The trend was started several years ago by Trading 212, who at the time launched the service as an alternative marketing strategy. but the initiative quickly grew into major business for the group.
Spread betting broker ETX Capital has previously offered equity trading for HNW clients and it has a three-person team dedicated to the space. Over recent months the equities team has even helped to raise money for a series of smaller companies. However, the move to offer commission-free trading is likely to have a wider appeal among the company’s 55,000 clients.
ETX’s new owners Guru Capital, who bought the business in 2020, have made no secret of their intention to broaden the services the company offers and this is no doubt part of that plan.
ETX will offer Commission Free trading on a range of leading equities including familiar names such as Tesla, Apple and Amazon but there will also make several UK blue-chips, such as Barclays available to traders.
However in a very important distinction, ETX Capital is offering commission-free trading on CFDs over these stocks and not the physical equities themselves.
Commission Free share trading is usually supported by the use of Payment For Order Flow or PFOF.
Under which a broker contacts with a market maker or high-frequency-trader (HFT) effectively selling their client’s order flow to that third party, in return for volume-related payments.
Those payments subsidise or offset the costs of running the Commission Free service, however,
PFOF is not permitted in UK or European stocks however ETX is perfectly at liberty to waive it’s comission charges on CFDs over the UK and European names of its choice.
UK broker Freetrade, who have built a business around Commission Free share dealing, has previously aggregated clients orders in UK stocks to greatly reduce the cost of trading, by dealing in bulk, just once or twice a day, rather than on a piecemeal basis.
Speaking about the new share trading service Nandik Barbhaiya ETX Capital’s CMO said
“We continue to see the demand for stocks increasing, but there are often so many barriers to new traders looking to try these. ETX wanted to give more people a simpler way to buy and sell these bigger stocks with no minimum charge or commissions”