This is the second in a new series of reviewing online services & retailers. This series will only review services and retailers I’ve personally used.
Money Mage makes no recommendations regarding Trading 212 or competing providers. This article is provided as information only. Read the Disclaimer.
What is Trading 212?
Trading 212* is a relatively new commission-free trading and investing platform. It originally started as a Contract For Differences broker, but regulatory pressure in the CFD market has forced it and platforms like it to adapt and evolve. Trading 212 still offers CFD trading but at reduced leverage due to regulation.[]
Contract For Differences are high risk, leveraged spread trading. 76% of retail investor accounts lose money when trading CFDs with this provider.
So, Trading 212 is attempting to branch out of high-risk CFD. It’s now offering a more traditional stock & ETF trading/investing account called Trading 212 Invest. But with a twist: zero commission. You can also open an account under a Stocks and Shares ISA wrapper called Trading 212 ISA.
You trade online or on your phone via their app, paying in funds via debit card.
How much does Trading 212 Charge?
Trading on the Trading 212 Invest or Trading 212 ISA account is commission-free. Any relevant taxes will be taken at point of trade or point of dividend payment.
How do you use Trading 212?
Trading 212 provide a web app, and a mobile App for iOS & Android.
Adding funds frictionless. Just add your debit card. Once a card is added, it’s only one click to add more funds.
Withdrawing funds however, is more frictionful. Withdrawing appears to ‘refund’ back to your card of choice. You have to deposit from the card first. You may be asked to provide ID at point of withdrawl. There are reports of people being unable to withdraw funds. More on that below.
Buying and selling stocks and ETFs is simple and straight forward. I have not tried the CFD side of Trading 212. You can buy fractional shares.
Dividend payments can be found under Account -> History -> Dividend. You do earn dividend for your fractional shares. There does not appear to be a way to automatically reinvest dividend.
How does Trading 212 make Money?
Their business model is not explicitly stated. It can be inferred that Trading 212 makes money from CFDs where revenues come from spread and interest swap. They claim they do not make money from bid-ask spread, although some have reported wider spreads than other platforms.
Trading 212 have confirmed[] they are loss-leading their commission-free trades. Cash at bank fell to £1.6m in 2019 from £2.4m in 2018[]
Trading 212 also lends out your shares, explained in their terms of service. If your shares are lent out 102% of the value (at point of lending) is held as collateral. Your voting rights are held with the borrower.
How do you withdraw from Trading 212?
You can withdraw any cash in your Trading 212 account via the ‘withdraw’ option. This refunds back to your payment card.
There have been reported problems with withdrawing funds from Trading 212. Trading 212 legally has to investigate suspected money laundering, so some reported problems withdrawing may be explained by this.
How are Dividend Paid in Trading 212?
Dividends for any stocks you own in Trading 212 Invest and Trading 212 ISA are paid to your account. You will see a cash balance added to your account when dividend is paid.
What Accounts do Trading 212 Offer?
Trading 212 offer three accounts:
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Trading 212 CFD. Contract For Differences are high risk, leveraged spread trading. 76% of retail investor accounts lose money when trading CFDs with this provider.
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Trading 212 Invest. Provides commission-free Stock and ETF trading for a subset of worldwide Stocks and ETFs.
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Trading 212 ISA. Same as Invest, but under a UK Stocks and Shares ISA wrapper, allowing you to make use of your ISA allowance.. You can only pay into one Stocks and Shares ISA per year.
How does Trading 212 handle complaints?
Trading 212 has an official complaints policy. It requires you to email their contact email address with details of your complaint.
Is any Tax Due on Trading 212 Gains or Trades?
Outside of an ISA, you are due Capital Gains Tax if you realise more than £12,000 of gains per year. Outside of an ISA you are due Dividend Tax on any dividends earnt over £2,000 per year. Inside of an ISA is Tax Free for gains and dividends and does not impact your Capital Gains or Dividend allowances.
If you are dealing with large sums you may wish to consult a tax specialist.
Any relevant tax from the jurisdiction will be taken. In the UK this is the Stamp Duty Reserve Tax which is 0.5% on transactions for UK listed companies shares.
You may also pay additional tax on Dividend from non-UK companies, even inside of an ISA.
Where is Trading 212 Based?
Trading 212 UK Limited, company number 08590005, is regulated and authorised by the UK Financial Conduct Authority. A group company, Trading 212 Group Limited also exists.
Latest company accounts show there are 5 administrative staff and two directors in the UK, with total remuneration of £624,581[], with the small number of UK administrative staff being business development, compliance, accounting and customer support.
Trading 212 is also registered and regulated in Bulgaria, registered number 201659500.
Trading 212’s engineering group appears to be based out of Sofia, Bulgaria.
Who runs Trading 212?
The two UK company directors are Mr Borislav Nedialkov and Mr Nicholas Saunders. Both have little active search history. Nick Saunders’ can be found as ‘Nick S’ on LinkedIn. Co-founder Mr Ivan Ashminov appears to be an equal shareholder.
CEO Nick Saunders was previously compliance officer before taking stewardship. Before Trading212, he was responsible for CFDs and then Operations at IG Index ‘the worlds’ No.1 spread betting and CFD provider’
Nick Saunders also holds a directorship at Tradebird Limited, a company jointly owned by Mr Nedialkov and Mr Ashminov. Tradebird was previously described in 2016 by Ashminov as ‘a social app for traders and investors. It’s for digital natives interested in markets and finance who want everything a minute ago and at their fingertips’.
What happens if Trading 212 goes bankrupt?
Per FCA regulation, your funds must be kept separately, in a segregated account. Trading 212 report this to be Interactive Brokers LLC (a member NYSE - FINRA - SIPC and regulated by the US Securities and Exchange Commission and the Commodity Futures Trading Commission)[]
Additionally, your investments are protected by the Financial Service Compensation Scheme for up to £85,000 in the event of insolvency.
FSCS protection does not cover capital losses you incur from your trading or investing.
Does it cost anything to open a Trading 212 account?
It is free to open an account. They offer a free share worth up to £100* if you sign up.
Money Mage makes no recommendations regarding Trading 212 or competing providers. This article is provided as information only. Read the Disclaimer.
There are affiliate links* in this article that earn you a free share worth up to £100 if you sign up. You should do your own research. Money Mage is not making a recommendation to sign up or otherwise.
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