Lightyear cuts FX fees to shake up UK broker market

Investment platform Lightyear has removed commission fees for personal customers and cut its foreign exchange charge to 0.1%, intensifying price competition in the UK retail brokerage market ahead of the end of the tax year.

It framed the move as a direct challenge to established investment providers and app-based rivals, arguing that the combined cost of account charges, dealing commissions and currency conversion fees can deter people from investing.

Pricing shift

Under the updated pricing, Lightyear charges no platform fee and no dealing commission for ETFs and US, EU and UK shares. It also offers a Cash ISA with an advertised annual equivalent rate of 3.75%, a Stocks & Shares ISA, and a flexible ISA option.

Lightyear's comparison table puts its new FX charge at 0.10%. The table lists Trading212 at 0.15%, Interactive Investor at 0.75%, and Hargreaves Lansdown at 0.99% on the first £10,000, with tiered reductions for larger sums. It also lists Hargreaves Lansdown's headline platform fee at 0.35% a year and Interactive Investor's Core plan at £5.99 a month, while showing Lightyear and Trading212 as charging no platform fee.

Retail investing platforms have competed aggressively on headline trading costs in recent years, with many shifting charges from commissions to FX mark-ups, subscription tiers, or paid-for data and services. Currency conversion remains a key cost for UK investors trading overseas shares and ETFs, since it applies when buying and selling assets priced in foreign currencies.

Market context

Lightyear also published research highlighting what it called a "cash comfort zone" among UK consumers. The survey found that 54% of respondents said they held savings in cash, while 15% said they invested through a Stocks & Shares ISA. It also found that 86% considered financial health important.

The research also tested knowledge of long-term market returns. Respondents were asked how much £1,000 invested in the FTSE 100 via a Stocks & Shares ISA 20 years ago would be worth today. Based on an accepted range around a total return figure, 21% of those who said they knew answered within that range.

"For too long, UK retail investors have got the short end of the stick. They've either been squeezed by legacy platforms charging exorbitant fees for basic market access, or lured by neobrokers with promises of 'free trading', actually monetising through wide FX markups or pushing users towards complex and expensive products like CFDs," said Wander Rutgers, Lightyear's UK Chief Executive.

Infrastructure change

Lightyear linked the price reduction to changes in how it connects to the UK market infrastructure. It is now a direct member of CREST, the UK's central securities depository, which it said reduces reliance on third-party intermediaries.

Direct CREST membership is commonly used by institutions and larger market participants to settle and hold UK securities. It can also shape a broker's operating model, given the interfaces and processes involved in settlement and custody.

"Becoming a direct member of CREST sets us up for a range of product improvements, instrument expansion and a fundamentally lower cost structure. We want to pass those wins on to our customers. We aren't cross-subsidising with risky, casino-style products; our aim is to fundamentally lower our cost to serve by cutting out expensive middlemen from the investing process and passing that margin directly back to the customer," said Rutgers.

Independent investment education firm PensionCraft also commented. Co-founder Ramin Nakisa said the number of brokers and the range of offers can make platform selection difficult for consumers.

"The UK market is full of brokers, making all sorts of shiny promises to win over customers. And choosing between them can feel very overwhelming. To me, the most important thing when deciding on an investment platform is understanding if the provider is simply trying to push you to gamble with your money or help you build long-term wealth. Lightyear does the latter, wholeheartedly," said Nakisa.

Today's news of even lower prices for UK individual investors is great. Firstly, because turning up the heat on the market might just push legacy providers to look into, maybe even correct, their outdated, expensive pricing. But more importantly, it's not a price drop for the sake of a price drop. The team is truly building innovative technical solutions, making sure they're around forever to offer UK investors the fairest possible access to markets," Nakisa added.

Lightyear was founded in 2020 by Martin Sokk and Mihkel Aamer, both former employees of Wise. It operates from London and Tallinn and has raised $58 million from investors including NordicNinja, Lightspeed Venture Partners and Mosaic Ventures, alongside individual backers such as Sir Richard Branson and Taavet Hinrikus.

Lightyear operates in the UK under Financial Conduct Authority authorisation, and in the EU under Estonian Financial Supervision Authority regulation, with rights to provide services across the EU and EEA. The new pricing is in place for personal customers and reflects the lower cost structure, it says it achieved after becoming a CREST member.