Trade Republic Review

Trade Republic is Germany’s leading commission-free and mobile-only securities trading platform. However, it has expanded its horizons and now caters to Austrian, French, Italian, Dutch and Spanish investors. The trading and investment platform is also one of the hottest Fintechs in the investment scene.

In 2019, a few months into its public launch, the revolutionary trading platform raised 10 million euros in its Series-A investment fund. Then, in April 2020, Trade Republic raised a juicy EUR 62 million in its Series B round. The Peter Thiel’s Founders Fund led round is one of the plumpest capital injections received by a German startup.

Peter Thiel is an eminent investor and supporter of fintech startups. The Series B fund will support Trade Republic’s expansion to the larger Eurozone, one of the key visions of its founders Christian Hecker and Thomas Pischke.

Its CEO, Christian Hecker, says that Trade Republic has over 150K customers. On top of that, the Berlin-based broker also has over 1 billion euros worth of assets in its asset management protocols. Its mobile app, offers its users stocks, derivatives, ETFs and cryptocurrencies investment options.

Presently, Trade Republic performs all its trades on the Lang and Schwarz exchange platform. The Lang and Schwarz exchange operates atop the Hamburg Stock Exchange (HAM). Therefore, in the early days, the only people who could open an account with the Trade Republic had to be in a position to remit taxes to Germany. However, the platform has expanded to Austria, France, Italy, Netherlands and Spain in its move to conquer the rest of Europe.

Trade Republic Founders | Trade Republic Review

Christian Hecker and Thomas Pischke met in 2011 while they were students. After school, Christian joined investment banking while Thomas found employment in the financial technology sector. Later, the duo met Marco Cancellieri, and in their investment discussions, the Trade Republic idea began to take form.

Hecker and Pischke launched the firm in 2015. The Trade Republic framework was greatly influenced by the rising Fintechs of the time, such as Revolut and N26. The duo had observed the disruption that these Fintechs had induced on the traditional current account.

They knew that it was a matter of time before this wave of change would similarly impact the investment account. Consequently, the duo began to piece together a mass-market investment platform.

It would be mobile, fetching, fresh and have a price advantage. Hecker says that the app’s functionality and design also had a significant influence from Robinhood, the rising investment app in the US at the time.

Robinhood had changed brokerage in the US, and Trade Republic would have the same impact in the European market. It does not come as a surprise, therefore, that many a keen observer has described the Trade Republic platform as ‘Germany’s Robinhood’.

Trade Republic unique use case | Trade Republic Review

That said, while Trade Republic used Robinhood’s platform functionality as inspiration, its operations are vastly different from the American financial services company’s. As a matter of fact, Trade Republic has gone out of its way to differentiate itself from the giant US competitor, following Robinhood’s recent legal and reputation woes.

First, Trade Republic operational model highly focuses on investment and savings rather than trading. This feature supports their vision of empowering European investors with a platform that promotes wealth creation via the capital markets.

Trade Republic has long-term saving products and easy equities trading options to meet this objective. Second, Trade Republic has a commission-free trading model, but unlike trade-focused platforms such as Robinhood, it levies a €1 flat rate per trade. This fee caters to all third-party costs that Trade Republic may encounter.

Some critics have found the €1 flat rate fee a bitter pill to swallow. They do make a valuable point. Prolific traders could have their profit margin adversely impacted by a series of €1 fees. That said, this fee has its benefits. As an illustration, it keeps the Trade Republic functional and free of practices such as the controversial ‘payment for order flow’ system.

To this end, the Berlin-based brokerage firm has less of an incentive to ‘follow the money’. Brokerage firms that leverage the payment for order flow system are under regulator’s scrutiny for making massive fortunes at the cost of their users.

As traditional stockbroking models go extinct, app-based brokers no longer charge a nominal fee but offer commission-free charges. They, however, make profits on the spread, which is entirely legal. Firms such as Robinhood have now auctioned their user orders to third party market makers for quick execution.

These intermediaries then settle the trade and pay a percentage of the spread fees to the brokerage firms. But, unfortunately, greed for higher payments has set in, and some brokerage firms now receive payments from third-party market makers for the exclusive rights to order routing.

The ‘payment for order flow’ system can only benefit the trader or investor as long as it is competitive and fair. Consequently, the order flow system has turned the customer into a product, with Robinhood generating 81% of its total revenue from this process.

These platforms have heavily gamified the capital markets investment process to encourage more and larger trades from the user. This feature has led to the rise of ‘meme stocks’ investing that, as per the SEC, does not have favourable outcomes for the trader.

In their rush for order flow system profits, these heavily gamified apps also encourage risky investment decisions amongst low-level skill traders. For example, in early 2021, Alex Kearns, a twenty-year-old Robinhood trader, took his life after wrongfully receiving a message that he owed the platform $750,000 in a risky bet.

Trade Republic’s responsible investing | Trade Republic Review

CEO Christian Hecker defines the Trade Republic form of investing as ‘responsible investing’. He also refers to it as a ‘boring’ form of investing compared to millennial-focused brokerage apps. “We have a very boring way of trading on the stock exchange in Hamburg that is fully regulated: we have full transparency and reliability in the way our business is conducted,” he says.

