German online broker Trade Republic is coming to the Netherlands. The broker started operations in Spain on Tuesday and at the same time announced in a press release the “opening of waiting lists of clients in the Netherlands and Italy.
Trade Republic, like FlatexDeGiro, is a so-called neo-broker that competes in Germany with low fees against established players such as Deutsche Bank, Commerzbank and the German branch of ING. They can afford these low fees as they often generate revenue on both sides of the transaction. Trading platforms and exchanges pay brokers for the order flow they bring in. Trade Republic does this on the LS Exchange trading platform, and FlatexDeGiro does this on another platform: Tradegate.
The AFM prohibits this for Dutch brokers because of potential “perverse incentives” that could disadvantage retail investors.
The revenue model worked well for Trade Republic in Germany, where it managed to acquire around one million new customers in two years. Together, they have placed more than €6 billion worth of assets with the broker. There they can invest in equities, index funds (etf’s), cryptocurrencies and derivatives, or put their capital into an investment plan ‘designed for long-term wealth accumulation.
Like many other online brokers, Trade Republic positions itself as an advocate for small investors. Earlier this year, founder Christian Hecker told reporters that the financial world has “made a lot of mistakes” that have destroyed people’s trust. “Investing has been a rich people’s playground. Too complicated, too expensive and too slow.” Half of his clients consist of people who have never invested before, said Hecker, who spoke of a “tectonic shift” in the investment market.