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.
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 possible outcome for you.
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
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, on a US trading venue or with our UK Treasury Bill third-party broker.
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.
When you place any orders in instruments other than the currency of your account we will undertake a foreign exchange (FX) transaction in order to complete your transaction. When you place your order, the FX transaction is passed to our third-party FX order routing system (“FX Routing System”). Via this FX Routing System, we request FX price quotes from a group of banks selected by Freetrade to form its FX panel. The currency conversion price for your order is executed at the best spot exchange rate available to us at the time you place your order, plus our FX fee. The rate of our FX fee is dependent on your Freetrade plan.
We may net groups of FX orders in the same currency pairs. Once netted, the final position of a netted group is sent by Freetrade to its FX Routing System for execution. This netting process does not impact the exchange rate you receive on your order.
Prior to placing your order, an indicative FX cost will be visible to you as this fluctuates with the FX market. The total FX cost and rate provided to you is also available on the contract note for each individual order.
When you place an order in a UK listed instrument (with the exception of Treasury Bills or gilts, see below for details) 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 order rejections.
When you place an order in a gilt, it is executed with a single market maker, who is registered with the London Stock Exchange, via the RSP network. We monitor the prices that are obtained to confirm that they obtain results at least as good as would be obtained from other market makers that we can access
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 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.
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 where possible.
In all cases, in line with its best execution objective, our US Broker commits to execute all whole share and fractional share components of a transaction at the best price available to them on the market as of the time of your order.
For Instant and Basic buy orders in US-listed securities, you are able to place an order either by:
Please see below: “Types of Orders” for details on these order types.
Freetrade places orders in UK Treasury Bills through its third-party broker (“UK Treasury Broker”), which participates directly in the UK Debt Management Office weekly Treasury Bill tender on Freetrade’s behalf.
When you place an order in a UK Treasury Bill, it is aggregated with orders placed by other Freetrade customers up until the cut-off time specified by in our app. Your order may also be aggregated with an order placed by Freetrade on its own account to meet the minimum required amount to participate in the tender with our UK Treasury Broker.
This aggregated order is sent to our UK Treasury Broker who will place a bid for the entire order at a price that we determine. All customer orders that are included in the aggregated order will receive the same price.
Due to the nature of Freetrade’s Treasury Bill execution process, an element of rounding takes place when allocating Treasury Bills to customers following the tender. This may lead to certain customers receiving an additional £0.01p of nominal Treasury Bill value.
Any yields displayed in the app prior to the execution of your order are for indicative purposes only. The actual yield that is achieved is only available following the tender.
The bid entered into the tender (i.e. the yield and value of our orders) is determined by us based on advice from our UK Treasury Broker. We will prioritise price, followed by likelihood of execution, as the most important execution factors. Freetrade will balance these two factors to ensure it can get its customers the best possible price while reducing the risk that customers’ orders are unsuccessful in the tender.
As such, with the advice of our UK Treasury Broker, we will aim to enter bids higher than the lowest accepted bid1 and lower than the highest accepted bid2. However, due to the nature of the tender process, this is not guaranteed.
Freetrade will not seek to place the lowest possible bid during the tender, as this increases the risk of unsuccessful or partially filled bids.
In certain circumstances Freetrade may, at its discretion, purchase Treasury Bills directly from its UK Treasury Broker, rather than via direct participation in the tender process. In this situation, Freetrade will use price as the highest priority execution factor.
1 - Entering prices at the lowest accepted bid suggests that we could have achieved a better price.
2 - Entering prices at the highest accepted bid decreases the likelihood of execution due to the risk of unsuccessful or partially filled bids.
We offer a number of different order types. Basic, Instant and Treasury BillOrders are available to all customers. Extended hours, Triggered, Limit, Stop Loss Orders and orders in UK Gilts are only available to customers with Standard or Plus memberships.
These order types are explained in more detail below.
The following table summarises the order types available to you in each investment account at Freetrade.
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:
Due to the nature of Basic orders, there will be a delay between the time you place an instruction and the time your instruction is sent for execution. This means there is a risk that the price of the securities you want to buy or sell may change in this period.
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.
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:
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.
Extended hours orders are available on certain US stocks during the pre-market trading session. We will send your extended hours orders as instant orders to our US broker.
Due to the nature of the extended hours trading sessions, these orders will be converted by our US broker to limit orders with a 2.5% difference from the best bid or offer (BBO) at the time the order is submitted. This is known as a price “collar”. It is in place to protect you against quick price swings.
In practice, the collar means that your order will not execute if it is 2.5% above the BBO for a buy order or 2.5% below BBO for a sell order. Your order will remain pending for one minute and will be rejected if the price stays outside the 2.5% collar.
Extended hours trading may not be suitable or appropriate for all investors and poses certain risks. In some cases it may be more difficult to execute your order.
Please see above: “Orders in UK Treasury Bills” for details on this order type.
Triggered orders allow you to purchase fractional and whole shares in a security.
There are three categories of the Triggered Order type:
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 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 orders allow you to purchase only whole shares in a security.
There are three categories of the Limit and Stop Loss Order Type:
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 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.
In some circumstances, Limit and Stop Loss Orders may be cancelled by Freetrade or a third party. For instance, this may include where a security is subject to a corporate action or there is a significant change in the exchange rate for securities which require foreign exchange.
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.
A Recurring Order is an instruction to buy a group of instruments selected by you for execution on your designated investment date. Please be aware of the following features and risks:
Depending on your investment size, allocation, and the prevailing market price at the time of execution, your order (or parts of your order) may not execute on your designated investment date due to insufficient available cash. If your Recurring Order does not execute due to insufficient cash, market conditions or any other reason, we will not attempt to execute your order again. Any surplus will be returned to your account in the form of cash. We will execute your next Recurring Order on your following designated investment date.
You should be aware that accepting this type of instruction comes with associated risks. Freetrade is not responsible for any losses that occur as a result of choosing the Recurring Order type, except in cases where we determine that we have not met our obligations to provide best execution.
We send orders for execution in the sequence in which they are received, except for:
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.
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.
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.
