Trading European with Freetrade
Freetrade’s 1.20 million registered users will be able to trade these stocks on a commission-free basis; the introduction of European stocks means that Freetrade now offers investing in more than 6,000 tradable instruments to its client base.
In the coming weeks, Freetrade will roll out trading in stocks from Austria, Belgium, the Netherlands, Portugal and Sweden.
How does Freetrade access European markets?
Freetrade has partnered with CBOE Europe, which operates two MTFs, or multilateral trading facilities, that provide online two way trading in UK and European equities.
Freetrade has also struck a deal with Euro CCP a central counterparty and clearinghouse, who in conjunction with Clearstream will provide settlement and custody services to Freetrade.
Freetrade customers will now be able to trade in and own European shares directly, rather than having their trades settled as crest depositary receipts over the underlying shares as is often the case currently.
Though I suspect this is a distinction that many retail traders won’t pick up on or fully grasp.
Speaking about the launch CEO and Founder of Freetrade, Adam Dodds said:
“The addition of European stocks to the platform is a key step for us as we begin our expansion into Europe and beyond. Our mission is to get everyone investing while keeping prices low.”
And added that:
“Freetrade’s unique direct to market access and proprietary brokerage platform helps to unlock cost-savings that we can pass onto our customers through a simple and low-cost investment experience.”
Whilst Natan Tiefenbrun, Head of Equities, Cboe Europe, said:
“We support Freetrade in their quest to offer customers a pan-European investing experience, and are delighted to welcome Freetrade as a participant of Cboe Europe”
How can Freetrade offer commission Free trading In Europe?
Freetrade has not expanded on how it is able to offer European share trading for free, given that payment for order flow, or PFOF, is banned in both the UK and the EU.
However, it is not alone in offering these services, Flatex AG parent of pan European broker Degiro, announced in late November that it would be offering commission-free trading on European stocks, without resorting to PFOF or similar incentive schemes, Flatex did not explain how that trading would be facilitated.
We are all for competition and customer choice. However, we also believe that there are no free lunches in the markets and that when a service is free then it’s quite likely that the customer is the end product.