DEGIRO

DEGIRO is a European brokerage company based in Amsterdam. It was founded in 2008 by a group of five former employees of Binck Bank to service the professional market.[1] In 2013, DEGIRO started offering its stockbrokerage services to retail investors, giving them online access to security exchanges worldwide.[2] Investors can buy and sell such securities as common and preferred stocks, fixed income (bonds), options, mutual funds, warrants, and ETFs via an electronic trading platform or by phone.

DEGIRO B.V.
TypePrivate limited company
IndustryFinancial services
Founded2008
HeadquartersAmsterdam, Netherlands
Key people
Muhamad Said Chahrour
ServicesStockbroker
Electronic trading platform
Websitewww.degirogroup.com, www.degiro.co.uk

History

DEGIRO was established in 2008. On 23 September 2013,[3] DEGIRO launched its services for retail clients in the Netherlands. In 2014 and 2015, DEGIRO then expanded to offer its platform across other European countries.

On 22 September 2014, Euronext announced its partnership with DEGIRO[4] regarding the distribution of retail services of Euronext. Upon publishing the third quarter results for 2014, the partnership was seen as a plan for Euronext to compete more effectively in the Dutch retail segment.[5]

The company launched its English-language platform in the United Kingdom on 11 June 2015.[6] The countries they now offer services to are Netherlands, Belgium, Italy, France, Austria, Switzerland, Germany, Czech Republic, Spain, Portugal, Poland, Greece, Hungary, Denmark, Sweden, United Kingdom, Norway, Finland, and Ireland.

In December 2019, flatex AG (a German online broker) announced to acquire 100% of DEGIRO, but keep the existing DEGIRO brand.[7] In July 2020, they closed the "transaction of acquiring 100% of DEGIRO shares".[8]

Regulatory

DEGIRO is supervised by the Netherlands Authority for the Financial Markets (AFM)[9] and under prudential supervision of the De Nederlandsche Bank (DNB). It is also registered with the Financial Conduct Authority (FCA).[10] DEGIRO has previously received criticism from regulators over its business practices and the quality of its IT infrastructure.

Trading platforms

Degiro supplies its clients with a web-based trading platform developed in-house, for desktop and mobile devices. It features free real-time streaming prices on certain European stocks, as well as five levels order book.

Degiro also provides users of the platform with the ability to buy certain ETFs without any transaction costs.[11] The ETFs are in the so called 'core selection'.

The 'core selection' lets users buy or sell ETFs from the core selection on the basis of a fair use policy. This means that they are eligible for one commission-free trade (a purchase or sale) per ETF. Any subsequent trade in the same ETF and direction will be executed commission-free, if the trade meets the following conditions:

  • the trade is in the same direction (i.e. buy/sell) as the first trade that month
  • the value of the transaction is at least 1000 EUR, USD or GBP.

Once an opposite trade or trade below 1000 EUR (or USD/GBP) is executed in the same ETF within the same calendar month, the rule will no longer apply to any subsequent trade in that ETF that month and regular fees will be charged.

Degiro offers this feature in various countries.

Awards

In the Netherlands, DEGIRO earned the first place in a 2015 survey for the cheapest broker in Financieel Dagblad.[12] In 2014, VEB[13] considered DEGIRO to be the cheapest broker for investments in shares, bonds, options and turbos and in the same year, Beleggers Belangen[14] elected the company as the #1 Dutch broker in regard to costs, trade opportunities, convenience and service. Consumentenbond, a Dutch non-profit organization which promotes consumer protection considered DEGIRO to be the cheapest Dutch broker. DEGIRO also won the Golden Bull Award in 2015, where Dutch brokers are judged in different categories, such as trading opportunities, commission fees, terms and conditions and investment tools.[15]

Internationally, DEGIRO has been awarded by Privata Affärer[16] in Sweden and by Finanztreff[17] in Germany, due to the low trading prices for retail clients.

Criticism

While the broker received various awards, there also have been critical reactions. The process of internalization of customer's orders against DeGiro's own hedge fund HiQ Market Neutral fund was subject of investigative press.[18] Clients were denied execution of passive orders, because the internalizer jumped in front of them.[19]

Selling of orders

In June 2021, Dutch state media reported that DEGIRO would start selling customer orders to Tradegate.[20] Dutch regulators did not approve this practice, known as payment for order flow or PFOF. However, following DEGIRO's takeover by German company Flatex, the money of its Dutch customers is now stored on a German bank account. By consequence, DEGIRO's business practices largely fall under German jurisdiction, where the practice is legal.

