Foreign Exchange (FX)

Benefits of our Foreign Exchange (FX) Services

Live prices for stand alone FX conversions - "the price you see is the price you get" (a fixed house exchange rate will be used at weekends)
The FX rate and quantity will be shown on all statement and contract notes
Tiered costs available online as well as by telephone Monday to Friday; these are dependant on the size of the FX transaction
Reduce need for FX and therefore FX charges by holding cash already in a foreign currency ready for when you trade
Exchange between any 2 of our 7 currencies
Withdraw by cheque in any one of the 7 currencies (no withdrawals are allowed from SIPPs).
We can accept CHAPs payments in the 7 currencies (excluding to SIPP Accounts) there is a charge for this service of £25 + VAT

What is Foreign Exchange?

Foreign exchange, Forex or FX is needed when one currency is converted for another.

Foreign exchange may be necessary in order for you to trade in stocks that are quoted in currencies different to sterling, whereby you would need to trade your sterling for the relevant currency in order to purchase your desired stock. You may also need FX to convert sale proceeds from a different currency back to sterling and any payment arising from Corporate Actions and Dividends that are paid in the underlying currency.

Only UK Sterling can only be held in your ISA, therefore any FX must be done at the time of trade and any income from none UK holdings is converted to Sterling automatically.

FX is determined by an exchange rate. Exchange rates can fluctuate and so can create additional risk to international investment if a market's currency rises against sterling. However, movements in currencies can also work to your advantage.

Two Foreign Exchange Services from TD Waterhouse:

Where FX is arranged at the time of trade rather than on the settlement date when prices and exchange rates may have changed
The facility to place a stand alone FX transaction, for example, to convert funds to another currency in readiness for trading in a different market.

Our multi currency facility helps to reduce the need for FX by letting you hold cash in your Trading Plus and SIPP Accounts in 7 major currencies:

Pounds Sterling (GBP)
US Dollars (USD)
Euro (EUR)
Canadian Dollars (CAD)
Hong Kong Dollars (HKD)
Singapore Dollars (S$)
Australian Dollars (AUD)

How does FX work?

When FX is arranged at the time of a trade

When trading international stocks you will receive a currency rate of exchange for the trade you wish to place as well as a price for the underlying stock. The rate of exchange is a live price and is open to the same fluctuations as share prices.

Multi-fills may apply to an international share trades. This means that your order may be traded in separate blocks and therefore, the same FX rate may not apply to each piece.

If a multi fill is applied only one trade will be shown on your contract note showing an average FX rate.

When a stand alone FX transaction is made

You can choose which of the four currencies we hold that you wish to convert into another currency and receive a real time exchange rate from the market.

Stand alone FX transactions will be clearly shown on contract notes and statements.

What does Foreign Exchange Cost?

The exchange rate is known as a spot rate provided by the market. TD Waterhouse charges a 1.5% margin on the value of that spot rate for all transactions less than £50,000. We can however, reduce our margin for transactions above this amount. This table shows the tiered margin costs.

Transaction Value	Margin Rate
£0 - £49,999	1.50%
£50,000 - £99,999	1.00%
£100,000 - £599,999	0.50%
£600,000 - £999,999*	0.25%

* Maximum electronic transaction size.

These rates will be applied to stand alone FX conversions, but because of the possibility of an international share trade being subject to a multi-fill (traded in separate blocks) we can only apply these reduced margin rates if the stock trade goes through in one lump.

Examples of how the reduced margin rates may be applied:

Spot rate to convert GBP to USD = 2.0300
£10,000 convert to USD at a rate of 1.9996	= $19,996.00 (1.5% margin)
£60,000 convert to USD at a rate of 2.0097	= $120,582.00 (1% margin)
£200,000 convert to USD at a rate of 2.0199	= $403,980.00 (0.5% margin)
£700,000 convert to USD at a rate of 2.0249	= $1,417,430.00 (0.25% margin)

When can I place Foreign Exchange Conversations?

The facility is live online from midnight on Sunday to midnight on Friday, with telephone support available 7.30am - 9.00pm Monday to Friday.

House Rate

From midnight on Friday until midnight on Sunday (the weekend) a fixed house exchange rate will be issued at the start of the session. We will honour any transactions placed over this period with the rate stated.

The house rate will be used in the likely event we lose the live feed. Please note that tiered rates will not apply when the house rate is used - all transactions will be completed at 1.5%.