Frequently Asked Questions about Trade Republic
What is a Trade Republic?
Founded in 2015, Trade Republic is an investment app that allows users to invest in stocks, ETFs, bonds, derivatives and cryptocurrencies (+ savings plans that include all these assets). It has more than 4 million customers and manages more than $35 billion in assets. Trade Republic is regulated by BaFin and the Bundesbank. In case of insolvency, up to €100,000 of your cash is protected by the Deposit Guarantee Scheme and your shares are held by the HSBC bank custodian in Germany.
How does Trade Republic make money?
Economists like to say, “There is no free lunch.” Trade Republic still makes money through payment for order flow (PFOF). PFOFs consist of paying brokers to forward orders to market makers for trade execution, creating a potential conflict of interest between brokers and their clients. According to the latest update, “The order-based payment flow contract is approximately One-third of the Republic’s total income from trade“(Our bold). As the EU plans to ban PFOF from 2026, Trade Republic will have to adapt and focus on other revenue streams, such as:
- Securities Management: Your stocks or ETFs are likely not fixed in one place. Typically, brokerage firms lend securities in exchange for an interest rate. Third parties borrow securities for a variety of reasons, including hedging positions, opportunistic arbitrage, creating structured products, and selling short.
- transaction fee: Trade Republic does not charge trading fees (excluding external settlement fees), so this could be an option for increasing your profits in the future.
- Withdrawal Fee: For withdrawals under €100, €1 is charged.
- inter alia: Registration annual general meeting, etc.