What’s the deal?
Guardian Shares is an online dealing service charging £6.94 for purchases and sales of UK shares. The execution-only service has been launched by Guardian Stockbrokers, a privately-owned advisory broker.
For trades up to £50,000, the commission is a flat £6.94. For bigger trades, an extra 0.075 per cent is charged on the incremental value, up to a maximum of £29. There is an inactivity fee of £6.94 for every month an investor does not trade.
The service, which allows access to foreign markets at commissions starting at €8 or $10, uses a dealing platform provided by Interactive Brokers (IB), a US firm.
Is this good?
£6.94 undercuts existing online brokers, which typically charge about £12. It also beats most brokers’ “frequent trader” tariffs.
What’s the catch?
For investors who do not deal very often, the Guardian service could end up being expensive. An investor who made trades in only four months of a year, for example, would be charged a further £55 for eight months’ inactivity fees. Guardian also charges a £7 fee per cash withdrawal after the first transfer.
Established brokers warn that Guardian’s service is unproven. The broker has only been operating for a year although IB, its platform provider, is said to process 1m trades a day and has been around for 32 years. Guardian says that were its business to fail, investors’ claims would be through IB under the US Securities Investor Protection Corporation (SIPC) and Lloyd’s of London insurance – rather than the Financial Services Compensation Scheme (FSCS).
What’s the alternative?
Interactive Investor charges one of the lowest standard commissions of £10 a trade. It is also waiving the commission on its regular investment service – which makes bulk purchases for investors – until June 30 2010. The biggest execution-only stockbrokers include Barclays, TD Waterhouse and Selftrade.
How do I find out more?
www.guardianstockbrokers.com
www.iii.co.uk
