Personal finance: Internet Investor

ONE OF the politer words I heard used to describe Freeserve's valuation as its shares soared on day one of trading was "dangerous", but at least we now have what Americans would see as a real internet business in the London market - real internet business as in massive valuation, volatile share price, minuscule revenue and non-existent profits.

So does the advent of such shares in the UK market mean that America's day-trading phenomenon will also follow?

There are structural differences between the UK and US stock markets that militate against day trading taking off here. The biggest difference is the 0.5 per cent stamp duty on all share purchases which has no US equivalent. This acts as a major drag on volatile trading activity. Quite simply, as a buyer of shares, you need to see a higher price rise in the UK to cover the cost of your purchase.

By coincidence, just a few days after Freeserve shares started trading, one of the leading internet brokerages in the USA unveiled E*trade UK, the first internet-only stockbroker operating in the UK. Its US website was launched in 1996 and now has more than 1.2 million active accounts and $26bn of customer assets held. E*trade UK subsumes ESI, which had been the first website outside the USA to offer real-time share prices.

E*trade's pricing structure

is highly competitive, operating on a flat-fee basis of pounds 14.95 for any trade of pounds 1,500 or less. Thereafter there is a maximum price of pounds 24.95 per trade which is reduced in steps back to pounds 14.95 the more you trade. The only other charge is a pounds 12.50 quarterly account-handling fee. These prices bring online dealing costs into direct competition with all but the very cheapest execution-only telephone services, while offering much more by way of investor support.

E*trade UK offers the ability to trade in all UK-listed securities; a dealing account also gives you a substantial research database, together with real-time news and prices. Once your deal is accepted and executed, you get an instant electronic confirmation and, if you are selling shares, you have the option of reinvesting the earnings from the trade immediately.

Conscious that E*trade in the US has been cited as part of the day-trading phenomenon, its UK operation is keen to present a responsible image. Julian Costley, its chief executive, says: "We've made a point of only allowing investors to purchase shares against cash held or to sell shares they actually hold. We are not offering margin trading." Indeed, to open an account with E*trade you will be asked to deposit a minimum of pounds 1,000 with the company.

One minor niggle - why should UK investors using E*trade UK pay pounds 14.95 when US investors using E*trade to buy shares on Wall Street pay only $14.95?

E*trade: www.etrade.co.uk

Robin can be reached at RobinAmlot@aol.com

News
peopleFrankie Boyle responds to referendum result in characteristically offensive style
Arts and Entertainment
Friends is celebrating its 20th anniversary this year
tvSeries celebrates 20th anniversary
News
news
Life and Style
Jack Cooksey goes for the grand unveiling - moments before dropping his new iPhone 6 on the floor
iphone launch
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
Life and Style
ebooksA superb mix of recipes serving up the freshest of local produce in a delicious range of styles
Life and Style
ebooksFrom the lifespan of a slug to the distance to the Sun: answers to 500 questions from readers
Arts and Entertainment
Liam Neeson said he wouldn't
tv

Liam Neeson's Downton dreams

Sport
Yaya Touré (left) and Bayern Munich’s Spanish defender Juan Bernat
football
Arts and Entertainment
A spell in the sun: Emma Stone and Colin Firth star in ‘Magic in the Moonlight’
filmReview: Magic In The Moonlight
Sport
A 'Sir Alex Feguson' tattoo
football

Arts and Entertainment
Ben Whishaw is replacing Colin Firth as the voice of Paddington Bear
tv

Thriller is set in the secret world of British espionage

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs General

    Primary Supply Teacher - Loughborough

    £90 - £120 per day: Randstad Education Leicester: Are you a Teacher looking fo...

    Primary General Cover Teachers

    Negotiable: Randstad Education Leicester: Are you a Newly Qualified Teacher lo...

    Part Time Primary Teacher

    £90 - £120 per day: Randstad Education Leicester: Part Time Primary TeacherOur...

    Science Technician

    £7 - £8 per hour: Randstad Education Cheshire: The Job:School Science Technici...

    Day In a Page

    Mystery of the Ground Zero wedding photo

    A shot in the dark

    Mystery of the wedding photo from Ground Zero
    His life, the universe and everything

    His life, the universe and everything

    New biography sheds light on comic genius of Douglas Adams
    Save us from small screen superheroes

    Save us from small screen superheroes

    Shows like Agents of S.H.I.E.L.D are little more than marketing tools
    Reach for the skies

    Reach for the skies

    From pools to football pitches, rooftop living is looking up
    These are the 12 best hotel spas in the UK

    12 best hotel spas in the UK

    Some hotels go all out on facilities; others stand out for the sheer quality of treatments
    These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

    Widespread fear of Isis is producing strange bedfellows

    Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
    Topshop goes part Athena poster, part last spring Prada

    Topshop goes part Athena poster, part last spring Prada

    Shoppers don't come to Topshop for the unique
    How to make a Lego masterpiece

    How to make a Lego masterpiece

    Toy breaks out of the nursery and heads for the gallery
    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
    Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

    Ian Paisley’s decision to make peace with his IRA enemies

    His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
    'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

    'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

    Exclusive extract from Janis Winehouse's poignant new memoir
    Is this the role to win Cumberbatch an Oscar?

    Is this the role to win Cumberbatch an Oscar?

    The Imitation Game, film review
    England and Roy Hodgson take a joint step towards redemption in Basel

    England and Hodgson take a joint step towards redemption

    Welbeck double puts England on the road to Euro 2016
    Relatives fight over Vivian Maier’s rare photos

    Relatives fight over Vivian Maier’s rare photos

    Pictures removed from public view as courts decide ownership
    ‘Fashion has to be fun. It’s a big business, not a cure for cancer’

    ‘Fashion has to be fun. It’s a big business, not a cure for cancer’

    Donatella Versace at New York Fashion Week