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Trading Platforms & Credit Risk


Don Coglione
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Don Coglione

What is the general feeling about the robustness of the various brokers and trading platforms? Do those who have more than £85k to invest share the love around, to keep within the FSCS guarantee, or is everyone happy to have in excess of this sitting with, for example, HL?

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Don Coglione
13 minutes ago, janch said:

This is not a problem for me so far!!

I'm with AJ Bell and they have been good for a beginner like me.

It has only now become a problem for me as our property sale completed last week and we have far too much money sitting in the bank!

I am officially a scummy STRer.

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I think there are two issues here if your FSCS protected broker goes bankrupt:

1. Loss of capital over £85k and

2. Loss of opportunity I.e selling/buying whilst auditors sort the mess out.

The former is irretrievable, the latter would take at least six months.

This then poses the questions,"What is the cost of protecting yourself?"

If we take a HL S&S isa the % is capped at £45 pa for stocks; other brokers are similar. So the `insurance` to avoid both of the issues above is £45, as a % of an £85k sum its 0.0529 %...worth it to avoid the loss?

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On 29/03/2020 at 16:05, MrXxxx said:

I think there are two issues here if your FSCS protected broker goes bankrupt:

1. Loss of capital over £85k and

2. Loss of opportunity I.e selling/buying whilst auditors sort the mess out.

The former is irretrievable, the latter would take at least six months.

This then poses the questions,"What is the cost of protecting yourself?"

If we take a HL S&S isa the % is capped at £45 pa for stocks; other brokers are similar. So the `insurance` to avoid both of the issues above is £45, as a % of an £85k sum its 0.0529 %...worth it to avoid the loss?

Seing how I only have 1.6k I'll be fine

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31 minutes ago, No One said:

Seing how I only have 1.6k I'll be fine

"Oh ye of little faith"..."This time next year we'll be millionaires Rodney!"

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  • 2 weeks later...

Sorry if this a dumb question.

If you bought say 10k [price paid] in each of BP RDSA BAT LLOY VOD and the broker, say HL goes tits up, what do you get back?

a. no of shares you supposedly hold in the 5 companies

b. 50k = the price you paid

c. 70k = the market value at a defined date ... what date ??

d. something else

And if you bought 100k in each of the 5 companies, do you only get 85k guaranteed back and lose the rest?

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Bus Stop Boxer

Just tried to open an account with Interactive Investor. They took card details and threw me out of their website.

I am deeply unimpressed. Nobody there can tell me the status of the application.

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On 09/04/2020 at 15:02, Bus Stop Boxer said:

Just tried to open an account with Interactive Investor. They took card details and threw me out of their website.

I am deeply unimpressed. Nobody there can tell me the status of the application.

I recommend iweb after a couple of weeks use.

Like most things I prefer the basic nature of it / simplicity which is the criticism levelled at it when comparing with others.

They set me up in a couple of weeks without problem but before shutdown and they've closed new applications now so you'd have to wait.

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On 08/04/2020 at 21:21, BWW said:

Sorry if this a dumb question.

If you bought say 10k [price paid] in each of BP RDSA BAT LLOY VOD and the broker, say HL goes tits up, what do you get back?

a. no of shares you supposedly hold in the 5 companies

b. 50k = the price you paid

c. 70k = the market value at a defined date ... what date ??

d. something else

And if you bought 100k in each of the 5 companies, do you only get 85k guaranteed back and lose the rest?

Really like to know the answer to this [before sticking over 85k in one place], if no-one here can answer, can anyone suggest a forum where someone will know?

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20 minutes ago, reformed nice guy said:

Thanks. Looks like a lead I can follow.

It doesn't really answer my question. That link says [about Beaufort collapsing in 2018, I'm assuming that's another broker?]:

Quote

Those protected by the Financial Services Compensation Scheme got their assets back, but were made to wait over eight months before being able to access them again (having been transferred as clients over to Share Centre).

Does that mean they got only the first 85k or all shares held but had to wait or ....?

... off to search Beaufort 2018 ....

There will be in any case a delay and inability to sell in that time but provided it's only a part of your assets and a very long term hold that bit doesn't bother you too much. Of course others will have a problem with that.

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Hmm that's even vaguer than the conclusions from looking at Beaufort.

The answer seems to be that you get the shares transferred to a new broker BUT you have to pay a cost for transfer to the new broker according to "Rule 135 of the Investment Bank Special Administration (England and Wales) Rules 2011."

https://www.pwc.co.uk/services/business-restructuring/administrations/beaufort/beaufort-faqs.html

FSCS will cover that cost up to the guarantee amount but I'm having a guess that the liquidator can charge what they like and it won't be cheap.

[Or at least that was the conclusion then.]

More info about Beaufort is here:

https://www.fca.org.uk/news/news-stories/information-customers-beaufort-securities-limited-bsl-and-beaufort-asset-clearing-services-limited

https://www.fscs.org.uk/failed-firms/beaufort/

Basically 10 customers only [out of how many?] were not covered by the then-50k fscs guarantee but how many lines were in their portfolio or what the amount was or even the charges applied by pwc are either not specified or buried more deeply than I looked so far.

Conclusion if you've got say 300k, 50 stocks, 20ETFs for example is you need to divide to different brokers .... or not. Still don't know. Maybe check what WICAO does.

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This is all pretty interesting, I'd always assumed that by owning shares I actually owned them and whether or not the broker bust was irrelevant, my shares were my shares. Shit.

If it's the case I may need the 85k then my first thought would be to use the biggest broker I can find and hope the government decided they're too big to fail...

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I wouldn't stick more than £85k with any of these fookers......look at what happened to worldspreads, I believe they were registered in Dublin, example of robbing paddies :P

Also avoid like a covid19 carrier any business registered in Cyprus....

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  • 4 weeks later...
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