In an e-mail to its customers, DEGIRO responded that some press coverage had not been accurate. DEGIRO states that the Tradegate deal allows users to trade outside regular opening hours of stock markets.[21] It also notes that users retain full control over whether they send orders to Tradegate.

Stability of IT infrastructure

In December 2021, the Dutch national bank raised concerns about the technical quality of DEGIRO's IT infrastructure.[22] It had ruled that DEGIRO was insufficiently protected against crashes and hacks. As a result, DEGIRO was ordered to put aside a liquid capital reserve of over 3 million euros. DEGIRO stated that in the last half year, it had significantly invested in IT infrastructure improvements.

On multiple occasions, Reddit users have reported being unable to place orders with DEGIRO due to downtime.[23][24]

Dividend withholding tax refund

DEGIRO refused requests from Clients to cooperate with their dividend tax refunds. In numerous legally bound cases, a Dutch dispute settlement commission (KiFID) ruled against DEGIRO when it comes to dividend tax withheld by the French Tax Authority. Given the Clients' request does not take excessive amount of work, it concluded cooperation is mandatory on account of reasonableness and fairness.[25][26] However, a case about the dividend tax withheld by the Swedish Tax Authority was ruled in favor of DEGIRO, because the process required payment information from third parties; thus not being a straightforward administrative task.[27]

References
  1. "About DEGIRO – The first Pan European broker". www.degirogroup.com. Retrieved 11 August 2020.
  2. Clinch, Matt (15 June 2015). "Is this the end of 'rip-off' stockbroker fees?". CNBC.
  3. "DeGiro stunt met brokertarieven" (in Dutch). IEX. 23 September 2013.
  4. "Euronext to Partner with Degiro on Dutch Retail Investor Services". 22 September 2014.
  5. "Euronext Publishes Third Quarter 2014 Results". Reuters. 6 November 2014. Archived from the original on 12 April 2016.
  6. "Cheapest-ever broker lets you trade shares for less than £2". Telegraph. 11 June 2015.
  7. Regulatory Approval
  8. https://www.flatex.com/fileadmin/fintech_relaunch/Public/pdf/news/2020/pm/flatex_-_DEGIRO_closing_EN.pdf
  9. "AFM Degiro". 1 August 2019.
  10. "FCA Degiro". 1 August 2019.
  11. "DEGIRO Kernselectie; DEGIRO Kernselectie explanation (Dutch)". 17 November 2021. Retrieved 19 February 2022.
  12. "Onlinebrokers staken hun prijzenslag(Dutch)". 13 March 2015.
  13. "Brokeronderzoek2014; de onderzoeksresultaten (Dutch)". 21 March 2014.
  14. "Brokeronderzoek: we have a winner". 4 December 2014.
  15. "Best Broker 2015 Award".
  16. "Här är sju Årets Bank-pristagare till (Swedish)". 22 December 2014.
  17. "Geldanlage & Altersvorsorge: Rechner, Vergleiche & News". www.finanztreff.de. Retrieved 11 August 2020.
  18. Amsterdamtrader.com, How DeGiro Screws Clients, 20 October 2015
  19. "DEGIRO Reviews | Customer Service Reviews of DEGIRO". Retrieved 11 August 2020.
  20. "'Beleggingsplatform DeGiro verkoopt miljoenen orders klanten door naar Duitsland'". nos.nl (in Dutch). 28 June 2021. Retrieved 11 June 2022.
  21. "Tradegate | Beleg met Tradegate Exchange | DEGIRO". www.degiro.nl. Retrieved 11 June 2022.
  22. "DNB grijpt in bij beleggingsplatform DeGiro vanwege langdurige IT-problemen". Tweakers (in Dutch). Retrieved 31 March 2022.
  23. "Degiro down? Can't login to create an order". 13 May 2022.
  24. "Degiro down for more than an hour. Embarrasing [sic] and shameful". 22 November 2021.
  25. "Uitspraak Geschillencommissie Financiële Dienstverlening nr. 2020-235" (PDF). 17 March 2020.
  26. "Uitspraak Geschillencommissie Financiële Dienstverlening nr. 2021-0415" (PDF). 5 May 2021.
  27. "Uitspraak Geschillencommissie Financiële Dienstverlening nr. 2021-0160" (PDF). 17 February 2021.
  • Media related to Degiro at Wikimedia Commons
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