I realise trading212 lend out it’s share to other brokers and receive the full amount in cash + fees. I believe by giving the shareholders a small fee for this service you will not only benefit people holding shares but trading212 itself too.
Let’s assume Tom has 50k of shares and trading212 makes a fee lending it out to brokers, Tom if he receives a fee of say 0.1% then he receives 50 pounds. Let’s assume Trading212 places a restriction on the 50 pounds e.g you can’t withdraw this money after 3-5 years, they are forced to buy more shares which allow trading212 to lend out more shares and generate some more money for the company.
There are pros and cons to this obviously
Users are encouraged to invest with T212
T212 allows users to generate a slightly bigger profit than those from other platforms
Assets under management will slowly increase further
At first, it will come at a cost to T212
T212 may not be able to lend out all the shares and may result in revenue losses
To solve one of the cons I believe T212 can reduce the % Tom receives so instead of 0.1% because T212 may face a loss, instead he only receives 0.01%. which not only allows Tom to make at least something from the share lending program but T212 does not generate a loss
Perhaps this will be a great way to increase your assets under management and attract others to your app as this will give you guys a small advantage over the competition,
Thanks for hearing this out
you get a free service. the above suggestions won’t happen. there are also already free share promotions which may get more countries on the list over time.
I know you’re trying to make it seem positive, but that money’s going towards making the service free. Most other paid platforms won’t give you part of the share lending, so Trading 212 definitely shouldn’t. They need to keep reinvesting all this capital to grow the business and make it even more self sustaining. Also, the amount you’d be paid will be tiny, it’s only because Trading 212 has £2B in client assets that it’s actually a decent amount. It will be barely anything in relation to the size of your portfolio.
You won’t get jack for lending out your shares. Like above post said it works well for 212 because they can lend out a massive amount, billions and then it starts making decent money. I wonder why so many people nitpick a free service.
Even those with fixed/% fees lend out for extra cash. Be happy you don’t pay transaction fees. This alone encourages people to invest here
This is simply a nonstarter. There’s no such thing as a sustainable free lunch; we get a free service to generate our own returns and Trading212 lend out shares keeping the interest as part of their business model which can only be sustainable at scale. This is a fair exchange; let’s not nickel and dime on this.
Actually can T212 even lend out our shares? I would think since they use IB underneath only IB can do & profit from this
They lend them out through IB, 212 get profit from that.
Can individual investors on IB do the same?
Yes individual investors can. But if one can believe the reports from people on Reddit the income is laughably small as a proportion of funds invested. Think around $20 per year for a typical account. Further, it is income, not dividends and so is taxed at income tax rates. From what I read people, do not find IB accounts as easy to use as that of Trading 212. Not worth being there for the share lending income.
from experience, I can say that the amount you’re getting is so small that I would trade it for no fees any day. My parents had an account of about €3k at Lynx (which works with IB) and after a year they received a laughable €0.5 in securities lending proceeds while paying around €200 in commissions/platform fee etc in the same time.
The only kind of interest I could see T212 giving us is if they introduce margin and use our deposits for financing the margin. They could then give us the interest generated from providing margin to us back to us - some costs and some profits for T212. But this would make T212 a bit of a bank and I know don’t if something like that is even allowed/wanted especially the latter one.
Bad idea, you want to take away one of the few ways Trading212 is making money so that you receive a couple of cents extra. It’s like asking Jeff Bezos to donate his wealth to every person on Earth… you’d receive like 20$
Let’s just allow 212 to make money.
Having this great service, FREE share dealing and ISA account is a massive feature. Compared to the fees you have to pay for identical products from other providers, 212 can make as much as they want from my share dealing. I’m very happy already.