To this end, Trade Republic has investors across the age divide. Moreso, while you can trade or invest in three taps on their slick app, you will not experience excessive gamification on the app. The Trade Republic app is minimal and has a simple trading screen and search tool.

They do not overly sell investment products, and you will not have a burst of confetti celebrating your every purchase transaction. Instead, Trade Republic has a detailed form that analyzes user experience in equities trading to ensure responsible investing.

The application will warn traders that deviate from their trading experience when placing their orders. On top of that, the app sends automatic risk warnings for high volatility risks.

Best of all, Trade Republic is a bank. It has a broker banking license with the Bundesbank and BaFin. This means that in opening an account with them, you will be dealing with a legal and certified banking entity. To this end, investors have their capital covered up to €100,000 as per BaFin law.

They have also partnered with Solaris Bank, significantly lowering user cost of transactions.

Trade Republic Partners | Trade Republic Review

In 2017, the founders convinced the financial service provider Sino AG of the potential held within their brokerage bank concept. As a result, Sino AG joined the firm as a strategic investor. They also received their securities trading license in the same year.

The bank has partnered with Solaris Bank AG, HSBC Germany, BlackRock, and Lang & Schwarz Exchange. These partnerships make their products available at a juicy commission-free rate.

HSBC Germany is a London-based financial services company and among the largest in the world. It is a derivatives trading partner. On the other hand, HSBC Transaction Services securely handles the securities trading of the apps’ customers.

BlackRock is a New York-based investment company and the world’s largest asset manager. This partnership supports the German-based brokerage firm’s individual ETF savings plans that are based on more than 1500 ETFs.

Moreover, the Trade Republic utilizes the Lang & Schwarz Exchange trading exchange. The exchange monitors the price and product quality through the Hamburg Stock Exchange regulation, guaranteeing high trading standards.

Solaris Bank AG is a Banking-as-a-Service platform based in Berlin and has a German full banking license. It supports Trade Republic’s efficient and secure storage of customer funds and keeps them free from the risk of negative interest rates.

Trade Republic Fees | Trade Republic Review

Trade Republic’s fee per trade is £1 regardless of the trade volume. So, for example, if you open and close one transaction every week, the total costs for the whole year will be £2*52= £104. This feature is advantageous, especially for traders that make large but infrequent trade volumes. The mass market that makes small and irregular trades also benefits from this fee system.

Trade Republic does not charge for deposits, withdrawals, or inactivity because it is a legal banking entity linked to all national banks in Germany.

With the Trade Republic platform, the following actions are free.

• Participation in corporate actions
• Shares dividend payment.
• Annual tax certificate
• ETF distribution
• Deposit and account statement
• Tax reporting

How to Sign-Up Trade Republic? | Trade Republic Review

To open an account with Trade Republic, you will need;

1. A smartphone with an IoS or android operating system.
2. A European cell phone number
3. A SEPA bank account
4. Proof of legal age.
5. Proof of permanent residency in supported countries and tax details

The sign-up process is simple, straightforward, and takes four steps. First, the customer supplies the smartphone’s mobile number to associate with the Trade Republic app. Second, they need to input other personal data such as name and address.

The next step is to verify your identity via a short live video with the bank representative. Afterwards, your account will be verified when these representatives are online. Fret not, though; you can open and confirm your account by a day’s end.

An SMS with a code that you must input to verify your account is then sent to your mobile number. Finally, you are asked about your experience and knowledge in security trading. The process takes 15 minutes, and then your Trade Republic account is ready to trade. A £15 award awaits newly recruited customers.

Trade Republic is only available in mobile app format. It does not have a web and desktop trading platform. This factor places professional traders that need to create complex trading strategies at a disadvantage due to limited mobile app functionality.

Experienced traders have a tougher time staking thousands of euros in a mobile app where they cannot customize their setup to maximize profits.

Trade Republic Payment and Withdrawal Options | Trade Republic Review

Since it is a Germany-based official banking institution, the Trade Republic has limited payment and withdrawal options due to the strict German financial industry’s compliance laws. Currently, the platform only accepts national bank accounts and other broker accounts as its deposit and withdrawal options.

You cannot make deposits via credit cards, debit cards, Apple Pay, PayPal and Google Pay. Moreover, when depositing your assets from another broker, Trade Republic will bounce unsupported assets back to the original account.

Also, you must make all withdrawals and deposit options to an account under your name. Failure to meet this action will lead to process failure.

Additionally, the average Trade Republic account’s cash withdrawal and deposit time process is excessively drawn-out. Expect funds to reflect in your trading account after 1 to 6 days of waiting time. National bank transfers take a shorter time, while moving securities from other brokers may have longer turnaround times.

The Trade Republic Customer Support | Trade Republic Review

One other drawback of the Trade Republic platform is its limited customer support channels. It is only available in three languages; German, French, and English. Its prominent customer support channel is its email address. They will, however, make a reply to a query in two hours tops. Their replies are simple, straightforward, and relevant.

For more assistance, tap the settings tab on the app and select ‘service’ to access support from an employee. Additionally, a customer can call their service number or use their postal address to get assistance.

