Trading Transaction Costs

[andyfuller]

Minimising the transaction costs is key so how about we try and compile a comprehensive list of Transaction Costs for the various trading methods which can then be used for reference? Add and/or remove where appropriate but put in a line as to why you have removed/added something at the bottom. Also probably best not to use abbreviations as chances are the list will be used by newbies who won't understand them.

Betfair:

1. Commission on Winnings
2. Premium Charge at either 20%, 40%, 50% or 60%
3. Data Charges
4. Transaction Charges


Spread Betting:

1. The Opening Spread
2. The Closing Spread
3.
4.


Futures:

1. Commission on Trades
2. Capital Gains Tax (18% or 28% yearly allowance of £10,100)
3.
4.

Shares:

1. Dealing Costs
2. Stamp Duty (If the purchase is valued at or under £1,000 no SD is payable, over £1,000 it is 0.5% which is rounded to the nearest £5.)
3. Capital Gains Tax (18% or 28% yearly allowance of £10,100)
4.


Exchange Traded Funds (ETFs):

1. Dealing Costs
2. Capital Gains Tax (18% or 28% yearly allowance of £10,100)
3.
4.

[superfrank]

Betfair:

1. Commission on Winnings
2. Premium Charge at either 20%, 40%, 50% or 60%
3. Data Charges
4. Transaction Charges

Spread Betting:

1. The Opening Spread
2. The Closing Spread
3.
4.

Futures:

1. "Commission" on Trades (comprises commission + exchange fees)
2. Capital Gains Tax (18% or 28% yearly allowance of £10,100)
3.
4.

Shares:

1. Dealing Costs
2. Bid/Ask Spread
3. Stamp Duty (If the purchase is valued at or under £1,000 no SD is payable, over £1,000 it is 0.5% which is rounded to the nearest £5.)
4. Capital Gains Tax (18% or 28% yearly allowance of £10,100)

Exchange Traded Funds (ETFs):

1. Dealing Costs
2. Bid/Ask Spread
3. Management Fee (typically around 0.3-0.5% which is deducted pro-rata from the price on a daily basis)
4. Capital Gains Tax (18% or 28% yearly allowance of £10,100)

When writing it all down it makes you realise how the buggers have the odds stacked against you!

[andyfuller]

Betfair:

1. Commission on Winnings (5% less your discount)
2. Premium Charge at either 20%, 40%, 50% or 60%
3. Data Charges
4. Transaction Charges


Spread Betting:

1. The Opening Spread
2. The Closing Spread
3.
4.


Futures:

1. "Commission" on Trades (comprises commission + exchange fees)
2. Capital Gains Tax (18% or 28% yearly allowance of £10,100)
3.
4.

Shares:

1. Dealing Costs (For example HSBC Charge if done online £12.95 per deal on both the buy and sell so £25.90 to complete a trade irrespective of the number of shares. They charge differently if traded on the phone and for shares that are quoted in € and $)
2. Bid/Ask Spread
3. Stamp Duty (If the purchase is valued at or under £1,000 no SD is payable, over £1,000 it is 0.5% which is rounded to the nearest £5.)
4. Capital Gains Tax (18% or 28% yearly allowance of £10,100) (If trading inside an ISA there is no CGT)
5. Inactivity Fee/Administration Fee (Barclays charge £12 for any quarter you do not trade)(not all brokers charge this)


Exchange Traded Funds (ETFs):

1. Dealing Costs
2. Bid/Ask Spread
3. Management Fee (typically around 0.3-0.5% which is deducted pro-rata from the price on a daily basis)
4. Capital Gains Tax (18% or 28% yearly allowance of £10,100)

[andyfuller]

When writing it all down it makes you realise how the buggers have the odds stacked against you!

You can say that again! Good to get a better understanding of the costs involved!

