How Trading212 makes money

Hi :wave:

Without the need for any deep details, but I was wondering how Trading212 makes money to survive as a company?

I think it’s a very valid question especially to who is building a long-term portfolio. :slightly_smiling_face:

Many thanks.

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I think mostly from cfd accounts looses, that’s how it was before free instant trades and free isa account, there is also some tiny inactivity fee after half year without orders on your account but does it give enough money to them hard to say. The best would be to wait for answer from one of team members

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I would assume they might make interest on the uninvested balances of free cash in users accounts like a lot of platforms do. But I would have to agree that the CFD losses are likely to be rather substantial considering the large percentage of people who lose money over making it.

Spread is with every transaction.

Trading 212 is making money from its CFD business where the main revenue comes from spread and interest swap.

As our Invest service grows, we will be able to monetise some of its advanced features but monetisation is not our priority at the moment. Our top priority is to provide an insanely great service, completely free.

Other platforms claiming to offer free trading either provide a significantly inferior service (e.g. the free trades are not instant but executed at the end of the day) or are limiting the number of free trades. And all of them are burning VC money.

We have been profitable for the last 15 years (if that is of concern for the long-term investor).

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@Ivan Are there any plans for a T212 listing for those who would like to invest in the platform? Or would such a thing not make much sense or provide reasonable benefits to be deemed viable?

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2020 will be a very decisive year for our sector and there are many moving parts. Most well funded fintechs will launch whatever they have prepared in the UK market. Depending on where we are by then and of course the macro picture, we might consider an IPO.

So far we are very happy that we don’t have to think about raising money and dream about valuations.

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Thanks for being so honest Ivan.

I am considering opening an account with you for the very long term. I understand you generate revenue from CFDs but, it this sustainable? CFD is now heavily regulated in the EU and even forbidden in the US.
Do you see Trading 212 still making money from CFDs in 20 years?

Anyways thanks for the massive improvements to the Invest app that we are witnessing.

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In the future, we will introduce additional features for the Invest and ISA accounts which will be paid. Just like any other company with a freemium model, we first have to build the free fundament of our service. But the goal is to make it sustainable.

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Any ideas as to what these features will be?

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Could T212 introduce withdrawal and selling fees to their customers without prior notice?

No. They need to give at least 1 months notice

It appears not?

Yes now there is no inactivity fee anymore

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Loads of ways, you should know how haha. But cfd losses, plus spreads. Invest losses, plus the spread. So buy at 1.50 but sale is 1.45 if I sell I lose 5p straight away. Trading 212 makes that.

I thought that the spread was from Market Makers / Exchanges, I thought that Trading212 did NOT increase the spread. Can anyone confirm?

It’s illegal to mark up the spread.

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Thank you, that was what I thought, which is why they are moving into lending securities through their new provider.

CFD losses and minor exchange rate fee’s. but most people lose money which is why brokers offer CFD services as they are very lucrative. Now T212 offers a service to provide shares for shorting which makes some money for them in fee’s. not everything you listed.

considering how markets work I doubt anyone can make money off you losing in Invest besides the person you bought from/sold to, that found a good deal.

also that’s not how buy/sell spreads work on the platform. you might want to touch up your research to avoid making any mistakes that can cost you money. down the road.

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Does Trading212 make money from borrowing the stocks? If yes, how the risk is managed?

Edit: I found partial answer to my question: Securities Lending