A new execution only, online broker has launched in the UK. Called Degiro it is offering private investors trades that it claims are on average 80% cheaper than its rivals.
It covers stocks, futures, options, investment funds, ETFs, rights, bonds, leveraged products and CFDs. As well as offering access to markets in Europe and the US, investors can invest in Australia, Japan, Hong Kong, and many more countries across the globe – in total 100 exchanges.
The platform, regulated by the Dutch regulator (AFM) and the Netherlands central bank (DNB), has accounts that it says are 100% segregated, with no risk of default. “This means there is no risk to client money if the company were to go bust,” said one of its founders – ex-trader and fund manager Gijs Nagel.
He and 4 colleagues from Binck Securities founded the company in 2008. At first they offered institutions a one-stop shop for trading global securities with ease. Just under 18 months ago, it used its institutional model to service retail clients, launching into European markets.
The platform is now active in 18 countries and claims to be the fastest growing broker in Europe, processing €30bn worth of transactions a year.
Nagel claims Degiro has captured a 30% share of the Netherlands market, 10% of Belgium and 6 months ago launched in Spain and Germany.
As an example of how cheap the trades are, Nagel cited a price of £1.95 to trade £5,000 Tesco shares, which is approximately 83% cheaper than that of its main rivals.
There are no minimum balances for account holders although it does charge £7 a stock for transfers.
How does it do it?
Apparently, because its infrastructure is used by professional clients, Degiro is able to negotiate wholesale fee structures with every exchange to which it connects. Moreover, offering a no-frills, online-only, platform enables further savings.
With such cheap trading prices it should make inroads into the UK market provided its services levels and website experience match those of its rivals. Certainly, most retail investors will welcome the advent of a cut-price broker into the UK given the level of fees and charges that are levied by its rivals.