EToro, the popular retail trading company, announced recently that it would not add any charges to its raw market spread, paving the way for zero-commission stock trading.
Zero commissions for British users
The multi-asset social trading platform announced today that it would be offering zero commission trading to its customers based in the United Kingdom. The facility will be available for buying and selling stocks using the eToro platform. Some other companies of the industry have also taken similar paths, most notably Robinhood, a newbie American stock trading platform which allows commission-free trading to its users for not just stocks but cryptocurrencies as well.
EToro’s competitors have increased their spreads instead of removing the trading commission of stocks. This helps them retail the zero-commission tag while nullifying any benefits to the users. Whatever they save by not paying commission is paid in the form of more fees. EToro clarified that it would not follow this path and would remove any charges from the raw market spread during stock trades.
Helping Britain invest
The UK managing director of eToro Iqbal V. Gandham said that the company is “on a mission to get Britain investing. First step, make it far more affordable.”
He said that a first-time investor who is willing to buy a few stocks would probably be unable to justify the 3% trading fee. This investor will either drop the idea of investing completely or would only be unpleasantly surprised later when he finds out the cost of investing. Gandham called it an “instant barrier” to investing. The company, therefore, is trying to make the process simpler for the investors- they will have to pay zero transaction fee, there will be no custody charges, no mark-up on spreads and zero stamp duty.
Only a small group of brokers are providing similar zero-commission stock trading services to their users at the moment. Prominent ones include JFD Brokers who launched their service last month and London-based Trading 212 which launched commission free trading in CFD brokerages and forex in September last year. BUX, a trading application also provides similar services to its users. Trading 212’s offerings are very unique amongst them all as commission-free trading is relatively new in CFD and FX space. The space was closed for the brokers because the European Securities and Markets Authority (ESMA) required them to change-up their product mix on offer.
EToro’s recent move suggests that just like its peers, it is also throwing its weight behind physical stock trading. The company hasn’t provided a timeline for the launch of its zero-commission service yet.
eToro is a multi-asset platform that offers both investing in stocks and crypto assets, as well as trading CFDs.
Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Past performance is not an indication of future results.
Cryptoassets are volatile instruments which can fluctuate widely in a very short timeframe and therefore are not appropriate for all investors. Other than via CFDs, trading crypto assets is unregulated and therefore is not supervised by any EU regulatory framework.