As the maxim goes: everyone loves a bargain! This may help explain how the Dutch upstart DeGiro, an online stock broker, has managed to storm the European retail market since it opened its doors to retail investors 18 months ago. And their sights are now set on Europe’s financial heart, the UK, with the launch of its online trading platform in London today (11 June).
DeGiro is set to shake up incumbant online retail brokers in the UK, presenting low-cost access to global markets for retail investors.
Through a heady mix of low prices, minimal fees, broad access to global markets, technology and canny strategic partnerships, DeGiro claims the title of Europe’s fastest growing online stock broker, purportedly operating in 18 countries and boasting a 30% market share back home in the Netherlands. The time is therefore ripe for entry into the City of London; DeGiro’s tried and tested product is now finally fit for launch in the UK.
The disruptive new entrant
DeGiro opens doors for retail investors that were previously the reserve of institutional investors. As stated by DeGiro’s director, Gijs Nagel: “The discrepancy in market access between retail and institutional investors is completely unnecessary and nothing short of a scandal. At DeGiro it is our mission to rectify this.”
As such, retail investors now have the possibility to trade on all major stock markets worldwide (including Europe, UK, US, Australia, Japan and Hong Kong) using a multitude of financial instruments, including shares, futures, bonds, options, CFD and spread betting.
The discrepancy between retail and institutional investors is nothing short of a scandal. At DeGiro it is our mission to rectify this.
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But most disruptively, DeGiro claims that its fees are on average 84% lower than its competitors; and up to 90% lower vis-à-vis its rivals in the UK, according to The Telegraph. Specifically, DeGiro will charge around £2 for trades of £10,000 (the actual tariff is £1.75 plus 0.004%). This compared to £5 from its nearest rival in the UK, iWeb, and more like £12 for the larger established players. Reduced commission on foreign trades, low tariffs on ETFs, canny deals with the likes of Euronext to offer low fee caps on some indexed options for larger retail investors, and the removal of custodian and inactivity fees further contribute to DeGiro’s cut-price allure.
You get what you pay for?
But like all good bargains, you may get what you pay for. DeGiro too has encountered some teething problems. The Amsterdamtrader blog, for example, cited a raft of issues back in October 2014, ranging from front-end website issues, poor communication, lack of insight and advice, and rigidity in terms of trading possibilities. Indeed, UK punters may be deterred by the absence of certain investment products as well as analysis and research, and lack of oversight and protection by British regulatory authorities.
Although, to be fair, many of these initial criticisms have been rectified: DeGiro’s in-house development team have since produced an app and continue to tweak the technology, and there is more flexibility in terms of product options. And it is a fully regulated platform, which provides full segregation of assets, meaning that there is no risk for clients if a company defaults.
We look forward to liberating UK investors from the hidden costs that have plagued them for so long.
DeGiro is now set to shake up the incumbent online retail brokers in the UK, as it has done in Europe, presenting low-cost access to global markets for retail investors. Only time will tell if punters take up the offer.
Gijs Nagel is confident: “The way we see it: it’s not that our fees are low, but that those of our competitors are too high! We believe this approach has fuelled our success and growth across Europe to date. All of our progress has culminated in this point, and the UK is a natural next step for us. We’re excited to be launching in Europe’s financial heart and we look forward to liberating UK investors from the hidden costs that have plagued them for so long.”