Brokers supporting online corporate bond purchases

[y0rkiebar]

As per title, are there any brokers out there which will allow online purchasing of UK corporate bonds ? (specifically into an ISA wraper).
I have an iWeb ISA and although they allow corp. bond purchases, it must be performed over the telephone, not online. I find this a bit clunky and would prefer a broker who supports purchases fully online.

Thanks!

[rtb998]

Try iDealing.com. 10.00 per trade

You can have a normal account for 20.00 a year.
ISA is an additional account for another 20.00 a year.

Other options available depending on your level of trading

[air04]

If cost is an issue, different brokers can have different costs for telephone dealing. I do not think any broker has online dealing for most bonds. I think it has to do with the market maker(or LSE or where the trade is done), than the broker. HL seems to be the most expensive for retail small trades client, and they do not have it.

Have you tried Interactive Brokers, they are the most "online". When I was their client "if it can be done online, they provide it, else it is not available on their platform"... that is what I felt.

[Laughton]

Another vote for iDealing (I use).

So long as the bond will settle through CREST then I've found that they will make the bond available online. In the past, if I've found a bond that they don't cover then I tell them and they quickly add it. I've also found that if I want to try to deal within the indicated spread or in larger amount than shown online I've just telephoned them to deal and they still only charge the online dealing price.

[dealtn]

When I was a market maker the worst form of broker for these kind of products would be a low cost online ones. There is simply poor liquidity and little infrastructure. You would want a broker that actually dealt directly with a market maker - for which you pay more, but your source of liquidity and improved pricing would more than pay for it.

I doubt its changed much in the last 5 years, and recent events don't give any confidence on much liquidity either.

[GoSeigen]

When I was a market maker the worst form of broker for these kind of products would be a low cost online ones. There is simply poor liquidity and little infrastructure. You would want a broker that actually dealt directly with a market maker - for which you pay more, but your source of liquidity and improved pricing would more than pay for it.

I doubt its changed much in the last 5 years, and recent events don't give any confidence on much liquidity either.

Could you suggest a decent broker for bonds then? Even Canaccord were no good by the time I left them a few years back and they were far from cheap.

GS

[Laughton]

You would want a broker that actually dealt directly with a market maker - for which you pay more, but your source of liquidity and improved pricing would more than pay for it.

Are you saying then that some market makers won't talk to all brokers and that they offer better prices to some than others? I accept that a market maker might have a better relationship with one broker as opposed to another - but does that mean he'd buy or sell bonds from/to one and not another?

[dealtn]

You would want a broker that actually dealt directly with a market maker - for which you pay more, but your source of liquidity and improved pricing would more than pay for it.

Are you saying then that some market makers won't talk to all brokers and that they offer better prices to some than others? I accept that a market maker might have a better relationship with one broker as opposed to another - but does that mean he'd buy or sell bonds from/to one and not another?

To be clear I didn't deal in Corporate Bonds (or Retail offerings) but I did Market Make electronically to the ORB platform (and similar). The way those platforms are set up are to send electronic Request For Quotes to our electronic infrastructure fed by our pricing sheets. These RFQs come from brokers who in turn are talking electronically to online clients, and for "best price" purposes these get sent to 3 or 4 market makers. Typically each market marker would be taking a "live" feed of a wide (because its illiquid) guide price from a source such as LSE, or ORB (which in turn is fed by - often the same - market makers - banks "wide generic price bid and offer"). Each market maker will electronically and automatically show an improvement to that price (pre determined according to the book eg. position, and size of trade). it being important to always compete and show a better price than "market". Since these are illiquid and small trades market makers have little incentive to programme their platforms to improve much, and are also mostly measured by the regulators (and others) by way of performance on trade volume (aggregate size, not number of trades), there is really little incentive to trade let alone show good prices.

Brokers that physically phone a market makers sales desk, because they aggregate trades, or generally have relationships will often get the sales man to get a mid-market or "who cares" quote from the market maker - particularly if it reduces (even slightly) a short position in an illiquid bond issue. Both the broker, and the sales desk, know they will get more from other trades (be that profit, volume or both) so use the relationship with the other business uppermost in mind.

Old fashioned broking over the phone results (or did when I left the industry) with a "who cares trade at mid" price. New fangled online broking results in a "who cares trade at bid (or offer)" price.

[hind]

I cant use DMA on gilts so could a regular gilt buyer advise if there much difference on gilts using a online broker and a telephone broker regarding fill prices ?

[bruncher]

You would want a broker that actually dealt directly with a market maker - for which you pay more, but your source of liquidity and improved pricing would more than pay for it.

