Foreign Exchange (FX)
Why do I need Foreign Exchange (FX)?
Stocks quoted on International Live markets are bought and sold in their market's underlying currency. Therefore, FX may be necessary to buy and sell these stocks.
What is Foreign Exchange (FX)?
FX is the purchase/sale of one currency against the sale/purchase of another. This may be needed for the settlement of an International Stock purchase, or to transfer proceeds of a sale back to Sterling. FX is determined by a rate of exchange, or a ratio valuing one currency against another.
FX is arranged at the same time as the trade to ensure that there is no overlap when settling in a foreign currency. However, a FX can also be arranged separately, for example to prepare funds for a trade or to convert to another currency to trade on a different market, or to convert back to Sterling if funds are required for other purposes such as UK investment or withdrawal.
Foreign exchange rates fluctuate. Consequently this may create additional currency risk to an overseas investment, if the market's currency rises against Sterling (GBP). However, movements in currencies could also work to an investors advantage.
Computershare Sharedealing multi-currency facility
At Computershare Sharedealing you are also able to hold cash in your Trading Account in four major global currencies:
- Pounds Sterling (GBP)
- US Dollars (USD)
- Euro (EUR)
- Canadian Dollars (CAD)
What are the advantages of this multi-currency facility?
The advantages of a multi-currency facility are:
- Reduce the need for FX - this may reduce the need to convert between currencies on entering or exiting an investment, which helps you manage your FX exposure and reduce FX charges
- You can exchange between any currency pair
- You can withdraw by cheque in one of the four currencies
- Computershare Sharedealing will also arrange and accept CHAPS payments (see ratecard for current charges)
Please note: Other currencies may be required, depending on the market, which require dual conversion: For example: Swedish Krona, Swiss Franc.
The multi-currency facility is not available with Trading ISA Accounts due to HM Revenue & Customs (HMRC) rules.
How does Computershare Sharedealing FX work?
The FX Rate for all currency conversions is based on the mid-market wholesale exchange rate supplied by Royal Bank of Scotland, to which Computershare Sharedealing apply a spread based on up to +/- 1.5%. This is applied at the time of contracting. Because Exchange rates fluctuate the exchange rate used will depend on market conditions.
| Trades <£50k GBP/Equivalent |
150bps (1.5%) |
Tighter tiered FX spreads are available by telephone for trades over £50k because an investment representative can book these in the FX market at the time of the trade. The telephone tiers are as follows:
| GBP/equivalent |
Spread |
| £50k-£100k |
100bps (1%) |
| £100k-£250k |
50bps (0.5%) |
| >£250k |
25bps (0.25%) |
If you deal online (i.e. on North American markets) and require FX over £50k then you may carry out the FX transaction online at 150bps. If you require a tighter spread than this then you can arrange the FX by telephone separately from the online trade transaction.
Which account can I hold cash in multi-currencies?
You can hold your cash in multi-currencies with a Trading Account.