Retail
trading firms and CFD brokers have recently begun offering their clients
interest on uninvested funds. London-based Trading 212 introduced a similar
offer in May, encouraging clients to engage in passive investing.
As it
turned out, the terms included a clause stating that the company reserved the
right to suspend interest payments for inactive clients. In the latest update
to the Invest terms, this unfavorable term has been removed.
Passive Investing in
Trading 212 Only for Active Clients
Record-high
interest rates have led many savers and investors to avoid risk, preferring to
keep their money in bank accounts and earning several percentage points in
interest.
To meet
this demand and retain clients, retail trading firms began offering interest on
uninvested cash. Among them was XTB, which in November 2023 offered up to 5% on
idle client deposits. BidX and Webull later joined with similar offers.
Trading 212
introduced a similar solution in May, along with a multi-currency payment card,
likely aiming to diversify revenue streams and keep clients on board. The new
product offered up to 5.2% interest on uninvested money deposited in trading
accounts.
Earn 1.5% cashback on your purchases throughout the summer!
Get your 212 card now: https://t.co/sQb5RyttfU1.5% cashback until 1 Oct 24, 0.5% thereafter
— Trading 212 (@Trading212) May 7, 2024
However,
the offer had a catch. Trading 212’s “Invest
Terms” reserved the right to suspend interest payments with immediate
effect. The company cited the need to ensure it operated within its regulatory
permissions.
However, according
to the September
update of the trading terms, this unfavorable clause for investors and
savers has been removed:
“15.3.
To ensure that we act within the scope of our regulatory permissions, in order
to be eligible to receive Interest on Cash in accordance with this Clause 15.,
you must actively engage in trading activities through your Account or Stocks
ISA Account with us. For Accounts that are not actively trading, we reserve the
right, at our sole discretion, to suspend any interest payment to you with
immediate effect and we will notify you.”
The change
takes effect on October 4, 2024, so within the next month.
Acquisition, New License,
and “Eaten Gains”
Trading 212
has been busy lately. Last month, the CFD company acquired FXFlat Bank GmbH as
part of its expansion into the German market. This acquisition aims to provide
German investors access to Trading 212’s commission-free investment platform,
which promises to disrupt traditional brokerage models in the UK and Europe.
Earlier in
June, the company obtained a cryptocurrency license in Cyprus, becoming an
official crypto asset service provider (CASP). According to the Cyprus
Securities and Exchange Commission (CySEC ) register, the CASP license was
granted to a local entity called Trading 212 Crypto Ltd on May 20, 2024. This
newly formed entity is separate from Trading 212 Markets Ltd, which holds a
Cyprus Investment Firm (CIF) license.
In May, the
London-based broker published its results for the previous year, showing that
the UK subsidiary experienced a slowdown in revenue and profit growth in 2023.
The brokerage operator reported a 3% decrease in revenue and a 28% decrease in
pre-tax profits over the year.
The
company’s profits were affected by increased administrative costs, which rose
by 45% to £71.2 million due to intensified marketing efforts. The firm resumed
marketing activities in the last quarter of 2022 and spent over £7.4 million on
research and development.
Retail
trading firms and CFD brokers have recently begun offering their clients
interest on uninvested funds. London-based Trading 212 introduced a similar
offer in May, encouraging clients to engage in passive investing.
As it
turned out, the terms included a clause stating that the company reserved the
right to suspend interest payments for inactive clients. In the latest update
to the Invest terms, this unfavorable term has been removed.
Passive Investing in
Trading 212 Only for Active Clients
Record-high
interest rates have led many savers and investors to avoid risk, preferring to
keep their money in bank accounts and earning several percentage points in
interest.
To meet
this demand and retain clients, retail trading firms began offering interest on
uninvested cash. Among them was XTB, which in November 2023 offered up to 5% on
idle client deposits. BidX and Webull later joined with similar offers.
Trading 212
introduced a similar solution in May, along with a multi-currency payment card,
likely aiming to diversify revenue streams and keep clients on board. The new
product offered up to 5.2% interest on uninvested money deposited in trading
accounts.
Get your 212 card now: https://t.co/sQb5RyttfU— Trading 212 (@Trading212) May 7, 2024
However,
the offer had a catch. Trading 212’s “Invest
Terms” reserved the right to suspend interest payments with immediate
effect. The company cited the need to ensure it operated within its regulatory
permissions.
However, according
to the September
update of the trading terms, this unfavorable clause for investors and
savers has been removed:
“15.3.
To ensure that we act within the scope of our regulatory permissions, in order
to be eligible to receive Interest on Cash in accordance with this Clause 15.,
you must actively engage in trading activities through your Account or Stocks
ISA Account with us. For Accounts that are not actively trading, we reserve the
right, at our sole discretion, to suspend any interest payment to you with
immediate effect and we will notify you.”
The change
takes effect on October 4, 2024, so within the next month.
Acquisition, New License,
and “Eaten Gains”
Trading 212
has been busy lately. Last month, the CFD company acquired FXFlat Bank GmbH as
part of its expansion into the German market. This acquisition aims to provide
German investors access to Trading 212’s commission-free investment platform,
which promises to disrupt traditional brokerage models in the UK and Europe.
Earlier in
June, the company obtained a cryptocurrency license in Cyprus, becoming an
official crypto asset service provider (CASP). According to the Cyprus
Securities and Exchange Commission (CySEC ) register, the CASP license was
granted to a local entity called Trading 212 Crypto Ltd on May 20, 2024. This
newly formed entity is separate from Trading 212 Markets Ltd, which holds a
Cyprus Investment Firm (CIF) license.
In May, the
London-based broker published its results for the previous year, showing that
the UK subsidiary experienced a slowdown in revenue and profit growth in 2023.
The brokerage operator reported a 3% decrease in revenue and a 28% decrease in
pre-tax profits over the year.
The
company’s profits were affected by increased administrative costs, which rose
by 45% to £71.2 million due to intensified marketing efforts. The firm resumed
marketing activities in the last quarter of 2022 and spent over £7.4 million on
research and development.
This post is originally published on FINANCEMAGNATES.
