Trading 212 Terms Updated: Inactive Clause Removed

Trading 212 Terms Updated to remove the inactive client clause, allowing all investors to earn interest, regardless of trading activity. Recently, retail trading firms and CFD brokers started offering interest on clients’ uninvested funds. In May, London-based Trading 212 introduced a similar offer, encouraging passive investing. However, the terms initially included a clause allowing the company to suspend interest payments for inactive clients. The latest update to the Invest terms has now removed this unfavorable clause.

Trading 212 Terms Updated: Inactive Clients Protected

The surge in interest rates has caused many savers and investors to shy away from risk, choosing instead to store their money in bank accounts, earning several percentage points in interest. In response to this trend and to retain customers, retail trading firms began offering interest on uninvested cash. One example is XTB, which in November 2023 introduced up to 5% interest on idle client deposits, with BidX and Webull later following suit with similar offerings.

In May, Trading 212 launched a comparable solution, also introducing a multi-currency payment card, likely in an effort to diversify revenue streams and retain clients. This new product promised up to 5.2% interest on uninvested funds held in trading accounts. However, there was a stipulation: Trading 212’s “Invest Terms” allowed the company to suspend interest payments at any time, citing the necessity of staying within regulatory boundaries.

The September update has removed this unfavorable clause for investors and savers from the trading terms:

“15.3. To ensure that we act within the scope of our regulatory permissions, in order to be eligible to receive Interest on Cash in accordance with this Clause 15., you must actively engage in trading activities through your Account or Stocks ISA Account with us. For Accounts that are not actively trading, we reserve the right, at our sole discretion, to suspend any interest payment to you with immediate effect and we will notify you.”

The change will come into effect on October 4, 2024, which is less than a month away.

Boosting Investor Benefits

Trading 212 has been quite active recently. Last month, the CFD company completed the acquisition of FXFlat Bank GmbH, marking its expansion into the German market. This move aims to provide German investors with access to Trading 212’s commission-free investment platform, which will disrupt traditional brokerage models in both the UK and Europe.

In June, the company secured a cryptocurrency license in Cyprus, officially becoming a crypto asset service provider (CASP). The Cyprus Securities and Exchange Commission (CySEC) issued the CASP license to the new entity Trading 212 Crypto Ltd on May 20, 2024. This entity operates separately from Trading 212 Markets Ltd, which holds a Cyprus Investment Firm (CIF) license.

In May, the London-based broker released its financial results for the previous year, revealing a slowdown in revenue and profit growth in its UK subsidiary for 2023. The company reported a 3% decline in revenue and a 28% drop in pre-tax profits. The company attributed the decline in profits to a 45% increase in administrative costs, which reached £71.2 million due to ramped-up marketing efforts. The firm resumed marketing campaigns in the last quarter of 2022, spending over £7.4 million on research and development.

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