Amsterdam-based online broker DeGiro has been gaining momentum since it began offering services to retail investors in 2013. This week the firm released Q1 2016 figures showing the company executed 2.2 million trades, an increase of 71% from this period last year.
The firm’s success comes from their use of technology to maximise the efficiency of the platform to offer the lowest fees available and DeGiro now serves over 100,000 clients throughout Europe.
The firm’s strategy is quite different from traditional Irish brokers. Previously, brokers in the country would offer only the primary markets such as the ISE, NASDAQ and NYSE to their clients and offer a wide range of additional and costly services such as financial advisory and portfolio management.
As an execution only broker, DeGiro focuses its efforts on offering a platform and a service to make trades across a wider number of exchanges and investors can access a range of 26 different countries across Europe, North America, Asia, and more.
“Economies of scale lead to lower cost per transaction resulting in an increase of our earnings by EUR 2.7 million,” said Paul Laverty, in charge of business development for Ireland and the UK at DeGiro.
DeGiro elects to reinvest profits toward long-term company growth. The company has recently begun offering free investing in more than 700 exchange-traded funds (ETFs). Commonly known as ‘trackers’, ETFs are financial products where the value is tied to an underlying asset such as a stock index, commodities basket, oil, gold, foreign currency, etc.
With their relative low cost and wide range of investment types these products offer investors simple way to spread their portfolio across a wide range of products.
“By offering these products free to trade, we hope to help clients avoid this common investor pitfall,” added Laverty. “And with no minimums to purchase, our clients can invest whatever amount they want into any of these products.”
DeGiro has many methods to keep costs low. One of them is the way they roll out over Europe. They use an agile approach to launch each country, a method copied from the IT industry.
In every country in which they operate, a user-friendly platform is launched first and is then tailored to meet the specific demands of the local market. DeGiro uses information directly from the investor community to cater to their needs.
“We see DeGiro as a puzzle and every piece has to be designed as efficient as possible,” commented Laverty. “We use the latest technology to automate many processes. These innovations help to cut costs for both the company and the client. An important piece of the puzzle is our order policy.”
Investments made at DeGiro are 100% segregated and held within a completely legally separated custodian entity. This party, a trust foundation, performs no commercial or financial activities itself but instead serves as the holder of assets, which is completely removed, from DeGiro itself.
The firm operates under the regulatory capital supervision of the Dutch Central Bank (DNB) and under the general regulatory scope of The Netherlands Authority for Financial Markets (AFM). The firm is also registered at the Financial Conduct Authority (FCA) in the UK as it operates using a European passport in accordance with the Markets in Financial Instruments Directive (MiFID).