📈 Now available: EVEN higher interest on uninvested cash!

📰 What's new
102

We’re placing the money in bank deposits and QMMFs but always on our client’s behalf.

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103

Anyone able to advise if money you have ‘reserved for orders’ is also eligible for the daily interest payments? TIA.

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If not mistaken, I read that uninvested money also include the money reserved for orders, for interest income matters.

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105

I’m (still) not a lawyer, but I think the key here is the “Q” in “QMMF”. For example, by contrast, the example you posted some weeks ago from DeGiro, where they reported that you as an individual had transactions buying and selling MMFs, conspicuously mentioned “MMFs” but not “QMMFs”. I believe that’s what makes all the difference.

The wording from T212 could admittedly be clearer still (and some legal references could help), but comments so far from T212 staff (and non-staff) have been clear that we are simply paid interest (see 17 Jan) and not performing individual transactions (see 6 Feb), and that this is equivalent to cash as far as law is concerned (see the Help Centre—by the way, the page may have been updated since I last looked at it and somewhat clarified).

My understanding is that this is what makes the “qualified” funds special. The broker (this isn’t even the word I’d like to use here, but I lack a better one) is allowed to invest our money, almost behind our backs but with our conscious approval, in these funds while continuing to present it to us as plain cash for all intents and purposes, including mutual contractual obligations and taxing. This can happen because they’re only allowed to use funds that are sufficiently trustworthy for this façade to hold reliably, and this happens transparently to us, but we are still warned due to a technically increased risk for the broker’s ability to give us our hard cash back when we ask for it. But it still acts as cash, or “cash equivalent” as the Help Centre puts it, and we should treat it as such. And as far as I can tell, this is still a rather new legal concept, so it’s no surprise that we lack a solid understanding of it.

The very latest comment that said “on our client’s behalf” is a tad confusing, but I understand it as: “Even if T212 should be declared insolvent, the underlying QMMF holdings into which your cash has been converted will be returned to you, not to T212’s other creditors.” This might be part of the rules that allow the broker to use QMMFs in the first place.

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106

Can now confirm that is the case. Even cash ‘reserved for orders’ but not yet invested, still receives interest
:wink:

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107

The only minor concern here in the UK with earning cash on our uninvested money is the fact that if in the extremely unlikely event of Trading 212 going broke then our uninvested cash is not covered by the governments FSCS ÂŁ85k scheme.

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What is your source on this?

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Is there a list yet of which banks and QMMFs T212 is using? Sorry if I missed it. And, what’s the strategy behind using them? Is the money spread out in some fashion so that when one investment goes up in smoke, not all the money is lost?

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112

Screenshot_20240310_132033_Trading 212
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In fairness, the T212 app does state money in a QMMF is not protected

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113

Bringing this up again because it still isn’t clear.

Screenshot_20240310_132216_Trading 212
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Can the customer lose money on uninvested cash?

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There is a massive problem here and 212 is being extremely vague and evasive. What QMF is my money in who is managing this fund, what instruments is the fund using. at 5% it clearly isnt bonds is it. other questions what happens if to many of us want to withdraw from 212 at the same time will the fund crash. 212 tells me my capital is at risk but not anything about the fund that is a risk to my money.
I am therefore either better off keeping it in a normal savings account or just putting it in vusa because i at least understand vusa and know what my money is going into

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which banks and qmf’s. just tell us

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116

Hi, although I absolutely love what you do, there are still a few details that don’t let me sleep particularly well at night:

  1. In the linked page, I can’t find any mention of the 1M EUR insurance by Lloyd’s. Where do you explicitly state that our investments are insured up to 1M EUR?

  2. Every time you mention the FSCS scheme you include “Where we hold your money with a bank”. Is the only other alternative to hold our money with a QMMF or is Trading 212 holding part of our money? Because Trading 212 UK Ltd is NOT protected by the FSCS scheme.

  3. “In the unlikely event that the QMMF fails to maintain their low-risk strategy, as with any investment, the protection will not be available”. I thought that I had a contract with Trading 212 in terms of the uninvested cash returns and that Trading 212 would absorb the risk of a QMMF screwing up, is that incorrect? Does it mean that we directly face risks should the QMMF lose on their investments?

Thanks for the clarification and apologies if the question is similar to others, but the devil is in the detail


One last thing: I would LOVE for you to allow the customers to choose separately between:

  • Opting in/out of getting smaller interest rates from depositing cash in banks (protected by the FSCS)
  • Opting in/out of keeping cash in QMMF (not protected by the FSCS)
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117

Sorry to butt in, but here’s my understanding.

EU customers on the CY platform.

FSCS is bank protection provided by partner institutions. It’s inherited. QMMFs are not banks, hence the risk statements on sign up to use the product.

This is in the risk statement when you sign up to the product. There’s no free lunches in investing, to access the higher rates you have to be prepared to take on a little risk. QMMFs are pretty well regulated, but a 2008 style crash will hurt an QMMF fund.

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118

Hey thanks for your input.
The Lloyd’s insurance is only for EU customers (Trading 212 CY), not for Trading 212 UK? So which guarantees do we have on our investments in the UK?

On top of that, when searching for it, I can find Trading 212 on the FCA website but not on the FSCS website.

Regarding the risk statement I might have expressed myself in an unclear way. What I mean is: are there 2 possibilities of where my money goes (third party bank and QMMF) or are there 3 (trading 212, third party bank and QMMF)?
Because if the latter is the case, Trading 212 does not have FSCS protection on the customers cash it holds.

Fair point, the risk statement definitely states that although it could make it more explicit that they are always placing money in bank deposits and QMMFs on client’s behalf.
Absolutely agree on free lunches, but there definitely are options to get fixed guaranteed returns while still being protected by either the FSCS or other schemes, albeit these will surely have lower APY interests


119

T212 doesn’t hold cash, as it isn’t a bank. It has bank partners that hold T212 customers’ cash in omnibus accounts.

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120

You have the CASS system and register ensuring assets are suitably segregated from 212’s balance sheet and FSCS for cash and shortfalls.

You won’t as they’re not a bank. Barclays and JP Morgan are their partner banks. You’ll find them if you search.

QMMFs are a might do and not a will do. Money not held in a QMMF is FSCS protected, money held in a QMMF isn’t.

Sure. Banks.

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121

Hey, everyone :wave:

Below are the answers to your latest questions. We hope these answers provide further clarification regarding the process and the interest on uninvested cash.

The largest QMMFs in Europe have assets under management of hundreds of billions. A significant portion of that is held in free cash to meet high withdrawal demand. QMMFs are subject to higher regulatory scrutiny than any other fund and are designed to maintain valuation regardless of withdrawal demand. To give an example, BlackRock’s ICS QMMFs have been active for nearly 30 years with a valuation of 100% throughout the entire time.

The specific QMMFs will be visible in the app and in the statements. In terms of banks, we currently use JP Morgan, Barclays and Natwest to hold client money.

You can check it out here. It’s available on our ‘Funds and assets protection’ page.

Client money is either held in a client money bank account or in a QMMF, there are no other alternatives.

We’ve covered that earlier in the discussion :point_down:

If you opt-in to receive interest on your cash you can’t specify what amount you’d like to be held in banks versus QMMFs. We will do that allocation periodically.

We are not a bank so we can’t hold client money ourselves. When you deposit funds, we hold your cash in a client money bank accounts at banks, like JPMorgan, for example. There are no other possibilities, your money is held either in a client money bank account or in a QMMF, if you’ve opted-in for interest on cash.

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123

has the prior APY been disabled/removed? It’s QMMF or nothing, even for older customers?

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