Order Execution policy

Version 2.4, September 2021

Reading time: 4 minutes

Introduction

Freetrade Limited (“Freetrade”, “we”, “our”, “us”) will carry out orders instructed by you, as a retail client, in accordance with this policy. By placing an order through our mobile application you acknowledge and accept this.

As a regulated stockbroker we are required to take all sufficient steps to achieve the best possible result available to us when executing customer orders, taking into account a range of execution factors. This is referred to as the “best execution” requirement.

Factors in best execution

In considering how to handle an order we take into account the range of execution factors listed below. When handling orders for retail clients, price and cost are the execution factors we prioritise in determining the quality of execution, and deciding how to handle the order to get the best result available to us.

  • Price - This is the factor we place highest priority on when handling an order. We look to obtain the best possible market price available to us at the time of trading, and aim to avoid executing an order at a price that is worse than the price available on the primary venue of the instrument.
  • Cost - We do not pass on any direct execution costs to customers therefore this factor is unlikely to impact our customer orders, however in considering the execution venues we select to execute customer orders we take into account any execution costs that may be incurred by us or passed on to our customers.
  • Speed - While, as an investment-focused app, lightning fast execution is not the main focus, we consider and monitor the time it takes from a customer placing an order with us to executing it.
  • Likelihood of execution and settlement - We consider how likely orders are to execute and settle, for example by checking the liquidity levels of the instruments on the execution venues we use.
  • Size, nature and any other factors - We may also consider the size of an order, and any other characteristics when determining how to get the best possible result.

Execution venues

We rely on a number of market makers, executing brokers, trading venues and order routing providers to execute your orders. We monitor and review these third parties to ensure orders are executing in line with this Order Execution Policy

You can find the main execution venues we use to execute orders you place with us on this webpage. In some circumstances we may choose to direct your order to an execution venue not included in the published list. Our decision on which execution venue to direct your order to will be based on the Execution Factors set out in this policy.

How we execute your order, and which third parties we rely on depends on the instrument you are trading.

We may execute your orders outside of a UK or EU regulated trading venue. This would include where your orders are executed with our US broker, a US executing broker or on a US trading venue.

Under the FCA rules, we are required to obtain your prior express consent before we arrange for an order to be executed outside of a UK or EU trading venue. By consenting to this Order Execution Policy you express your consent to us arranging for your orders to be executed outside a UK or EU Regulated Market, MTF or OTF.

Orders in UK listed instruments

When you place an order in a UK listed instrument it is passed through an order routing system to the UK’s Retail Service Provider (RSP) network. The RSP network is a collection of market makers registered with the London Stock Exchange, designed to service retail customer orders in listed securities.

When you place an order we request price quotes from market makers on the network, and execute your order at the best price quoted to us at that time.

There may be instances where your order is rejected, for example, if no market makers provide quotes at the time you place your order, or if the quote we receive is at a price that is worse than the price available on the primary venue where that instrument is traded (and is outside of our tolerance for differences). In these situations we will notify you in app that your order has been rejected, and you will have the opportunity to place it again.

During the LSE market open auction and certain unscheduled intraday auctions RSP market makers are not obliged to provide quotes, therefore in these periods you are more likely to experience orders rejections.  

Orders in EU listed instruments

Orders in EU listed instruments are passed through our EU order routing system, and directed to one of the EU trading venues we are connected to. The trading venue that your order is directed to is determined by the type of order you place and the location of the primary listing of the instrument you are looking to buy or sell. Orders are placed on the selected trading venue’s order book and execute directly with other venue participants. The trading venues we send orders to have pricing controls in place to ensure orders execute in line with market prices.  

There may be instances where your order is rejected, for example if there is no liquidity in the instrument you are looking to trade, or if the price available is not in line with wider market prices.  

Orders in US listed instruments

Orders for the majority of US-listed instruments are transmitted to our third-party US-based broker-dealer (“ US Broker”). For orders in US listed instruments transmitted to Our US Broker we allow fractional share quantities of less than one full share. How an order is handled by our US Broker depends on whether the order is for a fraction of an instrument or a full share of an instrument.

  • Orders for fractions of a security will be executed by our US Broker, as principal. This means they will execute the order using their own inventory of the instrument being traded
  • Orders for full shares of a security will be executed by our US Broker, as agent. This means our US Broker will route the order to regulated broker-dealers for execution. The broker dealers will either execute the order, or route the order to an execution venue.
  • Where your order includes both a whole share and fraction of a share, it will be executed in a mixed capacity by our US Broker. When executing on a mixed Capacity basis, the full share component of the order is executed as agent and the fractional component of the order is executed on a principal basis. When executing on a mixed capacity basis, the fractional component of the trade will receive the same price as the full share component.

Our US Broker seeks quotes and executes orders, as agent, or on a number of execution venues, including US executing brokers and US trading venues.

In all cases, Our US Broker commits to execute at the National Best Bid or Offer (“NBBO”) as of the time of your order, for all whole share and fractional share components of a transaction, in line with its best execution objective.

Types of order

We offer a number of different order types. Basic and Instant Orders are available to all customers. Triggered, Limit and Stop Loss Orders are only available to Plus members.


