Key Post Is Degiro a clear best buy for an online stockbroker?

I moved from Campbell O'Connor to Davy Select last year mainly because I had share certificates.

I am selling shares now and the 0.5% commission is very high.

I am thinking of moving to Degiro.


As far as I can see, it's a clear best buy as long as you are prepared not to hold share certificates.

1) There are no account holding charges so they suit a buy and hold investor
2) The fees seem very low



3) It seems Safe and Reliable

The shares are held in a separate Special Purpose Vehicle, so if DeGiro goes bust, your shares won't be impacted.
It is supervised by the Dutch Authority for Financial Markets and the Dutch Central Bank

4) Reports on Askaboutmoney seem to be positive.

The charges they don't highlight!

I had read quite a few threads on the topic and the promotion on their website.

It seems that they charge a fee of 3% for processing dividends on some accounts.

This might not matter to a trader but it would add up for a buy and hold investor.

Brendan

FAQ

1) How long is the waiting list?
I registered this morning and I have been told that I am no. 5,400 in the queue

2) What do you do if you have physical share certificates at present
You can open an account with Davy Select
Then you can either sell them via Davy Select
or dematerialise them and then transfer them to DeGiro

3) Which type of account do I want?

https://www.degiro.ie/helpcenter/faq/my-account/1120
What is the difference between the Basic and Custody profiles?
A Custody profile is different from a Basic profile in that the securities are held separately from the lending pool of DEGIRO clients’ securities and are thus unable to be loaned to third parties. Debit Money, Debit Securities, and Derivative trading is not available with a Custody profile and you cannot change to an Active, Trader, or Day Trader account. A Custody Profile has different conditions and fees. However you will still benefit from our low transaction costs and save money through trading with DEGIRO.

So worth opting for a Custody account instead of a Basic account if you're not interested in margin trading or derivatives I think.

This is a thread I'd be interested in. If you go ahead Brendan, would you detail your experience on here?
One consideration - I understand there is a fee from Davy to transfer a line out to another stockbroker. Is there something similar to bring a line (shareholding) into Degiro and when you add these fees up, how long after making the transfer would you be financially better off?
Also do Degiro allow for dividend reinvestment where a scrip dividend option is available? This is free with Davy Select.

Hi Rob

It's €35.70 per line to transfer out from Davy's to another stockbroker.

I see nothing about DeGiro charging to accept in stock.

Brendan

Brendan Burgess said:

Hi Rob

It's €35.70 per line to transfer out from Davy's to another stockbroker.

I see nothing about DeGiro charging to accept in stock.

Brendan

Click to expand...

Then that acts as a barrier to transfer? For example, transferring 10 stocks to another broker would cost €357. That's 7 quarters' worth of Davy Select fees. I suppose if you were to carry out 10 transactions in the following year (and that was the intention anyway), for comparison you'd have to say that the Davy fees would be zero, since they'd be offset by a lower quarterly transaction fee. Ultimately you'd be ahead but depending on your activity levels, it would be difficult to say when exactly.

I think the main factor would be the size of the deal.

0.5% of a sale of €100k worth of shares would cost €500 via Davys and €52 via De Giro.

Brendan

Hi Brendan,

You should consider Interactive Brokers as well

Hi Eeyore
I set out to do a comparison, but the long thread on II has most of their existing customers wanting to switch to DeGiro.
If you are a customer, could you do a separate thread on them setting out their costs and the pros and cons of dealing with them?

Thanks
Brendan

Brendan Burgess said:

I see nothing about DeGiro charging to accept in stock.

Click to expand...

Under Extra Services:
Transfer Portfolio to DeGiro
€10 per position

Regarding Custody/Basic Accounts, I have heard the main difference is commission on receipt of dividends. However I can't find any reference in the fee structure to this fee schedule.

From position 5400 you may have a few weeks to wait. I know someone who registered a month ago, was just over 10,000th in line at time. Near top of queue now.

llgon said:

Regarding Custody/Basic Accounts, I have heard the main difference is commission on receipt of dividends. However I can't find any reference in the fee structure to this fee schedule.

Click to expand...

Just for reference the two fee schedules for DeGiro -
Basic/Active/Trader/Day Trader Accounts - https://www.degiro.ie/data/pdf/ie/IE_Feeschedule.pdf
Custody - https://www.degiro.ie/data/pdf/ie/IE_Feeschedule_CUSTODY.pdf

As you say the only obvious differences I see are these, which are all free with Basic/Active/Trader/Day Trader accounts but not with Custody -

Dividend Processing: € 1.00 + 3.00% of dividend (maximum 10.00%)
Coupon Processing: € 1.00 + 0.10% of coupon (maximum 10.00%)
Repayment bonds and other corporate actions: € 1.00 + 0.02% (maximum 0.25%)

Click to expand...

