UncleBob: re fractional purchases, IE is the only platform where I have had the chance to buy fractions of an ETF unit. It is not possible with Vanguard, Charles Stanley or iWeb for ETFs - if you set a purchase by value they will deliver only a whole number of units. Not so with funds, though. This is what makes IE so useful for trades of values less than the trading costs of other platforms. CSH2, for example, costs £1,060 a unit yet I can get a fiver’s worth here.
I am starting to sound like a shill for IE, but I am just amazed at what we have available these days.
1 Like
Don’t get me wrong; I still have a liking to this platform. After-all we are now going on the 3rd year that I have my ISA with them. I’m just very disappointed in their pathetic customer services. When I raised my complaint I had the expectancy that they would actually do something about it or at the very least to have a bit of a chat with their brokers, but no, they told me to bugger off; it’s not their problem. I did not expect miracles to happen but at least something positive.
You can buy ETF fractional shares on Trading212 as well. ETF’s on LightYear are full units only
Choice of whole units or fraction based on monetary value.
The platforms I am actively involved with are InvestEngine (ISA and Money market stuff), Lightyear (American shares and a few European) and Trading212 (mixed). I have no involvement with the ones you mentioned so I cannot comment on them
Yes, we are very fortunate to have a good choice of budget friendly trading platforms available to us and even though I still do like IE a lot, my faith and confidence in them took a serious knock with the experience I have had with them.
1 Like
This is a serious concern and requires a meaningful response from InvestEngine.
Settlement risk will not just magically go away, and somebody needs to bear it.
The best outcome for customers is of course if InvestEngine can find an economically viable way to bear the settlement risk. In this ideal case, unsettled shares can be booked as sold at whatever price it is on the day the sell order is made. In the most ideal of ideal cases, perhaps even the full amount of the cash from the sale can then be used at once to buy something else.
In the unfortunate case that there is no way around having the customer shoulder the risk, IE can at least mitigate that risk somewhat by letting customers know the historical range of settlement times of each ETF. (Better yet, aggregate by market maker / fund size / volume to see if there is a trend.) If the settlement issue bothers enough people, we’ll start crowdsourcing the history anyway, so it’s best if IE who has the most accurate account shares it.
“Sorry but it’s out of our control” isn’t good enough. Counterparties’ action may not be under IE’s control, but IE can at least be transparent about their performance.
3 Likes
The team is aware of the concern and the inconvenience that late settling trades cause clients. We are sorry that you as clients are being affected by late settling trades. We are constantly in touch with our brokers pushing for the quickest possible resolution with unsettled trades.
To help mitigate the issue,we are working to deliver a solution and aiming to have an update for this in the near future. Please keep it here for the latest on that. It is also worth noting that the price that you get at execution of the trade is locked and market movement will then not affect the trade.
5 Likes
Paul, this is the same text block you guys were sending out for a year, but nothing happens.
This is not acceptable!
1 Like
Hi @Nic , Please be assured that this is being looked at seriously by the team. We aim to deliver a solution to this as soon as possible and will post the updates here in due course.
1 Like
It is also a little disingenuous what is written in that statement. Yes price is locked in, but IE has absolutely no guarantee of service regarding when the execution will settle, as has been shown by some customers within this thread experiencing +70days for a trade to clear, though that is still not a theoretical maximum.
In that case the statement “market movement will then not affect the trade” is true regarding that trade, but not having access to all those funds to reinvest for an undetermined length of time, market movement will affect a customers returns.
You are correct, clients’ return may be affected by the late settlement of the trade, however, we do refer to the specific trade in this situation.
We understand existing frustration and, as it was mentioned earlier, our team is working tirelessly on fixing this problem and providing our clients with faster settlement and more freedom of action in the situation when there’s a delay
This is so incredibly frustrating. For someone like me that invests regularly, delayed (more than a few days) settlements make it almost impossible to use the one-click rebalance function as it keeps telling me that it can’t do that due to transactions awaiting settlement!
At least give me an option to rebalance the rest of the portfolio!
1 Like
We understand your frustration and working on a solution as our top priority - we need to make sure we will still be meeting our regulatory obligations with segregated client funds and assets (being held in client nominees on CREST)
We believe we’ll be able to provide an update shortly, which we will post here, on the Community forum first.
1 Like
The only work around at the moment is to manually rebalance by placing trades on the unaffected ETF’s - assuming the affected ones are needed to fund the rebalance!
Taking the PSRU example as a demonstration the ‘solution’ is somewhat clear : don’t trade this illiquid stuff if it has limited Ordinary (AT or O) trade transaction volume daily AND is not covered by Market Makers you have legal relationships with.
PSRU, for example, has limited Market Maker coverage - non of which appear on any InvestEngine RTS 28 disclosure. So we can reasonably assume no relationship with these operators. This makes execution options limited. This reduces somewhat the likihood of settlement -0
especially given the low liquidity of the ETF anyway.
Compound this with most trades being transaction reported as ‘OILQ’ on the LSE means there is limited liquidity. You could force a Buy-in from your trade counterpart - but this is a relationship killer and you might not want to execute on the threat.
An option would be not to trade these instruments affected by such conditions.
Another one would be to use Corporate cash to bolster the client cash/stock pool black hole. The client then gets value for their trade. Yes you have a stock break but you have an open crest settlement contract that is legally binding just not executed. All entitlements etc are binding and will come as crest claims from now on anyway. The client can even sell their position even if the first transactional leg has not actually settled. Now you just have 2 open transactions. One for the buy. One for the sell. But the client cash pool is correct, the stock position is legally sound just not settled. It’s only the forcing of 100% trade settlement to have happened before giving clients value that causes this issue. It’s completely feasible an order could part settle. Then what? Update my account with 1 share purchase even though I purchased 3?
I’d just stop offering ETFs with low liquidity, minimal market maker coverage (at least the ones you need) and have nothing but OTC negotiated trade reporting – usually a give away of a small order for a smaller broker likely fulfilling a small/fractional trade.
5 Likes
I am still waiting for purchase from 30th June 2023 to be settled. Because of this I cannot rebalance the portfolio.
Sorry to hear that, Khakhun. Unfortunately, there is not much you can do besides to learn your lesson and choose a more reliable investment platform in the future.
I never got more than empty promises and generic text blocks from IE’s customer support.
Is it common for two transactions of the same ETF to settle out of order from each other?
My example is very recent (not the huge wait times detailed above) but I have two CSH2 transactions from two separate portfolios in the same ISA:
- Buy on 26 July - Already settled
- But on 24 July - Still awaiting settlement
I think you can manually adjust the other etf’s in the portfolio if needed
Hello and thanks for flagging! (please also advise if it’s now settled).
You can also reach our client services via email (support@investengine.com) so we can take a better look.
Best regards,