Are you saying then that some market makers won't talk to all brokers and that they offer better prices to some than others? I accept that a market maker might have a better relationship with one broker as opposed to another - but does that mean he'd buy or sell bonds from/to one and not another?

To be clear I didn't deal in Corporate Bonds (or Retail offerings) but I did Market Make electronically to the ORB platform (and similar). The way those platforms are set up are to send electronic Request For Quotes to our electronic infrastructure fed by our pricing sheets. These RFQs come from brokers who in turn are talking electronically to online clients, and for "best price" purposes these get sent to 3 or 4 market makers. Typically each market marker would be taking a "live" feed of a wide (because its illiquid) guide price from a source such as LSE, or ORB (which in turn is fed by - often the same - market makers - banks "wide generic price bid and offer"). Each market maker will electronically and automatically show an improvement to that price (pre determined according to the book eg. position, and size of trade). it being important to always compete and show a better price than "market". Since these are illiquid and small trades market makers have little incentive to programme their platforms to improve much, and are also mostly measured by the regulators (and others) by way of performance on trade volume (aggregate size, not number of trades), there is really little incentive to trade let alone show good prices.

Brokers that physically phone a market makers sales desk, because they aggregate trades, or generally have relationships will often get the sales man to get a mid-market or "who cares" quote from the market maker - particularly if it reduces (even slightly) a short position in an illiquid bond issue. Both the broker, and the sales desk, know they will get more from other trades (be that profit, volume or both) so use the relationship with the other business uppermost in mind.

Old fashioned broking over the phone results (or did when I left the industry) with a "who cares trade at mid" price. New fangled online broking results in a "who cares trade at bid (or offer)" price.

Would you say that electing to pay for a phone trade with low-price brokers (e.g. iWeb, AJ Bell) will likely result in a price improvement over the cheaper online quote?

[88V8]

Would you say that electing to pay for a phone trade with low-price brokers (e.g. iWeb, AJ Bell) will likely result in a price improvement over the cheaper online quote?

This morning I bought via ii, had to call as it was a bond they don't trade online, but they only charged me the online price. The price was OK.

V8

[bruncher]

Would you say that electing to pay for a phone trade with low-price brokers (e.g. iWeb, AJ Bell) will likely result in a price improvement over the cheaper online quote?

This morning I bought via ii, had to call as it was a bond they don't trade online, but they only charged me the online price. The price was OK.

V8

I'm wondering whether there is a price improvement when there is an online quote but the customer elects to phone instead?

[Gan020]

Would you say that electing to pay for a phone trade with low-price brokers (e.g. iWeb, AJ Bell) will likely result in a price improvement over the cheaper online quote?

AJ Bell only do phone trading for bonds although they will do it at their £9.95 a trade price. They aren't really set up for bonds in the same way they are for equities and you may well find you know much more about bonds than their dealers do. Historically I struggled to get the same price out of AJ Bell I could get online from HL and approximately 3-4 years ago I moved most of my money to HL. I still have one account with AJ Bell and I've only placed one bond trade with AJ Bell in the last year and that went OK.

The problem with bonds is the same as equities really. The only time you are going to get an amazing price is when the MM wants to shift stock and that will be when you are catching a falling knife or he is working some order in the opposite direction for a client.

[bruncher]

Would you say that electing to pay for a phone trade with low-price brokers (e.g. iWeb, AJ Bell) will likely result in a price improvement over the cheaper online quote?

AJ Bell only do phone trading for bonds although they will do it at their £9.95 a trade price. They aren't really set up for bonds in the same way they are for equities and you may well find you know much more about bonds than their dealers do. Historically I struggled to get the same price out of AJ Bell I could get online from HL and approximately 3-4 years ago I moved most of my money to HL. I still have one account with AJ Bell and I've only placed one bond trade with AJ Bell in the last year and that went OK.

The problem with bonds is the same as equities really. The only time you are going to get an amazing price is when the MM wants to shift stock and that will be when you are catching a falling knife or he is working some order in the opposite direction for a client.

Interesting, thanks for this. I've just looked at charges, and it appears HL is cheaper than AJ Bell, as there is no custody/account fee for a basic dealing account. That was a surprise.

[88V8]

Would you say that electing to pay for a phone trade with low-price brokers (e.g. iWeb, AJ Bell) will likely result in a price improvement over the cheaper online quote?

This morning I bought via ii, had to call as it was a bond they don't trade online, but they only charged me the online price. The price was OK.

I'm wondering whether there is a price improvement when there is an online quote but the customer elects to phone instead?

What I mean was the price was OK and they charged me the online fee....

Better price? Not this morning. She was just able to bypass the 'can't trade online' blockage so the price was what I would had if I had been able to trade online. Slightly inside the spread, albeit the spread is now very tight as these things go.

