Admiral Markets Ceases Free Stock Trading, Unmatching Industry Race to Zero

Admiral Markets has taken a step further, effectively banning purchases of the risky securities.

Admiral Markets is undoing its previous decision to slash the fees it charges on some stocks and exchange-traded funds (ETFs) to zero — news that could set off a new trend for the FX-focused brokerage firms.

In an update on its website, Admiral Markets said it will discontinue the zero-fee trading offer for Stock CFDs and ETF CFDs and will start to levy a commission, effective from 15 February 2021.

“Starting from this day and going forward, every transaction in these instruments will be subject to a transaction fee as outlined below. Fees will apply to both new and old positions, including those opened prior to 15 February,” it further explained.

To put the move into context, Admiral Markets was among trading platforms that took matters into their own hands recently amid unprecedented volatility in certain stocks. The company was getting tougher to restrict the trading of several highly shorted stocks following a trading frenzy led by amateur investors.

Last week, Admiral Markets raised margin requirements for transactions involving certain securities, including GameStop, AMC Entertainment, Blackberry, among others. This was extended to reduce the leverage ratio available to silver traders as the grey metal became the latest flashpoint in the Reddit mania.

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Admiral Markets has taken a step further, though. Additionally, the multi-asset broker has introduced dramatic changes to its trading terms around Stock CFDs and ETF CFDs, effectively banning purchases of the risky securities.

Penny Stocks Also Banned

Specifically, penny stocks and their respective CFDs are no longer welcome on Admiral Markets platforms. The company told clients it was changing its trading policy regarding stock CFDs and ETF CFDs whose market price are currently below 5 USD / 5 EUR / 5 GBP / 5 CHF / 25 DKK / 50 NOK / 50 SEK / 5 AUD / 500 JPY.

Effective today, Admiral Markets will switch these instruments into close-only trading mode, which means investors would be able to sell only their positions and not open new ones. Further, by the end of this week, it will no longer allow trading of any stock CFDs if their underlying stock has a market capitalization of less than $1 billion (or equivalent in other currencies).

These tiny-cap stocks, commonly referred to as penny stocks, have for decades been a tool for fraudulent schemes, including the pump-and-dump where manipulators hype a stock before exiting positions. Brokers have increasingly made their views of penny stocks apprehensive amid a multi-day rally spearheaded by retail investors on social media networks.

Admiral Markets appears to be the first major retail brokerage house to explicitly walk away from the zero-fee craze. Although whether the brokers’ offering was actually free is less straight forward than it sounds, but most retail apps and platforms have caught up with a wave of fee-eliminating announcements over the past two years. We discussed this phenomenon in detail last month.

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