Broker profile – The International Investor

IG

IG is one of the largest providers of leveraged trading services (such as spreadbetting and CFDs) globally. In September 2014, it launched stockbroking services covering the UK and a handful of other countries, with more international markets likely to be added in the future.

The UK service is notable for offering execution via Direct Market Access (DMA) as well as the more common Retail Service Provider (RSP) model. DMA can be useful to more active traders and the firm is one of only four UK platforms to provide this for retail investors – the others are iDealing, Interactive Brokers, and Saxo Bank.

For international investors, perhaps the most significant aspect of the service is the low FX conversion charge of 0.3% – this compares very well with almost all rivals at present. In addition, the firm also offers an ISA with no annual fee, which should make it a particularly competitive choice for holding international stocks in a tax-efficient account.

The Share Centre

Broker profile

A popular UK broker with a reputation for solid customer service, Share Centre offers access to the usual range of CREST-settled international stocks (those listed in the US, Canada and major European markets), traded through UK-based market makers.

The fee structure for this broker is unusual, making it slightly harder to compare than some peers. There’s a monthly fee of £1.8 (£1.5+VAT), after which investors can choose to pay 1% per trade with a minimum per trade of £7.5 or a further quarterly fee of £24 to get a flat rate of £7.5 per trade). Currency conversion costs – the big hidden expense of international investing for many investors – should be lower than most competitors since Share Centre says that it does not earn any additional commission from the market market’s FX spread (many brokers get the market maker to pad the FX rate and rebate a portion to them, earning an additional commission of which many investors remain ignorant).

That’s commendable, but otherwise the firm seems to offer a middle-of-the-road proposition in terms of both costs and international markets available. Feedback from users is generally positive and it may be a good choice for investors who want to hold a few international shares in a mostly UK-based portfolio. However, other UK providers offer cheaper or more comprehensive international services, so it doesn’t appear to be an obvious choice for those whose primary interest is overseas markets.

Barclays Stockbrokers

Broker profile

Barclays Stockbrokers’ international dealing service, known as International Trader, is a separate add-on service to their standard online dealing account for UK shares. The underlying international dealing platform is actually Saxo Bank’s, but pricing and range of markets differs from Saxo’s own product.

International Trader offers a reasonable wide range of major international markets for online dealing. It’s clearly pitched to compete directly against TD Direct Investing’s foreign dealing service, covers slightly more markets and could work a bit cheaper for some very active users. However, cash can only be held in sterling, euros and US dollars at present and each currency requires a separate account, in contrast to TD Direct’s multicurrency account covering a wider range of currencies. One notable limitation is that only a restricted range of international stocks can be held within a Barclays Stockbrokers ISA or SIPP at present.

Barclays also previously offered a telephone-only service called a Foreign Dealing Account that covers a slightly wider range of markets, but at higher cost. This is apparently no longer offered to new clients.

Interactive Investor

Broker profile

Interactive Investor was simply a white label for Halifax Share Dealing until it launched its own platform at the end of 2011. The international dealing service now covers a number of major US and European stocks that can be held through CREST, the UK’s securities clearing and settlement system. As with a number of UK brokers, foreign stocks are not traded directly on the overseas exchanges, but through Winterflood Securities, a major UK market maker.

The II service was popular with cost-conscious investors due to a straightforward fee structure with few charges other than trading commissions. However, charges were overhauled in the run-up to the retail distribution review and the firm now imposes a £20 quarter account fee – this is offset against trading commissions (and so includes two “free” regular trades). This is per individual rather than per account, so an investor holding a trading account and an ISA will only pay once – and accounts held by family members can be linked together to be covered by the same fee.

Investors can only hold and settle in GBP, meaning that every international trade has to be converted to sterling. Interactive Investor charges a 1% commission on currency conversion. With FX charges creeping up in recent years, this is towards the lower end of typical charges among many UK brokers, but is more expensive than the typically 0.25-0.5% cost through cheaper firms such as iDealing that simply pass on the market maker’s charges.

AJ Bell Youinvest (Sippdeal)

Broker profile

AJ Bell Youinvest (formerly known as Sippdeal) is best known as a pioneer in low-cost, online SIPPs, but the firm also offers regular trading accounts and ISAs. The firm offers an extensive range of funds and bonds in addition to UK and international shares.