Don't know if it's typical but unless one is buying in size, ii are reluctant actually to put one through to a dealer. Perhaps they no longer have many dealers.

V8

[dealtn]

You would want a broker that actually dealt directly with a market maker - for which you pay more, but your source of liquidity and improved pricing would more than pay for it.

Are you saying then that some market makers won't talk to all brokers and that they offer better prices to some than others? I accept that a market maker might have a better relationship with one broker as opposed to another - but does that mean he'd buy or sell bonds from/to one and not another?

To be clear I didn't deal in Corporate Bonds (or Retail offerings) but I did Market Make electronically to the ORB platform (and similar). The way those platforms are set up are to send electronic Request For Quotes to our electronic infrastructure fed by our pricing sheets. These RFQs come from brokers who in turn are talking electronically to online clients, and for "best price" purposes these get sent to 3 or 4 market makers. Typically each market marker would be taking a "live" feed of a wide (because its illiquid) guide price from a source such as LSE, or ORB (which in turn is fed by - often the same - market makers - banks "wide generic price bid and offer"). Each market maker will electronically and automatically show an improvement to that price (pre determined according to the book eg. position, and size of trade). it being important to always compete and show a better price than "market". Since these are illiquid and small trades market makers have little incentive to programme their platforms to improve much, and are also mostly measured by the regulators (and others) by way of performance on trade volume (aggregate size, not number of trades), there is really little incentive to trade let alone show good prices.

Brokers that physically phone a market makers sales desk, because they aggregate trades, or generally have relationships will often get the sales man to get a mid-market or "who cares" quote from the market maker - particularly if it reduces (even slightly) a short position in an illiquid bond issue. Both the broker, and the sales desk, know they will get more from other trades (be that profit, volume or both) so use the relationship with the other business uppermost in mind.

Old fashioned broking over the phone results (or did when I left the industry) with a "who cares trade at mid" price. New fangled online broking results in a "who cares trade at bid (or offer)" price.

Would you say that electing to pay for a phone trade with low-price brokers (e.g. iWeb, AJ Bell) will likely result in a price improvement over the cheaper online quote?

No idea. I have never worked for a broker, nor have I ever bought a Corporate bond through one.

I suspect it will make little difference but try it and tell the board. In my view you would need a "low-price broker" to talk to the market maker. That's not the same thing as the customer using the phone to speak to his broker. I suspect - but willing to be proved wrong - that when you use your phone to talk to your "low-price broker" they undertake the same job you could have done yourself online (and you pay more for someone else to do it).

A full-price (?) broker might get different results.

[Gan020]

You would want a broker that actually dealt directly with a market maker - for which you pay more, but your source of liquidity and improved pricing would more than pay for it.

Are you saying then that some market makers won't talk to all brokers and that they offer better prices to some than others? I accept that a market maker might have a better relationship with one broker as opposed to another - but does that mean he'd buy or sell bonds from/to one and not another?

To be clear I didn't deal in Corporate Bonds (or Retail offerings) but I did Market Make electronically to the ORB platform (and similar). The way those platforms are set up are to send electronic Request For Quotes to our electronic infrastructure fed by our pricing sheets. These RFQs come from brokers who in turn are talking electronically to online clients, and for "best price" purposes these get sent to 3 or 4 market makers. Typically each market marker would be taking a "live" feed of a wide (because its illiquid) guide price from a source such as LSE, or ORB (which in turn is fed by - often the same - market makers - banks "wide generic price bid and offer"). Each market maker will electronically and automatically show an improvement to that price (pre determined according to the book eg. position, and size of trade). it being important to always compete and show a better price than "market". Since these are illiquid and small trades market makers have little incentive to programme their platforms to improve much, and are also mostly measured by the regulators (and others) by way of performance on trade volume (aggregate size, not number of trades), there is really little incentive to trade let alone show good prices.

Brokers that physically phone a market makers sales desk, because they aggregate trades, or generally have relationships will often get the sales man to get a mid-market or "who cares" quote from the market maker - particularly if it reduces (even slightly) a short position in an illiquid bond issue. Both the broker, and the sales desk, know they will get more from other trades (be that profit, volume or both) so use the relationship with the other business uppermost in mind.

Old fashioned broking over the phone results (or did when I left the industry) with a "who cares trade at mid" price. New fangled online broking results in a "who cares trade at bid (or offer)" price.

Would you say that electing to pay for a phone trade with low-price brokers (e.g. iWeb, AJ Bell) will likely result in a price improvement over the cheaper online quote?

