Thanks, It does help a little. However it seems HL hold your shares in a separate Limited company untouchable if they themselves went bust. As you’ve rightly pointed out they all pool our shares and have a ledger of who owns what. I think the lack of clarity for T212 is the use of “certain overseas territories” because that could include the NASDAQ, which is what needs clarifying.
Beaufort securities thought their segregated separate company was untouchable. PWC still touched it.
Yes, the countries affected should be declared.
So going back to this and Sasha’s video. This statement and video sounds like every share is at risk.
We know our shares are held in a single omnibus account on IBKR.
So if I have 5 TSLA shares, you have 10, another T212 customer has 3 we have 18 total.
Its T212 database that then says who owns what of that 18 TSLA shares show inside their IBKR account.
What we are talking about is the shares have various ways of registering who is named as the holder.
What is being stated is that there may be situations where it can’t be registered in your name that you own those shares.
So inside T212 IBKR account it might show 23 XYZ shares all registered under T212s name.
Although T212s database says that someone might have purchased 10 shares and another person 13 shares, what I think is being suggested is that if those shares are not in your name, that they would be at risk if T212 ship sinks.
I have to assume that 99%+ would be in your name and hence not seen as T212s property to be sold in the event it all turns sour.
Have I got any of this correct?
If it is a case this was always the situation that certain shares can’t be held in your own name, then what has changed (other than clarifying this with 13.10)
How about a clear way to know what shares are not technically possible to be held in your name?
Bonus Q if someone knows what happens if T212 is nuked. And the business isn’t able to be wound down smoothly.
Who takes that database and works out who owns what? I assume the shares would be sold together eg 18 TSLA shares sold on IBKR directly, and then the cash would be distributed based on the T212 database of who owns what portion.
Or is there a magical button that if pushed, creates individual IBKR accounts and the shares are re-distributed?
Nothing in the relevant term has changed in a way to impact the business, nor the client’s relations with Trading 212. Rather: more details are added for the sake of transparency.
In a nutshell: the client assets are kept in a segregated account. In the unlikely event of insolvency of Trading 212 UK Ltd. → client’s assets will be protected.
The information in the discussed video can be misinterpreted as it contains a personal point of view towards legal documents. We are encouraging every client who has any legal questions or insecurities to reconcile with a solicitor or a lawyer in order to receive accurate advice.
Now in more detail: the update to Clause 13.10 is intended as a clarification in line with CASS 6.2.3R (CASS 6.2 Holding of client assets - FCA Handbook). We would like to stress that all client assets are held in clients’ omnibus accounts, segregated from assets of Trading 212 UK Ltd., in line with the applicable rules under the Custody rules (CASS 6). At all times Trading 212 UK Ltd. complies with all relevant rules under CASS 6, which relates to financial instruments, and CASS 7, which relates to client money.
For the avoidance of doubt, you will at all times retain the beneficial ownership of your shares - your shares will always be protected under CASS 6.
Retail client brokers in the UK and across the world usually operate with a custody chain. This means that our service is such that it is not actually Trading 212 UK Ltd. holding your financial instruments but is that we provide you access to a worldwide network of custodians, who hold the relevant financial instruments for your benefit and risk as ultimate beneficiary. In all situations we will require custodians to protect your investments against their bankruptcy. Due to the nature of how the financial markets operate and the applicable rules and market practices, it may be the case that the assets are not recorded in your name but are recorded in our name (Trading 212 UK Ltd.), the name of our custodian or another third party.
By way of example, if you have bought a share listed in the US, it will be held via a custody chain (through Trading 212 UK Ltd., our custodian etc.) with the end custodian being the Depository Trust Company (DTC) in the US. The share will be held in the name of DTC’s nominee entity, Cede & Co, as is standard with US shares. In any case, however, the relevant share will be held for your benefit, in line with the CASS 6 rules.
Appreciate your time Tony. Thanks for the clarification.
I’m with you Sasha that this one sentence needs a little clarification, maybe the well protected bit rather than the bits you’ve underlined.
But you are wrong about the rest, and I present to you Vanguards clause which explains the process in greater detail.
Wrong again, there is precedent that client assets HAVE been used to pay creditors in this situation.