Brendan Burgess said:

Hi Eeyore
I set out to do a comparison, but the long thread on II has most of their existing customers wanting to switch to DeGiro.
If you are a customer, could you do a separate thread on them setting out their costs and the pros and cons of dealing with them?

Thanks
Brendan

Click to expand...

I think there may be some confusion here. I'm talking about Interactive Brokers (IB) not Interactive Investor (II) different crowd entirely!

I'd be interested to hear what people's experience is with DeGiro, they may be the cheapest but I'm finding that I can't find half the things I want to buy, I can't get transaction statements going back any further than last month and customer service is non-existent. Is it just me or is the platform really not very user-friendly?

A friend of mine uses them and has big problems with customer service. Also if they are on boarding 10000 accounts I can’t see it getting better.

Dividend Processing: € 1.00 + 3.00% of dividend (maximum 10.00%)

That seems high. Amazing that they don't highlight it.

Davys don't charge anything for dividend processing as far as I know. They do charge €50 a quarter for maintenance and much higher sales and purchasing commission.

Brendan

Brendan Burgess said:

A Custody profile is different from a Basic profile in that the securities are held separately from the lending pool of DEGIRO clients’ securities and are thus unable to be loaned to third parties.

Click to expand...

So is there a difference in the safety?

I can opt for the Basic Profile and avoid charges for processing dividends.

Or go for Custody. They won't be able to lend my shares. But I will pay 3% of dividends in fees.

Brendan

It would be great to see a comparison between DeGiro and whatever the other options are, if anyone is feeling bored enough to look into it

Silvius said:

It would be great to see a comparison between DeGiro and whatever the other options are, if anyone is feeling bored enough to look into it

Click to expand...

We compared some of the aspects (access to CREST, costs) in this thread - https://www.askaboutmoney.com/threads/choosing-a-stockbroker.217887/#post-1609146. DeGiro also have this table on their site, which is obviously a little simplistic - https://www.degiro.ie/fees/compare-brokers/

Brendan Burgess said:

So is there a difference in the safety?
I can opt for the Basic Profile and avoid charges for processing dividends.
Or go for Custody. They won't be able to lend my shares. But I will pay 3% of dividends in fees.

Click to expand...

When I looked into this originally, my understanding was that shares in Custody accounts are held by a different custodian entity to those held in Basic/Active/Trading accounts. I assume there are additional risks of bankruptcy where DeGiro are lending shares/finance and by being in a different entity you are more protected from creditors of these positions. Whether this is in anyway legally meaningful or has ever been tested, I'd be interested to hear.

I looked into this last year and could not really understand the custody account stuff - in particular if DeGiro went bust then what happens then? How practical and easy would it be to retrieve your shareholdings. I think somebody on another thread here mentioned some potential issues. Because I couldn't get clarity on this stuff and because I already had an E*Trade account through work I used that instead.

Zenith63 said:

When I looked into this originally, my understanding was that shares in Custody accounts are held by a different custodian entity to those held in Basic/Active/Trading accounts. I assume there are additional risks of bankruptcy where DeGiro are lending shares/finance and by being in a different entity you are more protected from creditors of these positions. Whether this is in anyway legally meaningful or has ever been tested, I'd be interested to hear.

Click to expand...

So - from the quotes above I can take a reasonable guess at the difference. A full custody account is held completely segregated from DeGiro and they have no use of the assets. But you then pay full fees for services (e.g. income collection etc).

The basic account seems to allow DeGiro lend the securities in the market from which they will earn revenue and consequentially they waive some charges to the customers. Generally, securities lending is done against collateral (usually with an excess such as 105%) - which means the assets should be reasonably safe. It is a model used by a lot of US brokers. Nominally there should be little risk as it's collateralised. The only time I can recall a problem was when Lehman's collapsed. On the day, other parties delayed transferring assets to Lehman's which meant they were short collateral - not helped by the complexity of what was trading. But in the end, it did all get worked out but there was a long delay in recovering assets.

Up to you really. If you want stronger protection then the custody account would probably be the one for you. If more cost conscious, the additional risk in the basic account is probably pretty small to be honest