Trading 212 plans to transfer 14% of clients to Cyprus, UK revenue soars to £124mln

An unprecedented boom in retail trading helped Trading 212 earn handsome fees from its clients’ trades, resulting in a 300% jump in revenue of the fiscal year ending December 31, 2020.

Trading 212

Per its filing with the UK companies house, the FCA-regulated broker said revenue from online trading jumped to £124 million. This figure more than quadrupled from less than £30 million in the year earlier.

The solid revenue was, however, offset by soaring operational costs which increased fivefold during the period. The expenses were reported at £113 million in the FY 2020 compared to £19 million the previous year. As a result, Trading 212 earned £10.1 million, up 40% over a yearly basis from £8.5 million in 2019.

“External factors have also contributed to the significant demand for T212’s services and include both the well-publicised surge of public interest in the stock markets seen in early 2021 as well as the COVID pandemic. This demand has translated into increased account openings, transaction volumes, and significant increases in both new and existing user activity,” the company said.

These metrics might raise questions about the sustainability of revenues and how long the bumper capital markets environment will last. However, Trading 212 said that demand for its products and services continued into 2021 with revenues and profitability for the FY 2021 having grown significantly.

Trading 212 resumes client onboarding

Trading 212 also highlighted that it had temporarily halted the on-boarding of new users as its platform came under pressure to keep up with the huge growth in retail investing, which caused severe operational difficulties. The company has, since February 14, re-commenced the daily onboarding of a limited number of customers, with the intention to resume full onboarding thereafter.

“With much of this exceptional growth coming in the UK trading entity, there became a need for the UK Board to, voluntarily and temporarily, pause onboarding and reflect on the firm’s strategy and operating model, including the current systems, capacity and controls in place, to ensure that they remain appropriate for the size and scale of the growing business,” it said.

London-based fintech was one of several platforms, including Robinhood and IG Group, that experienced outages as the number of retail trades soared in wild days for the markets. The service disruptions came during a period of frenetic trading, where Reddit users were accused of inflating the price of GameStop, AMC, Blackberry, Nokia and other meme stocks.

Trading 212 was the first retail UK broker to offer commission-free trading and its core product portfolio consists of stocks, ETFs, FX, and derivatives products.

Outside of the UK entity, and following Brexit, Trading 212 plans to transfer some of its clients around the group. This will see the UK entity transferring circa 14% of its clients (all being EU clients) to the new Cyprus entity, while the Bulgarian entity will also be transferring its client to either the Cyprus or UK entity.