Basic Order

If you decide to place an Instruction outside of the available trading hours for a Security, you will place these Instructions using our Basic Order type. Please be aware of the following features and risks:

  • A Basic Order will be executed after our Cut-Off Time (see our Terms & Conditions for more details). This may be a different time for different markets, details of which will be provided through our mobile application or on our website.
  • You can cancel a Basic order in our mobile application up to the relevant Cut-Off Time.
  • If you place a Basic Order after the Cut-Off Time such that it is not executed on that day, your order will be valid for the next trading day only and will be queued for execution on that day. During the available trading hours for a Security, Basic Orders will not be available.
  • The price at which a Basic Order is executed will depend on the prevailing market price at the time the trade is executed. This may work to your advantage or disadvantage due to the inherent nature of a moving market.

You should be conscious to accept the risk associated with this type of instruction. Freetrade will not be liable for losses incurred due to the selection of the Basic Order type, save any assessment made by us that we have fallen short of our best execution obligations.

Depending on the prevailing market price at the time of execution, the full amount instructed may not be invested. If the instruction exceeds the amount of available cash in your account, we will automatically lower the number of shares purchased accordingly. Any surplus will be returned to your account in the form of cash.

Instant Order

During the available trading hours for a Security we facilitate commission free Instant Orders. Instant Orders are sent for execution immediately after being placed through our app. You should be aware of the following risks when placing Instant Orders.

  • An Instant Order is an order to buy or sell at the best price available to us in the market at that time.
  • You may only place an Instant Order when the respective market is open. For example, in London this will ordinarily be from 08:00 until 16:30 local time during every normal trading day. Other markets will vary.
  • You cannot cancel an Instant Order on account of it being executed as fast as possible after instruction.
  • Due to the inherent nature of a moving market and any delays in displaying information through our mobile application, it is likely that the actual execution price will differ from that shown on screen before the order is made.


You should be conscious to accept the risks associated with this type of instruction. Freetrade will not be liable for losses incurred due to the selection of the Instant Order type, save any assessment made by us that we have fallen short of our best execution obligations.

Triggered Order

A Triggered Order is an instruction to submit:‍

  • a buy order when the observed price during normal market hours falls to or below the Trigger price set by you (a Triggered Buy Order);
  • a sell order when this observed price rises to or above the Trigger price set by you (a Triggered Sell Order);
  • or a sell order when this observed price falls to or below the Trigger price set by you (a Triggered Stop Loss Order).

You can only cancel a Triggered Order (of any type) up until the point the Trigger price is observed and the order is triggered. Once the order has triggered, it is not possible to cancel.

Where a Triggered Order executes, the actual execution price you receive may be higher or lower than the Trigger price due to market prices moving between an instruction triggering and the order executing, or due to differences between prices published in data feeds and the price at which our market counterparties or other market participants available to us are willing to execute a buy or a sell order.

If the observed market price reaches the Trigger price you set, it will not always mean that your order will be sent or executed, for example, due to differences between price data and the prices at which our market counterparties or other market participants available to us are willing to buy or sell.

You should be conscious to accept the risk associated with this type of instruction. Freetrade will not be liable for losses incurred due to the selection of the Triggered Order type, save any assessment made by us that we have fallen short of our best execution obligations.

Limit and Stop Loss Order

A Limit or Stop Loss Order is an order to:

  • buy at a price equal to or below the Limit Price set by you (a Buy Limit Order);
  • sell at a price equal to or above the Limit Price set by you (a Sell Limit Order);
  • or sell at a price equal to or below the Stop Price set by you (a Stop Loss Order).  

You can only cancel a Limit or Stop Loss Order up until the point it is triggered.

Once the order has triggered, it is not possible to cancel. Buy Limit Orders and Sell Limit Orders in US instruments will only execute at or better than the Limit Price set by you. In rare circumstances Buy Limit Orders and Sell Limit Orders in UK instruments will  execute at a price slightly worse than the Limit Price set by you, for instance if the instrument is experiencing low liquidity and the best quote we receive is within a small tolerance of the price you set.

Stop Loss Orders will not necessarily execute at the Stop Price set by you and will often execute at a lower price, due to the inherent nature of moving markets and the price at which our market counterparties or other market participants available to us are willing to buy at that time. If the observed market price reaches the Limit Price or Stop Price you set, it will not always mean that your order will be executed, for example, due to differences between price data and the prices at which our market counterparties or other market participants available to us are willing to buy or sell.

You should be conscious to accept the risk associated with this type of instruction. Freetrade will not be liable for losses incurred due to the selection of the Limit or Stop Loss Order types, save any assessment made by us that we have fallen short of our best execution obligations.

By placing a Limit or Stop Loss Order with us you are providing your express consent to us not making public the details of your Limit or Stop Loss Order prior to execution.

Order allocation

We send orders for execution in the sequence in which they are received. We do not prioritise one customer’s order over another. It is only in exceptional circumstances that we may prioritise orders - for example, during an external or internal outage, we may prioritise sell orders over buy orders, in order to minimise potential harm to our customers.

Specific instructions

Acting on specific instruction from you in relation to an order you place with us may prevent us from taking the steps we have designed and implemented in this policy to obtain the best possible result for the execution of those orders. However, as our orders are automatically executed or queued for execution when placed through our app, we do not envisage situations where we will be in a position to act on specific instructions.

Monitoring and review

We monitor execution performance for compliance with this policy, as well as periodically reviewing the policy itself to ensure that we are delivering the best execution results for our clients. We will let you know about any important changes being made here.