Investa has launched completely free US share trading, removing not only dealing commissions but also the foreign exchange fees that investors would normally expect to pay when buying American stocks from the UK.
The FCA-regulated options trading app says customers can now buy and sell US shares without commission, FX charges or other trading fees, making Investa the first UK platform to offer US share trading on this basis.
There is a fair use policy, though. Each account can trade free of charge until it reaches one of three annual limits: £250,000 in total trade value, 50 trades or 5,000 shares traded, whichever comes first.
Free stock trading designed to bring investors into options
One of the key problems of not charging fees on FX for US stock investing is that this is how UK brokers have traditionally made money, as commissions and account fees have gradualy been removed by other providers.
But, with Investa, options are their core product.
Alec Beasley, co-founder of Investa, told Good Money Guide exclusively:
“To make options trading far more accessible, we’re removing the barriers to share trading. Options remain our core product, so FX fees still apply there, but I think pairing options trading with free share trading is a compelling reason for investors to use Investa. This also sets the stage for our upcoming launch of covered calls, allowing customers who own stock to sell calls against it and generate income.”
That gives some context to why Investa is prepared to remove FX fees from ordinary share dealing. Rather than necessarily treating US stocks as a standalone product, the company is building an ecosystem in which investors can own the underlying shares and then use options alongside them.
Investa already provides access to more than 300,000 options contracts covering popular US shares and ETFs. Options can be traded without commission, although other charges, including FX fees, may apply.
Covered calls are coming next
Investa say this is part of their strategy to introduce covered calls.
A covered call involves owning shares and selling call options against those shares. The investor receives the option premium, potentially generating additional income from a portfolio, but in exchange accepts that the shares may be sold at the option’s strike price if the option is exercised.
It means Investa’s free share dealing service could effectively provide the first part of the strategy: customers acquire US shares through the app and will subsequently be able to write options against those holdings.
This could help Investa differentiate itself from the increasingly crowded commission-free investment platform market, where most providers have concentrated on making it cheaper and easier to buy shares and ETFs rather than integrating options strategies.
Investa was originally built around making options trading more accessible to UK retail investors through simplified product design and education-led onboarding. The company has raised £3.8 million from more than 1,000 investors and is now available on both iOS and Android.
The company has also been experimenting with giving customers a financial interest in its own growth. Eligible early users have previously been granted options on up to £1,000 worth of Investa shares, while a referral programme is due to offer qualifying customers and the people they refer options on £100 worth of Investa shares.
Richard is the founder of the Good Money Guide (formerly Good Broker Guide), one of the original investment comparison sites established in 2015. With a career spanning two decades as a broker, he brings extensive expertise and knowledge to the financial landscape.
Having worked as a broker at Investors Intelligence and a multi-asset derivatives broker at MF Global (Man Financial), Richard has acquired substantial experience in the industry. His career began as a private client stockbroker at Walker Crips and Phillip Securities (now King and Shaxson), following internships on the NYMEX oil trading floor in New York and London IPE in 2001 and 2000.
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