[superfrank]

Betfair:

1. Commission on Winnings (5% less your discount)
2. Premium Charge at either 20%, 40%, 50% or 60%
3. Data Charges
4. Transaction Charges

Spread Betting:

1. The Opening Spread
2. The Closing Spread
3.
4.

Futures:

1. "Commission" on Trades (comprises commission + exchange fees. Example (Mirus Futures current commissions per contract/trade): http://www.mirusfutures.com/sites/default/files/pdf/Mirus_Futures_Product_Info.pdf)
2. Capital Gains Tax (18% or 28% yearly allowance of £10,100)
3. Account Deposit/Withdrawal Costs (£/$ exchange rate/commission)
4.

Shares:

1. Dealing Costs (For example HSBC Charge if done online £12.95 per deal on both the buy and sell so £25.90 to complete a trade irrespective of the number of shares)
2. Bid/Ask Spread
3. Stamp Duty (If the purchase is valued at or under £1,000 no SD is payable, over £1,000 it is 0.5% which is rounded to the nearest £5.)
4. Capital Gains Tax (18% or 28% yearly allowance of £10,100) (If trading inside an ISA there is no CGT)
5. Inactivity Fee (not all brokers charge this)

Exchange Traded Funds (ETFs):

1. Dealing Costs
2. Bid/Ask Spread
3. Management Fee (typically around 0.3-0.5% which is deducted pro-rata from the price on a daily basis)
4. Capital Gains Tax (18% or 28% yearly allowance of £10,100)

I've added Mirus Futures current commissions link as an example and 'Account Deposit/Withdrawal Costs (£/$ exchange rate/commission)' to the Futures section.

[andyfuller]

Betfair:

1. Commission on Winnings (5% less your discount)
2. Premium Charge at either 20%, 40%, 50% or 60%
3. Data Charges
4. Transaction Charges


Spread Betting:

1. The Opening Spread
2. The Closing Spread
3. Roll Over Costs (**example needed**)
4.


Futures:

1. "Commission" on Trades (comprises commission + exchange fees. Example (Mirus Futures current commissions per contract/trade): http://www.mirusfutures.com/sites/default/files/pdf/Mirus_Futures_Product_Info.pdf)
2. Capital Gains Tax (18% or 28% yearly allowance of £10,100)
3. Account Deposit/Withdrawal Costs (£/$ exchange rate/commission)
4.


Shares:

1. Dealing Costs (For example HSBC Charge if done online £12.95 per deal on both the buy and sell so £25.90 to complete a trade irrespective of the number of shares. They charge differently if traded on the phone and for shares that are quoted in € and $)
2. Bid/Ask Spread
3. Stamp Duty (If the purchase is valued at or under £1,000 no SD is payable, over £1,000 it is 0.5% which is rounded to the nearest £5.)
4. Capital Gains Tax (18% or 28% yearly allowance of £10,100) (If trading inside an ISA there is no CGT)
5. Inactivity Fee/Administration Fee (Barclays charge £12 for any quarter you do not trade)(not all brokers charge this)
6. Account Deposit/Withdrawal Costs (£/$ exchange rate/commission/some deposit or withdrawal methods can incur a charge)


Exchange Traded Funds (ETFs):

1. Dealing Costs
2. Bid/Ask Spread
3. Management Fee (typically around 0.3-0.5% which is deducted pro-rata from the price on a daily basis)
4. Capital Gains Tax (18% or 28% yearly allowance of £10,100)


Added in a few examples and point 6 on Share Trading and point 3 on Spread Betting

[superfrank]

On Shares I think 5 is a bit OTT and covered by Dealing Costs (depends on the type of share dealing a/c whether or not such costs apply) - we should keep in fairly straight forward. 'not sure about 6 too, only for non-UK shares?

Another section we should add is

Retail Forex (e.g. FxPro)

1. Bid/Ask Spread
2. Overnight Financing (of positions)

[andyfuller]

Reason I put 5 in on shares was because I was talking to a friend and it was one of the first things he mentioned. He only trades part time and used to have a few accounts, he then consolidated them into one after being charged the inactivity fee with Barclays. So perhaps worth leaving in just so people are aware of it.

