Key Post Is Degiro a clear best buy for an online stockbroker?
- Thread starter Brendan Burgess
- Start date
BTW I did open a DeGiro account last year but have never used it to date. I'm surprised at the reported time lag in getting accounts set up and working as when I did it I was up and running very quickly. Maybe a day or two for them to process my id documentation.
In the account details on the app I don't see anything about "custody" accounts. See the attached screenshot.
In the account details on the app I don't see anything about "custody" accounts. See the attached screenshot.
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Well - it is based on an assumption. It's based on the assumption that things work properly. I work on stock lending quite a lot and broadly my view is that it should be fine. If you have €100 of equities in your account, DeGiro can lend it out and will get back from the person borrowing €105 of bonds or cash which they hold in a client collateral account. It should be safe. My business holds that for some of the largest US brokers with a lending program.
The reason that it's vague - we have a precedent for the system running into trouble 12 years ago. And while, in the end, it was wound out ok - it depends on what appetite for tail risk you have. If you want to 100% avoid that issue, then I can be completely non-vague - open a custody account and pay for the service
Ok - let me be more specific about my concerns...
www.degiro.ie
Edit: I've also scanned their Investment Services booklet and find it a bit confusing and not necessarily reassuring about the risks involved.
Safe & Reliable | You can trade safely with DEGIRO
DEGIRO takes care that all your products are being held safely. All your investments are held in a separate custody company that is separated from DEGIRO.
www.degiro.ie
But then they say this which seems to contradict the above!
So here they start off by seemingly reassuring customers that their assets are safe in the worst case scenario only to qualify that at the end by saying that they may not be! Confusing...
Edit: I've also scanned their Investment Services booklet and find it a bit confusing and not necessarily reassuring about the risks involved.
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Silversurfers
Registered User
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I tried to transfer a holding from II to DeGiro about a month ago, only to be told that DeGiro were not accepting transfers at that time.
An alternative option might be Trading212, who offer no fees trading. They are UK based, don't know if you can transfer holdings to them.
An alternative option might be Trading212, who offer no fees trading. They are UK based, don't know if you can transfer holdings to them.
Ok - let me be more specific about my concerns...
Safe & Reliable | You can trade safely with DEGIRO
DEGIRO takes care that all your products are being held safely. All your investments are held in a separate custody company that is separated from DEGIRO.
But then they say this which seems to contradict the above!
So here they start off by seemingly reassuring customers that their assets are safe in the worst case scenario only to qualify that at the end by saying that they may not be! Confusing...
Edit: I've also scanned their Investment Services booklet and find it a bit confusing and not necessarily reassuring about the risks involved.
Two different risks.
In either account (custody vs basic) assets are held segregated from DeGiro itself. So assets in a custody account are held in a "client assets" account. Assets in a basic account, as I mentioned above, can be lent out and the collateral received against the lending are held in a segregated account. So if DeGiro goes under, these assets (irrespective of type of account) are not part of DeGiro's assets and aren't available to creditors.
What I highlighted is that there is counterparty & market risk in securities lending. The risk should be pretty minimal and mitigated. As I mentioned, if €100 of assets are lent out, approx. €105 of collateral (depending on the collateral) will be taken. This is recalculated every day so if the value of the collateral goes down one day, more will be requested. All fine. But there is a risk in a very volatile market that the value changes significantly so that the value of the collateral doesn't cover the exposure and the counterparty can't / won't stump up more and goes under. In that case, you are relying on DeGiro to make you whole. That's the risk
It's minimal. But if you want to avoid it - open a custody account
I've recently opened accounts with both Davy Select and DeGiro.
Davy do seem expensive for a 'DIY' account. You're charged .5% when you buy and .5% when you sell. Plus the €50 a quarter (deductible against trading costs).
But the hidden cost with Davy I think is their currency fees, they charge .7 on top of the market rate for Sterling or dollars.
So really if you're buying on LSE your initial cost is .5% fee + .7% currency.
The Degiro account I opened is a Custody profile. I just didn't like the idea of shares being lent out. The penalty is the 3% charge to process dividends. If you're buying accumulating funds that charge is irrelevant of course but for shares paying dividends it's there.
Degiro for currency add .1% to market rate, so way better than Davy's .7.
An advantage with Davy is that you can hold Sterling and Dollars in your account, with Degiro you can only have an account in your country's base currency.
Davy do seem expensive for a 'DIY' account. You're charged .5% when you buy and .5% when you sell. Plus the €50 a quarter (deductible against trading costs).
But the hidden cost with Davy I think is their currency fees, they charge .7 on top of the market rate for Sterling or dollars.
So really if you're buying on LSE your initial cost is .5% fee + .7% currency.
The Degiro account I opened is a Custody profile. I just didn't like the idea of shares being lent out. The penalty is the 3% charge to process dividends. If you're buying accumulating funds that charge is irrelevant of course but for shares paying dividends it's there.
Degiro for currency add .1% to market rate, so way better than Davy's .7.
An advantage with Davy is that you can hold Sterling and Dollars in your account, with Degiro you can only have an account in your country's base currency.
Are you still in the queue?
I registered myself this week, and likely will also register for Trading212. Haven't decided which one to opt for yet.
What is meant exactly by 'processing' here?
If invested in a distributing ETF, okay fine they tax you 3% on the gains. But if invested in an accumulating ETF, are they still going to charge 3% just to reinvest the dividend back into the fund for you?
DEGIRO are not operating the ETFs, so they won’t be doing any reinvesting/dividend processing in the case of accumulating ETFs.
Iamyourfriend
Registered User
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What happens if your degiro account is hacked? Do you lose any money the hacker loses on your behalf?
confused12
Registered User
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Have been with degiro and IB. IB are better as no money leeching through MMF provided you have >100k in account
@Brendan Burgess Did you get set up with DeGiro in the end? I have an account and now I must transfer a portfolio to Degiro (old account is being closed). I am wondering how to execute the transfer, is it through Degiro or the original broker (Computershare)
Brendan Burgess
Founder
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No, I didn't bother. I got approved eventually, but never went any further.
Brendan
Brendan
Silversurfers
Registered User
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DeGiro had issues yesterday afternoon when New York opened. I couldn't get an order processed for quite awhile.
Trading212 wasn't its usual efficient self, but I did get all my orders processed after a few attempts.
Silversurfers
Registered User
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I'm not aware of any fee for holding positions. €10 per position to transfer portfolio into Degiro.