Stake Academy – FX Fees and BPS
Invest in knowledge and continue your investing education with our quick Stake Academy crash course on currency conversion.
Naturally, before buying US shares it’s necessary to have US dollars. The guide below runs you through the ways foreign currencies are priced and the associated fees on Stake.
Tell us the price
To begin, let’s understand how an FX rate is quoted.
Currencies trade in pairs. To buy one currency, you need to sell another currency. It’s intuitive. For example, to buy US Dollars you sell Australian dollars. That’s the AUDUSD pair.
The currency quoted first in the pair is equal to 1. If AUDUSD is 0.7500 it means 1 AUD buys 0.7500 USD. These rates are constantly fluctuating as the FX market is open 24 hours a day, 5 days a week.
Stake displays the live FX rate, known as the spot rate, when making deposits and withdrawals
BPS vs % fee
Stake charges 70 basis points (bps) on deposits and withdrawals
It is important to clarify that basis points (bps) differ from a percentage fee.
70 bps doesn’t equate to 0.7% of the total amount transferred. The bps fee as a percentage fluctuates based on the exchange rate and the direction of transfer.
Let’s take a look at an example. Say the official AUD/USD spot rate is 0.7500. AU$1000 deposited at an AUDUSD 0.7500 spot rate will return $750.00
Stake’s fee of 70 basis points (0.0070) brings the rate to 0.7430 (0.7500-0.0070). AU$1000 deposited at an AUDUSD 0.7500 spot rate will return US$743.00 after the 70bp fee.
The fee of 70bps can be calculated as US$7.00 ($750.00 – $743.00)
On withdrawals, this rate is 0.7570. Customers will receive AU$1 for every US$0.7570 they withdraw from their account (0.7500 + 0.0070).
A simple way to think about it: Stake fee is US$0.70 per AU$100 transferred in or out.