I would say,
think Trading212 like a bank.
Itās your money, bank holds. Bank lends the money for interest.
You get interest for your money from the bank.
Trading212(IBKR) holds/stores the shares.
Itās your shares and you get the dividend.
If T212 goes bang the shares still belong to you.
Iām not sure where you got that only Ā£85k is segregated. This is not true. All client funds, as in cash, is held in a Barclays bank account. If you use that money to buy shares with, the shares are bought and held with IBKR.
FSCS protection covers up to Ā£85,000 per firm. But that does not perclude you getting back your full amount or close to it if you are over this. Depends on what happened to cause T212 to shutdown.
Yes this is industry standard.
@Sean_Idle Sure, but I am also sick to death of regulation and the EU telling me what I can and canāt do with my money. So thereās that also.
Edit: Ps. We have nothing to do with IBKR or Barclays. Our agreement and contract is with T212.
Edit: Itās all explained very well here by Dao and AlexK: Long term investing reassurance (hopefully)
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You really donāt get itā¦ do you?
@Stalianu you have to be specific or you arenāt saying anything at all. Cavanhagan knows what he is talking about for the record.
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I was referring to the point that itās a contractual agreement that followings the share price and dividends are paid. I agree I slightly read it wrong initially, I didnāt see that he acknowledged that Trading 212 own a physical share, which is correct. I was just trying to separate it from a contract for difference, which it is not. Itās a bit more than a contract for share price and dividends, in Trading 212ās books itās your share, itās just not in the officially yours at any level above Trading 212. People get scared of this but itās just a logistical thing, much easier than registering the share to everybodyās individual name.
I donāt think thereās anything I donāt get about it. Please share if Iām missing something.
Hey @Team212
I made this video recently about Trading 212 vs Freetrade, but in the comments we were talking specifically about how the shares are held in custodian accounts. Freetrade hold all clientsā shares with a custodian, but Trading 212 state that
13.5. Investments purchased by us on your behalf or transferred to us will be registered `in the name of a nominee company or our name or a sub-custodian. We will be responsible and liable for our nominee to the same extent as for our own acts, including losses arising from fraud, wilful default or negligence.
The person argues that having the shares registered in Trading 212ās name is riskier than holding it in a custodian account, but Iām really unsure about this stuff, maybe @Richard.W could add to this?
But the question really is in what way are the shares generally registered? And if you could maybe elaborate more on what this means. I feel that a lot of people require more transparency on this aspect.
Many thanks,
Cavan
You couldnāt have split shares without t212 as the custodian thatās the real issue
Freetrade have fractional shares though yet they say shares are held with a custodian?
Yes but not the investor, the custodian has to buy a full share and distribute a fraction share to the investors. Which means they receive the dividend, rights of ownership and voting rights they just elect to give these to us as part of the contract.
I donāt know if itās the share provider or t212 that actually makes the offer of fractional shares but they are obviously not available through the exchange
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I just joined in January, and I am extremely new to trading much to my regret now, however this topic has certainly interested me.
I receive a summary of all shares purchased from 212, which Is all the proof I would need to verify ownership? Unless I am investing more that 5% of the total volume of shares (which I presumably would do via a direct broker) it makes little sense to receive share certificates as it is merely an investment tool to increase the return on my savings, and since I am buying and selling the shares on a regular basis to balance my portfolio, it would make even less sense to request certificates.
Or am I missing something?
How are you covered though with your shares of 212 went under? Cash wish I know youāre covered for 85k with FSCS but what happens to your shares?
Iām not really sure it confuses me. But your shares are held by interactive brokers, so if Trading 212 go under, your shares will be transferred to you from IB. I guess if IB goes under your shares will be covered by that Ā£85,000 protection. Itās always good to try understand the worst case scenario, but I wouldnāt worry about it too much as I say. If the FSCS covers a business, they have faith that they are legal and secure. They donāt want to be paying all that money out. And if something bad does happen, it might not come out as the worst case scenario of having to claim from FSCS
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T212 has an omnibus account with IBKR, they are the custodian and the intermediary. You can google what that means. You are the benificial owner of the shares. That is legal and lots of other brokers do it. If T212 go bust you recover your shares from IBKR and your account cash is covered up to Ā£85.000 by FSCS.
All this info is presented when you open the account.
That is the the cost of comission free.
If you create an account with IBKR you will pay comissions for you transactions.
Itās your choice, nobody is forcing you to go with one or the other.
All this information is also free on the internet, just a few keystroks away.
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That is not entirely correct, shares are like physical assests and you will always own them whatever happens to the broker. The Ā£85,000 covers cash and CFD.
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But remember theyāre held under a nominee. It would be different if they were in your name. But Iām sure Trading 212 would find a different broker to transfer the shares to in that case and it would continue as normal. Again I really donāt know, I just have faith in the system that we wonāt get screwed over
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Thatās it!..
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For anyone still interested in this topic please note that it might be worth researching some the these key terms:
- nominee shareholder / registered owner
- beneficial owner
- proof of ownership (always save the emails you receive from T212 that have Statement in their name
)
Nominee shareholder refers to the holder of shares on behalf of another person or beneficial owner or original holder of shares. The nomination is a mandate given by a shareholder to give the legal title of shares to a described person with whom shares shall vest on the death of a shareholder or original holder of shares. A nominee is person who is described in that mandate.
I am not a lawyer but as far as I can understand if IB or T212 go bankrupt they donāt disappear from the face of the earth. They just close shop. Before they do that there are some legal requirements that need to be met. One of the legal requirements is to inform both the company and the beneficial owner and to allow the possibility of share ownership transfer to another nominee.
What I believe are some good references:
https://www.wallstreetmojo.com/nominee-shareholder/
Again I am not a lawyer. This is not legal advice, just some ideas on a forum. You might want to seek legal advice if you feel you are misrepresented.
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Even if T212 gets sued for doing something wrong or they go bust they hold the shares and the cash in their clientās name(one big account for all the clients) in a separate account and bank from their own cash. This is the law. No entity can have access to take that, by suing or any other means.
Most brokers do that.
We are 100% secured.
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What happens to fractional shares using Pie investing? When I decide to switch over from Trading212 to some other broker but Iāve only done pie investing. Then all the wholly owned shares of mine are transferred to the new broker and what happens to the last fractional one?