Retail trading firms and CFD brokers have recently begun offering their clients interest on uninvested funds. London-based Trading 212 introduced a similar offer in May, encouraging clients to engage in passive investing.

As it turned out, the terms included a clause stating that the company reserved the right to suspend interest payments for inactive clients. In the latest update to the Invest terms, this unfavorable term has been removed.

Passive Investing in Trading 212 Only for Active Clients

Record-high interest rates have led many savers and investors to avoid risk, preferring to keep their money in bank accounts and earning several percentage points in interest.

To meet this demand and retain clients, retail trading firms began offering interest on uninvested cash. Among them was XTB, which in November 2023 offered up to 5% on idle client deposits. BidX and Webull later joined with similar offers.

Trading 212 introduced a similar solution in May, along with a multi-currency payment card, likely aiming to diversify revenue streams and keep clients on board. The new product offered up to 5.2% interest on uninvested money deposited in trading accounts.

However, the offer had a catch. Trading 212's “Invest Terms” reserved the right to suspend interest payments with immediate effect. The company cited the need to ensure it operated within its regulatory permissions.

However, according to the September update of the trading terms, first reported by Investing in the Web, this unfavorable clause for investors and savers has been removed:

“15.3. To ensure that we act within the scope of our regulatory permissions, in order to be eligible to receive Interest on Cash in accordance with this Clause 15., you must actively engage in trading activities through your Account or Stocks ISA Account with us. For Accounts that are not actively trading, we reserve the right, at our sole discretion, to suspend any interest payment to you with immediate effect and we will notify you.”

The change takes effect on October 4, 2024, so within the next month.

In response to a question about the change asked by Finance Magnates, Mukid Chowdhury, the Group's Chief Executive Officer, responded: “The removal of the clause related to the suspension of interest payments is part of our ongoing effort to simplify and improve transparency in our terms and conditions. We strive to ensure that our terms are clear and beneficial to our clients, and this change reflects our commitment to providing a more straightforward and customer-friendly experience.”

Acquisition, New License, and “Eaten Gains”

Trading 212 has been busy lately. Last month, the CFD company acquired FXFlat Bank GmbH as part of its expansion into the German market. This acquisition aims to provide German investors access to Trading 212's commission-free investment platform, which promises to disrupt traditional brokerage models in the UK and Europe.

Earlier in June, the company obtained a cryptocurrency license in Cyprus, becoming an official crypto asset service provider (CASP). According to the Cyprus Securities and Exchange Commission (CySEC ) register, the CASP license was granted to a local entity called Trading 212 Crypto Ltd on May 20, 2024. This newly formed entity is separate from Trading 212 Markets Ltd, which holds a Cyprus Investment Firm (CIF) license.

In May, the London-based broker published its results for the previous year, showing that the UK subsidiary experienced a slowdown in revenue and profit growth in 2023. The brokerage operator reported a 3% decrease in revenue and a 28% decrease in pre-tax profits over the year.

The company's profits were affected by increased administrative costs, which rose by 45% to £71.2 million due to intensified marketing efforts. The firm resumed marketing activities in the last quarter of 2022 and spent over £7.4 million on research and development.