I agree with you about the matter of “well protected” but yes, they have all copied from vanguard (I believe vanguards used to be worded in this way) but they have since updated to the current.
You are also attempting to argue that Trading212 can interpret their clause outside of the rules of the FCA, the most current example of such deceit I can probably give you of this is Nikola motors… and that didn’t go well for them.
But… you just contradicted yourself in that sentence.
To define ‘shortfall’ in this context, as I interpret it, would be that the nominee account does not contain enough “asset” to cater for the client amount minus what is owed to creditors.
If you are not interpreting Vanguards wording in this way, then we will not be able to come to an agreement here.
I guess you could have just sent an email to Trading212 to clarify rather than put mine and apparently your own assets at risk.
Yes, but in previous cases of this exact thing happening, the nominee account has been used to pay debts and then has been retrospectively recovered by the FSCS.
Isn’t this what the whole line is about?
This is why I personally would like the term “well protected” clarified rather than what you’re talking about.
This i believe is the relevant CASS 6 section that caused the change in T&C.
Simply put, some foreign jurisdictions may require T212 to divert from the normal arrangements with custodians in the UK & US markets
Johny for finding and understanding the regulatory text. It can be a minefield at times the number of revisions made over the years to find the current stance.
@Sasha the simple answer would be that the highlighted text is not relevant to the current structure. The text in question (now under clause 13.10 b) is not newly introduced but has been preserved from the previous version of the Terms of Business. And most importantly, all client funds are always protected by us under CASS.
Further clarification on how the clause corresponds with the custody chain.
The wording referred to by Sasha refers to a hypothetical situation where assets of clients of Trading 212 UK Ltd. are registered in the name of Trading 212 UK Ltd. As mentioned above, Client Assets are always protected by Trading 212 UK Ltd. under CASS 6. Due to the custody chain, it may be the case that assets are not recorded in your name but in our name, the name of our custodian or a sub-custodian down the chain. Currently it is the practice of our custodian and the custody chain we use to register assets in the name of the end sub-custodian or a third party nominated by that sub-custodian. This means that the current practice is that assets are not registered in the name of Trading 212 UK Ltd., therefore the provision referred by Sasha is currently not applicable. As mentioned above, for instance with US shares, the end custodian is the Depository Trust Company (DTC) in the US. The shares are held in the name of a third party, DTC’s nominee entity, Cede & Co, as standard in the US.
Trading 212 UK Ltd. always strives to provide widest possible access to the worldwide financial markets to you, our clients. It may be the case that certain overseas markets (for instance outside the most commonly used markets in the US, UK and EU) require or have a market practice that assets are recorded in the name of the end broker, this being Trading 212 UK Ltd. This is why this provision is part of our Share Dealing Terms of Business, even if not applicable currently. For the avoidance of doubt, at all times Trading 212 UK Ltd. will comply with the applicable rules under CASS 6 for the protection of your assets and you remain the beneficial owner of any shares.
@Sasha you might need to now put out another video commenting on all the wrong assumptions “Trading 212 Just Confirmed Your Investments Are Actually Safe”
You’ve basically made free money with your clickbait whilst potentially cost T212 customers both existing and new.
Whilst you might be sticking with T212, the comments show the knee-jerk reaction with your followers
This is just a small selection, you have to remember the viewers that don’t comment. Currently 13k+ views but the longer the video is around without a follow up the more damage it does.
@phildawson You want free money? Find a bookmaker to offer you odds that he won’t.
It’s a shame it’s actually costing people money. Look at Duncan’s post above. Was going to move to 212, from Vanguard to avoid the Vanguard 0.15% platform fee, and has now cancelled it.
T212 could ask compensation for misinformation.
If I had a business that was targeted by misinformation and speculation, lowering the goodwill of my company, and with that lowering my company assets, I will seek compensation for reputational damage.
Scary how people just follow the pied Piper, take note when buying your stonks. Do your own research.
We’ve gone from a world of spending weeks on your own DD to watching a few seconds of tiktok for advice on what to do.
With easier on ramps to stocks comes inexperience and lack of attention span. Easier to follow and blame someone else.
I also blame crypto with 1% actually understanding what the technology does or solve on any project, its insert coin and spin the wheel stuff.
All about the influence