Reason for 6 on Shares was because Barclays charge you £20 unless you withdraw cash (I assume from a branch?) if you do a wire (electronic transfer?) they charge likewise with HSBC if you do an electronic fund transfer with a non HSBC account you get charged £30! So perhaps again worth leaving in just so people are aware of it.

Some of them if they could get away with it would probably charge you if you visit their office and accidentally fart

Edit: Though thinking about it you are probably right - there are pages detailing all the little charges you could be hit by so probably best to keep it to the main ones rather than splitting hairs about all the small ones. For example BF charge I think if you use certain withdrawal methods but they are rarely mentioned. So when next updating perhaps remove 5 and 6 like you suggest.

[xitian]

Betfair:

1. Commission on Winnings (5% less your discount)
2. Premium Charge at either 20%, 40%, 50% or 60%
3. Data Charges
4. Transaction Charges


Spread Betting:

1. The Opening Spread
2. The Closing Spread
3. Roll Over Costs (**example needed**)
4.


Futures:

1. "Commission" on Trades (comprises commission + exchange fees. Example (Mirus Futures current commissions per contract/trade): http://www.mirusfutures.com/sites/default/files/pdf/Mirus_Futures_Product_Info.pdf)
2. Capital Gains Tax (18% or 28% yearly allowance of £10,100)
3. Account Deposit/Withdrawal Costs (£/$ exchange rate/commission)
4.


Shares:

1. Dealing Costs (For example HSBC Charge if done online £12.95 per deal on both the buy and sell so £25.90 to complete a trade irrespective of the number of shares. They charge differently if traded on the phone and for shares that are quoted in € and $)
2. Bid/Ask Spread
3. Stamp Duty (If the purchase is valued at or under £1,000 no SD is payable, over £1,000 it is 0.5% which is rounded to the nearest £5.)
4. Capital Gains Tax (18% or 28% yearly allowance of £10,100) (If trading inside an ISA there is no CGT)


Contracts For Difference (CFDs):

1. Commission on Trades (For example 0.05% of trade value, with a minimum of £3)
2. Capital Gains Tax (18% or 28% yearly allowance of £10,100)
3. Cost of leveraged financing (This is similar to 3 in Spreadbetting, Roll Over Costs. Since you only need to have a margin of the total value in your account, you pay interest on the money you've effectively borrowed)


Exchange Traded Funds (ETFs):

1. Dealing Costs
2. Bid/Ask Spread
3. Management Fee (typically around 0.3-0.5% which is deducted pro-rata from the price on a daily basis)
4. Capital Gains Tax (18% or 28% yearly allowance of £10,100)


Removed 5 and 6 on Shares as suggested.

I've added trading CFDs as I think it's a realistic alternative to shares since there is no stamp duty. I also believe there's only stamp duty on UK shares, and not on US shares, say. (Please correct me if I'm wrong though). CFDs are typically only sold on UK shares. At the moment I'm not sure what the spreads are like on CFDs, but I'd expect much more hospitable than spreadbetting, even after commission/costs. You'll pay capital gains tax on CFDs, but that's not necessarily and issue since financial markets are quite scalable.

Like others in this forum I'm actively looking to move into financial trading. Initially I'm looking at UK CFDs or US stocks. For a decent brokerage that a lot of professionals use take a look at Interactive Brokers (http://www.interactivebrokers.com). I haven't opened an account with them yet, but that's my plan once I'm up to speed.

[andyfuller]

I also believe there's only stamp duty on UK shares, and not on US shares, say. (Please correct me if I'm wrong though).

That is correct from what I can see, you pay it when you buy the shares only as I understand. I think you have to pay a Securities and Exchange Commissions Levy on US Equity sale of 0.00192% of US $trade value (?)