms use different market makers, the larger ones may use more.

I had concerns when I moved to IG from HL that the prices would be different but I have found them to be exactly the same, although IG can partially fill orders at better prices. It is not just the spread prices but the actual live quote prices that matter. I have managed to buy some shares at around the sale prices even on fairly wide spreads such as G4M.

It is not just the prices but being able to buy and sell when you want, sometimes there is no market, the larger brokers tend to be better, this can be important if you need to sell quickly, ie a profit warning.

On Solid State (LON:SOLI) on HL the highest price on Friday was 894p and lowest was 881p, so quite tight.

iWeb is Halifax, I heard mixed reports about them for share dealing. Probably not worth switching from Fidelity if the prices are worse.

IG Group (LON:IGG) if you make 3 trades in the previous month then trades are £3 per deal on UK shares. But there are issues with IG Group (LON:IGG),

To be clear that wasn't trades on HL it was the whole market.

See https://www.stockopedia.com/share-prices/solid-state-LON:SOLI/chart/ select 5D and candlestick.

By the by, in response to your original enquiry (does anyone know of a comparison site), you might find this useful.

http://www.comparefundplatform...

Gus.

(On closer inspection, I think it is out of date, e.g. it shows Fidelity as not offering a share dealing facility which has now been in place for a couple of years).

Metatron

Looking to transfer a current ISA with EQI to another ISA provider anyone with any knowledge as to any ISA providers who it will cost nothing to transfer an ISA to and who have fixed adminstrative costs & fixed commission costs on trades as opposed to rip off % of your portfolio annual costs or % commission charges on trades?

Warning transferring ISAs can take a long time and you won’t be able to trade those shares, some have reported it taking 6 months.

I believe this needs to improve by the authorities taking action.

Really there is a lot of room for improvement in U.K. platforms.

PLS1nve5t

Interactive Investor are okay - £9.99 per month and you get one free trade per month - useful if you top something up on a regular basis.

No other regular charges from what I remember. Website is a bit 1980's but it's adequate.

Its probably quicker to sell everything in your current ISA account and do a cash transfer to your new provider (keep it within the ISA wrapper). I did Hargreaves to II and it took about 4 or 5 weeks - its unnerving seeing a zero balance in both accounts during that period....

Indie

I use Barclays Smart Investor specifically to keep costs down. I pay £4 a month and £6 a transaction. I can only have UK shares, not foreign.

I was with Selftrade and when EQI took over and imposed their charges I got out. It took an age to transfer to iWeb who blamed EQI for the delay but I expect their were thousands of ex Selftrade customers also taking advantage of the free window. Do you have a free window now? If not consider the route of selling all and transferring cash. ii is mentioned - iWeb is opening fee then no annual fee. x-o has no annual fee.

carvalio

Agree with Herbie47, I transferred a JISA which only had one type of fund in, took 4 months. When I complained I was told that's a usual timeframe.

28th Mar '21

Cash transfers are quicker - their are no excuses on either side, though you may be out of the market for 4 or 5 weeks, its better than being locked into something for 4 to 6 months.

10th Apr '21

I'm still trying to transfer my cash, it is nearly 2 months now and still has not happened. HL keep saying they never received the transfer forms, I don't believe them. They don't answer emails from IG.
The other one is just a cash ISA, they got the form but then requested some information from IG, which they said they never received, so they said the whole transfer was cancelled, I went a bit mad with them.

Really I despair at the lack of service in this area.

14th Apr '21

There is an article in Investors Chronicle today about transfer delays between platforms. I don’t have access to it as I’m not a subscriber but seems there are many people suffering delays. I think the procedures should be improved and there should be a time limit imposed.

Variation in spread across brokers

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Ricardomontalban

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