No idea. I have never worked for a broker, nor have I ever bought a Corporate bond through one.

I suspect it will make little difference but try it and tell the board. In my view you would need a "low-price broker" to talk to the market maker. That's not the same thing as the customer using the phone to speak to his broker. I suspect - but willing to be proved wrong - that when you use your phone to talk to your "low-price broker" they undertake the same job you could have done yourself online (and you pay more for someone else to do it).

A full-price (?) broker might get different results.

To add to this my experience is as follows;

AJ Bell are incredibly helpful, eager to please and have time to talk to you and will trade at the on-line price. However, their dealers are very much executing your instructions. They will place an order for you at market, a limit price and a kill and fill order but that's very much it. They place the order in their software and 5-20 minutes later depending on how busy the market is you will either get filled or not filled. If the market is in crisis mode which say happens once a year and the MM's are busy your order may disappear into the ether for an hour. Usually if you don't get filled they will phone you back to tell you which is a bit odd as the software happily does that. Sometimes they seem to be able to tell me what price would have been accepted, sometimes not. I have found no way to get them to "talk" to a dealer although I am now down to as few as 2 bond trades a year so I'm not really bothered.

HL is a different story. Their priority seems to be minimisation of time on the phone to you. I have found them on occasion rude and unhelpful and some of the dealers know so little about bonds they ought not to be on the phone line at all. However, if you can get past this and take control of the transaction by telling them exactly what you want they will get the job done. If you get the wrong dealer on the wrong day when they are busy, they will try and do nothing other than enter the order as if you had done so yourself. Once for example I had a dealer tell me he couldn't offer me a better price for phone dealing as they had a duty of best execution and this would be to the detriment of their other customers if I got a better deal over the phone! If you get the right dealer on the right day when the market is quiet and you want more volume than is on their screen and you press them they will pick up the phone to a MM and usually seem to be able to get something.
For me phone dealing is expensive at £50 unless I'm doing massive volume or trading something outrageously illiquid so about 95% of my bond trades are now on-line.

The way I see it is that AJ Bell are lovely people doing execution only phone trading at £10, whereas HL staff are under incredible pressure which at times leaks out into rudeness, arrogance and a desire to either complete the transaction quickly or just get rid of you which doesn't seem right considering the £50. If I have to phone deal I try to do it at quiet times or on quiet days

I would appreciate others views as I am getting rather fed up with HL due to their pricing structure and restrictions on what they will let me trade and thinking of moving to Interactive Investor. I have no idea whether II would be any better though.

[88V8]

I would appreciate others views as I am getting rather fed up with HL due to their pricing structure and restrictions on what they will let me trade and thinking of moving to Interactive Investor. I have no idea whether II would be any better though.

Not specifically bonds, but this year I set up an a/c with HL because they would let me trade AXI and NATW when ii wouldn't.
Haven't tried their phone service, nor have I done much through them as I don't like their website but perhaps that's just a case of what one is used to.

It was possible in the past to do more online at ii. The lady I spoke with yesterday was perfectly pleasant and able to press the buttons but from the I-speak-your-weight manner in which she parroted what she was seeing on the screen I doubt that she had any idea what she was buying.

I doubt that any of the retail brokers are a perfumed garden but then, unless one is dealing with a specialist such as Cannacord, bonds are probably a tiny fraction of their activities.

V8

[ResourceOgre]

Try iDealing.com

I second this. Had account for many years. Direct market access & good phone service also.

[hiriskpaul]

Are you saying then that some market makers won't talk to all brokers and that they offer better prices to some than others? I accept that a market maker might have a better relationship with one broker as opposed to another - but does that mean he'd buy or sell bonds from/to one and not another?

To be clear I didn't deal in Corporate Bonds (or Retail offerings) but I did Market Make electronically to the ORB platform (and similar). The way those platforms are set up are to send electronic Request For Quotes to our electronic infrastructure fed by our pricing sheets. These RFQs come from brokers who in turn are talking electronically to online clients, and for "best price" purposes these get sent to 3 or 4 market makers. Typically each market marker would be taking a "live" feed of a wide (because its illiquid) guide price from a source such as LSE, or ORB (which in turn is fed by - often the same - market makers - banks "wide generic price bid and offer"). Each market maker will electronically and automatically show an improvement to that price (pre determined according to the book eg. position, and size of trade). it being important to always compete and show a better price than "market". Since these are illiquid and small trades market makers have little incentive to programme their platforms to improve much, and are also mostly measured by the regulators (and others) by way of performance on trade volume (aggregate size, not number of trades), there is really little incentive to trade let alone show good prices.

