Online share dealing services tend to offer cheap dealing. Many still offer commission-free dealing for a limited initial period to attract new customers. The larger brokers often aim to attract frequent and large trades. They may reduce commissions for frequent traders. For example, Barclays Stockbrokers has a set commission of £12 per trade but, when you trade at least 10 times a quarter, it is reduced to £7.50. Some brokers have minimum charges which are cost-effective for larger deals but discourage the smaller ones. This leaves a niche for brokers who want to attract the smaller traders, and who construct their charges accordingly. Halifax Share Dealing offers a facility to buy shares for just £1.50 in commission, where it combines the orders to make a bulk purchase on a set day, four times a month. The Share Centre has a similar batch-dealing scheme, although, according to Oldham, most of its clients choose instead to deal in real time.
Brokers may charge for non-trading services, including portfolio admini¬stration, money transfers, having an account and processing share certificates, PEPs and ISAs. ‘This type of activity is the highest-value service that brokers have. They should not be giving it away free,’ says Oldham.
Experience of US brokers in 2002–3 shows that those that have created such a diversified income stream are more likely to survive a market downturn than those that rely just on trading commissions, he notes.
