Trade Republic - how do they make money?

F

Frivolous

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Just made my first trade with TR. I bought €25k worth of shares - the total charges were €1 - how can this be?
 
They use something called "Payment for Order Flow". I won't claim to understand what it is, so best to Google it yourself. Apparantely the EU are planning to outlaw it starting 2026. Trade Republic published a paper on it.
 
When you place an order (buy or sell) on Trade Republic, it passes that order onto to a broker/exchange for execution and it gets paid by the broker/exchange for giving it the order. The broker/exchange then finds a seller/buyer for your order and executes it.

The transaction price you pay will be different from one broker/exchange to another - it is the price that someone else was prepared to offer/pay on that particular exchange.

Whether you got the best price available is unknown - in theory you could have looked at the price available on all exchanges but as the prices vary by the milli- or even micro- second these days who knows?

The paper referred to above was commissioned by Trade Republic and shows that you did better most of the time using Trade Republic (surprise, shock, horror!)
 
Maybe they don't make money. They could be an investor backed Fintech company looking for customer base growth rather than profit.
 
they make on the spreads they charge and also on the fx conversions for non EUR stocks.
 
they make money by charging a higher spread than other brokers. They also charge FX conversion fees on all non eur transactions. They take a little off a lot of transactions.
the 1EUR per trade is an introductory fee. i'd expect that to increase as their market share increases.
 
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