Brokers that physically phone a market makers sales desk, because they aggregate trades, or generally have relationships will often get the sales man to get a mid-market or "who cares" quote from the market maker - particularly if it reduces (even slightly) a short position in an illiquid bond issue. Both the broker, and the sales desk, know they will get more from other trades (be that profit, volume or both) so use the relationship with the other business uppermost in mind.

Old fashioned broking over the phone results (or did when I left the industry) with a "who cares trade at mid" price. New fangled online broking results in a "who cares trade at bid (or offer)" price.

Would you say that electing to pay for a phone trade with low-price brokers (e.g. iWeb, AJ Bell) will likely result in a price improvement over the cheaper online quote?

No idea. I have never worked for a broker, nor have I ever bought a Corporate bond through one.

I suspect it will make little difference but try it and tell the board. In my view you would need a "low-price broker" to talk to the market maker. That's not the same thing as the customer using the phone to speak to his broker. I suspect - but willing to be proved wrong - that when you use your phone to talk to your "low-price broker" they undertake the same job you could have done yourself online (and you pay more for someone else to do it).

A full-price (?) broker might get different results.

To add to this my experience is as follows;

AJ Bell are incredibly helpful, eager to please and have time to talk to you and will trade at the on-line price. However, their dealers are very much executing your instructions. They will place an order for you at market, a limit price and a kill and fill order but that's very much it. They place the order in their software and 5-20 minutes later depending on how busy the market is you will either get filled or not filled. If the market is in crisis mode which say happens once a year and the MM's are busy your order may disappear into the ether for an hour. Usually if you don't get filled they will phone you back to tell you which is a bit odd as the software happily does that. Sometimes they seem to be able to tell me what price would have been accepted, sometimes not. I have found no way to get them to "talk" to a dealer although I am now down to as few as 2 bond trades a year so I'm not really bothered.

HL is a different story. Their priority seems to be minimisation of time on the phone to you. I have found them on occasion rude and unhelpful and some of the dealers know so little about bonds they ought not to be on the phone line at all. However, if you can get past this and take control of the transaction by telling them exactly what you want they will get the job done. If you get the wrong dealer on the wrong day when they are busy, they will try and do nothing other than enter the order as if you had done so yourself. Once for example I had a dealer tell me he couldn't offer me a better price for phone dealing as they had a duty of best execution and this would be to the detriment of their other customers if I got a better deal over the phone! If you get the right dealer on the right day when the market is quiet and you want more volume than is on their screen and you press them they will pick up the phone to a MM and usually seem to be able to get something.
For me phone dealing is expensive at £50 unless I'm doing massive volume or trading something outrageously illiquid so about 95% of my bond trades are now on-line.

The way I see it is that AJ Bell are lovely people doing execution only phone trading at £10, whereas HL staff are under incredible pressure which at times leaks out into rudeness, arrogance and a desire to either complete the transaction quickly or just get rid of you which doesn't seem right considering the £50. If I have to phone deal I try to do it at quiet times or on quiet days

I would appreciate others views as I am getting rather fed up with HL due to their pricing structure and restrictions on what they will let me trade and thinking of moving to Interactive Investor. I have no idea whether II would be any better though.

Your experience of HL is interesting. I have used them to trade bonds for many years. Prior to HL I used Williams De Broe, who seemed to be able to obtain good prices for illiquid stuff but were eye wateringly expensive and we had a falling out after they were taken over and seemed far more interested in trying to sell me wealth management services than executing orders.

In the early days I used HL, they were expensive as well, charging 1% I think for illiquid bonds/PIBS, without any limit, so the £50 cap was very welcome, although they never seemed as good on price as WDB. The online trading with HL came later and again was very welcome for the bonds they offered online. My experience of phone dealing has mostly been very good, but I have always known precisely what I want and what price I was prepared to accept. I don't recall ever meeting reluctance for the dealer to phone a MM when screen prices were unavailable, but may have just been lucky with the dealers who picked up the phone.

They did screw up an order once, putting into the wrong account. SIPP instead of my general account or vice-versa, but they sorted this out within minutes and I got a profuse apology and they waived their fee. I had a similar experience with another broker and my account was locked for days while they sorted it out.

For a retail broker HL have at times been very flexible, eg doing broker to broker trades without hassle when I have precise details of something being offered by another broker. They have at times also allowed me to purchase bonds without having sufficient cash in my account. In these circumstances I had other very liquid securities to sell in order to cover the cost, but was reluctant to sell before I knew I could buy at an acceptable price. Doing that always had to get the nod from a head trader first, but is very unusual these days for a retail broker.

The one fly in the ointment is that HL will no longer offer bonds that they cannot settle through CREST. This is unfortunate, but common with most other retail brokers.