Trade Republic Order Types | Trade Republic Review

Trade republic has three order types; market order, limit order and stop order. The brokerage app makes purchases at the next best market price in a market order. A trader who wishes to set specific price ranges should initiate a limit order and set the values in advance. With the limit order type, you can set a value below the current market price or a value above the current price.

How to place an order on Trade Republic?

The trading platform offers one regular equity account type. Thus, you can trade every asset from one account without too much ado. Launch the app and search for the product you want to invest in. Ensure you have enough funds in your clearing account for the order process to initiate successfully.

On clicking on the security of choice, your screen will show a detailed view of information on the product and its historical price development. Select ”Buy”, and the platform will forward your order entry to the exchange system.

You can also choose your preferred order type. For example, choose between a market order, stop order, or limit order. Click next, and you will get a summary of your order which you can confirm by checking your interface’s data.

The platform will then send you a ‘ message’ order successfully created’ on your screen. You can track the order on your user profile.

Trade Republic Services | Trade Republic Review

Derivatives

Trade Republic users can trade about 40,000 derivatives, including warrants, knock-out products, and factor certificates. It has various products from just about every sector, making it easy to find your preferred trade or investment choice.

Stocks

Trade Republic collaborates with Lang & Schwarz Exchange, a platform listed on Hamburg Stock Exchange. This connection is so beneficial that you can access blue-chip investment products from Germany, the United Kingdom, the United States, Canada, Hong Kong, China, and Japan.

Additionally, Trade Republic allows you to diversify your portfolio with indices of assets like NASDAQ, Dow Jones 30, Europa select, euro Stoxx 50, Dax, MDAX, and SDAX. There are around 6500 assets available on Trade Republic, quite a fair number.

Some of the asset types you can trade with Trade Republic are:

Currency pairs

The Lang and Schwarz exchange platform offers the EUR/USD pair.

Commodities

Trade Republic supports Gold, Silver, and Brent Oil commodities trading.

Bonds

It has more than 500 Bonds from German companies and other prominent European contractors on offer.

ETFs

Trade Republic offers around 1500 ETFs on indices, commodities, and currencies. However, not all ETFs available on Lang and Schwarz exchange are available on Trade Republic. It also offers ETFs from iShares and the Wisdom Tree.

Trade Republic ETF saving plan

Trade Republic’s saving plan for ETFs has a minimum initial deposit of £25. This allows you to enjoy permanent discounts on ETFs. Also, you will only have to pay for the market value and the platform’s standard £1 per trade.

Trade Republic Crypto

Trade Republic has now introduced crypto investing. You can HODL or sell commission-free digital assets like Bitcoin, Ethereum, XRP, Litecoin, among others. All you need to pay is £1 for order execution.

Trade Republic has a one-of-a-kind bank-regulated service that protects all crypto trades. Also, the bank ensures transparency on the execution and value of your crypto assets. Your crypto assets are secure in the platform’s cold wallets. Crypto trading is 24/7 and takes place on the B2C2 exchange. The digital assets are kept in Germany by US custodian Bitgo.

Trading Hours and Custody Service | Trade Republic Review

The Trade Republic trader has the added advantage of purchase and/or trade of shares and ETFs with comparatively long trading hours from 7:30 am to 11:00 pm. In addition, trading hours for derivatives run between 8.00 am to 10 pm. Thus, the trader has about a full day to make most of their investment and trades.

Additionally, the app offers a comprehensive securities account service to ensure security trading is successful and supports sensible investment decisions. Other benefits include the automatic payment of taxes that arise during trading and the facilitation of the production of an annual tax certificate. In addition, Trade Republic allows the user to participate in corporate actions and general meetings.

Is Trade Republic Safe? Regulation and Security | Trade Republic Review

Trade Republic is a bank and partners with Solaris Bank AG to insure all user deposits to the tune of EUR 100,000. The funds are secured in a trustee collection account in Solaris Bank in Germany. Berlin-based Solarisbank is a fintech under the regulatory oversight of  the Deutsche Bundesbank and the BaFin.

On the other hand, HSBC Germany secures all assets in your Trade Republic account. BaFin is based in Frankfurt and regulates all other companies in the financial service sector. Consequently, all Trade Republic customers have a safe, reputable, and reliable broker.

The Trade Republic’s digital pages are encrypted, keeping users safe from fraud and other internet crimes. SSL encrypted pages have “HTTPS://” at the opening of the address. On top of that, they have a small lock icon next to their URL.

The brokerage firm’s app is both android and iOS device compatible. The app allows users to track their assets and investment while on the move. Additionally, Trade Republic offers useful functions such as price alerts and push messages, enabling users to react fast to changes and make flexible decisions.

Conclusion

The Trade Republic brokerage app is diverse and rich. You can trade blue-chip stocks from some of the world’s most vibrant economies and diversify your investment portfolio with indices, currency pairs, commodities, bonds, ETFs and cryptocurrencies, all from the comfort of your home. To this functionality and efficiency, add the benefit of German financial industry regulation, and you have in your hands one of the safest trading experiences that you can access on an online platform.