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Freetrade[1] is a crowdfunded European alternative to Robinhood. [1] https://freetrade.io/ https://freetrade.io/

by krn 8y ago

tptacek 8y ago
Does Freetrade say somewhere that they don't pay for execution services from some other company? If they don't, is that a good thing? Doesn't that imply that they think they can outcompete Citadel and Two Sigma on execution? Because, like, they can't? Right?
- krn 8y ago
  > A year in the making, Freetrade has built a bona-fide “challenger broker,” including obtaining the required license from the FCA (the U.K. regulator), rather than simply partnering with an established broker as it is understood Revolut initially plans to do. This, Dodds explained on a call, has enabled the startup to plug directly into the capital markets “piping,” with as few intermediaries as possible. It means Freetrade can execute trades on its own behalf and ultimately be much more in control of its own destiny. It should also help the startup maintain a lower cost-base as the app scales. https://techcrunch.com/2018/10/02/freetrade/ https://techcrunch.com/2018/10/02/freetrade/
  - tptacek 8y ago
    I saw that, but that just says they have (in some circumstances) the option to place their orders. I'm unclear why that would necessarily be a good thing, but either way: have they made a clear statement that they're not farming retail orders out to other firms? If they are, they're going to get paid for them.
    - krn 8y ago
      Their entire business model seems to be extremely transparent[1], and they treat their users as customers, not products. I don't know what they are doing now, but I think that farming retail orders out is not something they would be focused on in the long run. It's more like "mobile-first Interactive Brokers for equity trading". [1] https://freetrade.io/pricing/ https://freetrade.io/pricing/
      - kasey_junk 8y ago
        If you read their order-execution statement they are very clearly doing things that are going to have bad execution. Their 'default' order price is a market order that they promise will not clear until after hours or the next day. https://freetrade.io/order-execution/ https://freetrade.io/order-execution/ This is quite possibly the worst way a retail investor could send in an order.
        krn 8y ago
        > Their 'default' order price is a market order that they promise will not clear until after hours or the next day. Isn't this only true for the non-paying users, who are not subscribers of their premium plan? That's probably their entire (freemium) business model. It's the same with Revolut: free users might lose more money in foreign exchange and withdrawal fees, which pushes them to upgrade[1]. [1] https://www.revolut.com/pricing https://www.revolut.com/pricing
        tptacek 8y ago
        Even if you pay them $10/mo (whether you trade or don't, and keeping in mind that most people shouldn't be trading most months!), they still charge you for "instant" orders (the kind they don't delay purposely) in the one market they actually execute orders in. Robinhood seems like a better deal.
        krn 8y ago
        That's a good point. It's hard to compare a crowdfunded company with a one burning through more than 500 mln USD in VC funding. But I see no reason why people shouldn't be increasing their passive portfolios every month if they can. And with many brokers, $10 is around a minimum commission for a single trade.
        tptacek 8y ago
        We are commenting on a thread about a brokerage with substantially lower fees than that.
kasey_junk 8y ago
freetrade.io uses market makers (or reserves the right to anyway): https://freetrade.io/order-execution/ https://freetrade.io/order-execution/ In the US they would be required to disclose how much they are being compensated for that. I don't know if that is a requirement for the UK so have been unable to magic search term my way to their disclosures.
- kasey_junk 8y ago
  Because I am curious about such things and had a moment I went and looked it up. In the UK payment for order flow is effectively banned (there are some firms who are trying to say they aren't brokers so it isn't payment for order flow but the FCA has taken a dim view of this practice). https://www.fca.org.uk/publication/thematic-reviews/tr14-13.pdf https://www.fca.org.uk/publication/thematic-reviews/tr14-13.... So for as long as freetrade is UK only I think you can probably assume they aren't receiving payment for order flow.

Freetrade[1] is a crowdfunded European alternative to Robinhood. [1] https://freetrade.io/ https://freetrade.io/

by krn 8y ago

Freetrade[1] is a crowdfunded European alternative to Robinhood. [1] https://freetrade.io/ https://freetrade.io/

Does Freetrade say somewhere that they don't pay for execution services from some other company? If they don't, is that a good thing? Doesn't that imply that they think they can outcompete Citadel and Two Sigma on execution? Because, like, they can't? Right?

krn 8y ago
> A year in the making, Freetrade has built a bona-fide “challenger broker,” including obtaining the required license from the FCA (the U.K. regulator), rather than simply partnering with an established broker as it is understood Revolut initially plans to do. This, Dodds explained on a call, has enabled the startup to plug directly into the capital markets “piping,” with as few intermediaries as possible. It means Freetrade can execute trades on its own behalf and ultimately be much more in control of its own destiny. It should also help the startup maintain a lower cost-base as the app scales. https://techcrunch.com/2018/10/02/freetrade/ https://techcrunch.com/2018/10/02/freetrade/
- tptacek 8y ago
  I saw that, but that just says they have (in some circumstances) the option to place their orders. I'm unclear why that would necessarily be a good thing, but either way: have they made a clear statement that they're not farming retail orders out to other firms? If they are, they're going to get paid for them.
  - krn 8y ago
    Their entire business model seems to be extremely transparent[1], and they treat their users as customers, not products. I don't know what they are doing now, but I think that farming retail orders out is not something they would be focused on in the long run. It's more like "mobile-first Interactive Brokers for equity trading". [1] https://freetrade.io/pricing/ https://freetrade.io/pricing/
    - kasey_junk 8y ago
      If you read their order-execution statement they are very clearly doing things that are going to have bad execution. Their 'default' order price is a market order that they promise will not clear until after hours or the next day. https://freetrade.io/order-execution/ https://freetrade.io/order-execution/ This is quite possibly the worst way a retail investor could send in an order.
      - krn 8y ago
        > Their 'default' order price is a market order that they promise will not clear until after hours or the next day. Isn't this only true for the non-paying users, who are not subscribers of their premium plan? That's probably their entire (freemium) business model. It's the same with Revolut: free users might lose more money in foreign exchange and withdrawal fees, which pushes them to upgrade[1]. [1] https://www.revolut.com/pricing https://www.revolut.com/pricing
        tptacek 8y ago
        Even if you pay them $10/mo (whether you trade or don't, and keeping in mind that most people shouldn't be trading most months!), they still charge you for "instant" orders (the kind they don't delay purposely) in the one market they actually execute orders in. Robinhood seems like a better deal.
        krn 8y ago
        That's a good point. It's hard to compare a crowdfunded company with a one burning through more than 500 mln USD in VC funding. But I see no reason why people shouldn't be increasing their passive portfolios every month if they can. And with many brokers, $10 is around a minimum commission for a single trade.
        tptacek 8y ago
        We are commenting on a thread about a brokerage with substantially lower fees than that.

kasey_junk 8y ago

freetrade.io uses market makers (or reserves the right to anyway): https://freetrade.io/order-execution/ https://freetrade.io/order-execution/ In the US they would be required to disclose how much they are being compensated for that. I don't know if that is a requirement for the UK so have been unable to magic search term my way to their disclosures.

kasey_junk 8y ago
Because I am curious about such things and had a moment I went and looked it up. In the UK payment for order flow is effectively banned (there are some firms who are trying to say they aren't brokers so it isn't payment for order flow but the FCA has taken a dim view of this practice). https://www.fca.org.uk/publication/thematic-reviews/tr14-13.pdf https://www.fca.org.uk/publication/thematic-reviews/tr14-13.... So for as long as freetrade is UK only I think you can probably assume they aren't receiving payment for order flow.