The online international dealing service covers foreign stocks that can be held through CREST, the UK’s settlement system and securities depository, which essentially means major North American and European stocks. Some non-CREST markets are also available for telephone dealing, including some of the major Asian markets.

International trades are done through market makers rather than directly on the overseas exchange – the same method used by firms such as Hargreaves Lansdown, Selftrade and (for the most part) iDealing. Trading commissions are relatively low, but there is an additional cost in the form of a 1% FX charge, which increased from up to 0.5% at the beginning of 2014. This remains lower than most peers (at least for smaller trades), but represents a significant and unwelcome increase.

There are no set-up fees or annual fees for ISAs, which is one of the biggest selling points for this provider. The firm introduced an administration fee for SIPPs in 2014 for the first time, but remains one of the least expensive SIPP providers. Overall, Youinvest is one of the better-value UK brokers for international dealing, especially for investing in foreign shares within an ISA or a relatively small SIPP. Feedback on customer service is generally good.

Charles Schwab Global Account

Broker profile

Charles Schwab’s online global trading service is distinct from the international dealing option in its Schwab One Account and, unlike the latter, is only open to US citizens (US residents who don’t hold US nationality will apparently not be eligible). It offers online trading for 12 markets in Europe and Asia – some publicity material claims access to 30 countries, but this larger number refers to trading in foreign ADRs and OTC stocks, which is not the same as having direct access to an overseas exchange.

Fees are more competitive than the Schwab One telephone dealing offering. However, be aware of the currency conversion commissions (up to 1% over interbank rates) and also the 0.1% extra commission that Schwab’s local broker will add on – detailed rates are in Schwab’s fee guide [PDF]. On the plus side, this account has no minimum balance, other than requiring clients to already have a Schwab One account.

Overall, this is more realistic for smaller investors than anything Schwab offered previously, but it is still more expensive than Interactive Brokers and covers less markets than the similarly priced Fidelity.

Motley Fool Share Dealing

Broker profile

The share dealing service for the UK arm of finance site The Motley Fool is now a white label of the Interactive Investor service, having previously been operated by Halifax. The underlying product and charges are exactly the same as for Interactive Investor.

iWeb Share Dealing

Broker profile

iWeb was taken over by Halifax Share Dealing in 2003, but has continued to operate as a separate brand. The underlying service is identical, but iWeb generally has somewhat lower costs.

Trading commissions are £5 rather than £12.50, while a stocks and shares ISA has no annual fee through iWeb. However, there is a one-off charge of £200 to open an account, increased from £25 in March 2015. The 1.5% FX commission for international stocks is higher than the 1.25% for Halifax-branded accounts.

Overall, this means that the service is not especially competitive for larger international deals, but could suit investors looking to make smaller trades in major US and European stocks. For UK-only trading, the £5 per trade commission trade is extremely competitive, but the increased account-opening fee means that you will need to be relatively active to make the savings worthwhile.

Binck Bank

Broker profile

Binck Bank is the largest discount broker in the Netherlands. It also has divisions in Belgium and France, which offer much the same service but with different fee structures.

The company does not offer services in English, although some staff may be able to provide support. And for investing in stocks, there are plenty of alternative brokers for all the markets Binck trades that are already set up for English-speaking clients.

However, for investors who are looking for a wide range of instruments such as options and structured products covering European markets, Binck is reported to be a very useful low-cost provider if you’re prepared to learn enough key Dutch or French terms to operate the platform.

MubasherTrade Global

Broker profile

MubasherTrade Global (previously known as DUTrade) is an online trading platform run by Bahrain-based Mubasher Financial Services, which is a subsidiary of National Technology Group, a Saudi Arabian conglomerate. Mubasher FS is a large regional institutional brokerage and MubasherTrade Global is its move into serving retail investors.

As far as we know, this is the only platform offering an online trading service covering most of the Middle East and North Africa markets, making it potentially very convenient for investors interested in this region. Some markets and stocks may not be available to all users – for example, Saudi Arabia is restricted to Gulf Cooperation Council citizens only.

In terms of investor protection, Mubasher FS is regulated by the Central Bank of Bahrain and local rules require brokers to keep clients assets segregated from their own assets. However, investor should be aware that there is no investor compensation scheme in this jurisdiction to protect against worst-case scenarios.

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