Germany's Federal Financial Supervisory Authority, locally known as BaFin, has slapped a EUR 1.05 million fine on the publicly-listed online operator flatexDEGIRO Bank AG for violating banking supervisory regulations.

flatexDEGIRO Faces €1.05 Million Penalty

The regulatory order further directs the company to eliminate the 'serious lapses' in its internal control around supervisory reporting and anti-money laundering measures. In addition, BaFin appointed a special representative to monitor the implementation of the ordered measures by the company.

The German regulator issued the legally binding penalty order on 17 February. It elaborated that the order will ensure that the company limits its risks.

"We find the fact that BaFin has appointed a special officer to be extremely helpful in order to ensure close monitoring of the projects right from the start," a flatexDEGIRO spokesperson said (translated from German), adding that the company is already in the process of implementing the initial measures of the remedies to the lapses.

On 8 September 2022, BaFin imposed additional capital requirement orders on flatexDEGIRO Bank AG and the flatexDEGIRO AG financial holding group.

The Reaction of the Markets

Listed on Germany's primary stock market, the Frankfurt Stock Exchange, flatexDEGIRO share price corrected significantly after the regulatory order became public. The shares of the online broker had lost 8.96 percent to EUR 7.07 on Friday, making it one of the weakest stocks in the SDAX index on that day. However, the investors' sentiment in the company is recovering as the company has gained about three percent, as of press time, since the market opened on Monday.

Meanwhile, the company's performance in recent quarters has excelled significantly. Its revenue in the third quarter of 2022 jumped by 4.3 percent to EUR 91.9 million, along with a 25.1 percent increase in EBITDA to EUR 37.6 million. Moreover, its revenue per transaction increased by 6.5 percent to EUR 5.15.

Furthermore, the retail trading platform acquired over 376,000 new customer accounts in the first nine months. It ended the period with a total customer base of 2.4 million, as the retention rate remains at 98.4 percent.