Trade Republic Bank GmbH
Trade Republic Bank GmbH: STUDY CONFIRMS: ON AVERAGE, TRADE REPUBLIC CLIENTS TRADE AT BETTER SPREADS THAN ON THE REFERENCE MARKET

STUDY CONFIRMS: ON AVERAGE, TRADE REPUBLIC CLIENTS TRADE AT BETTER SPREADS THAN ON THE REFERENCE MARKET

– Prof. Lutz Johanning, WHU – Otto Beisheim School of Management, Vallendar, and Prof. Steffen Meyer, SDU – University of Southern Denmark and Danish Finance Institute, have analyzed the explicit and implicit transaction costs of more than 2 million transactions executed via Trade Republic

– On average, customers save €0.52 per €1,000 transaction compared to a hypothetical transaction conducted at the same time on the reference market XETRA

– Extrapolated over the last 12 months, Trade Republic customers have saved over €6 million as a result of better spreads

BERLIN, NOVEMBER 18, 2021 – Researchers at WHU – Otto Beisheim School of Management and SDU – University of Southern Denmark and Danish Finance Institute have reviewed the trading quality of Trade Republic on the basis of randomized orders. The analysis of two million transactions executed via Trade Republic shows that for a large number of transactions, customers trade at better prices than on the reference market. On average, Trade Republic customers save €0.52 per €1,000 order. Extrapolated over the last 12 months, customers thus have saved over €6 million through better prices compared to XETRA. The study therefore confirms the controls of the Hamburg Stock Exchange as well as the results of renowned German market researchers, Stiftung Warentest.

“It is well known that neobrokers have very low explicit costs. However, we wanted to find out whether this is at the expense of implicit costs,” reports Prof. Steffen Meyer. “For this purpose, we were able to evaluate one of the largest data sets of executed transactions in Germany, which Trade Republic made available to us. The analysis of the data sets shows that, on average, the prices are better than on the reference market and customers thus get a better deal overall accounting for both implicit and explicit costs.”

Trading at Trade Republic takes place via the Hamburg Stock Exchange. Trading is public and independently verified by the stock exchange and its Trading Surveillance Office (HÜST). In this context, prices are tied to a reference exchange according to the exchange rules. In Germany, this is typically XETRA.

A team of researchers from WHU, led by Prof. Lutz Johanning, and from SDU, led by Prof. Steffen Meyer, has now examined trading transactions on behalf of Trade Republic. For this purpose, more than two million transactions were analysed. The results of the study provide insights into trade quality.

In their study, the researchers show that Trade Republic customers benefit from both low implicit costs, i.e., better price quality, as well as from lower explicit costs. They found that implicit costs were lower than those on the reference market for a significant proportion of trades. As a result of the narrower spreads on Trade Republic’s primary trading venue, the Hamburg Stock Exchange, researchers determined an average price advantage of €0.52 per €1,000 order. On average, the spread is 43% better than on the reference market XETRA. Extrapolating these findings over a 12 months period, Trade Republic customers have saved more than €6 million as a result of better spreads alone.

In addition, the explicit costs are also significantly lower. Traditional online brokers typically charge less active investors with small investment amounts between 1.5% and 3.5% in fees and those with higher activity and larger volumes between 0.5% and 1.0%. In contrast, the explicit costs at Trade Republic are only 0.25% for customers with low activity and 0.08% for investors with high activity.

“We strive to empower low and mid incomes to build wealth by investing in the capital markets,” says Christian Hecker, Co-founder of Trade Republic. “The average household can only save 300 euros per month. Commission-free trading at the best rates is at the core of our offering since it is the only way to give everyone fair access to economic growth.”

Already, far more than one million customers who hold over six billion euros in assets trust the neobroker’s innovative offer. This makes Trade Republic one of the largest savings platforms in Europe. Christian Hecker adds: “We see ourselves as a loud and critical voice of savers in capital markets. With full transparency and openness, we want to work on the further development of capital markets to ensure that everyone has a fair chance to build wealth.”

The study is freely available to everyone via this link.

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ABOUT TRADE REPUBLIC

Trade Republic is on a mission to set millions of Europeans up for wealth creation with secure, easy and free access to capital markets. With over one million customers Trade Republic is already the home screen app for many Europeans to manage their wealth. It offers commission-free investing in equities and crypto as well as free ETF and fractional stock savings plans. Trade Republic is a technology company with a German banking license supervised by Bundesbank and BaFin. As Europe’s largest neobroker Trade Republic has received investments by Accel, Creandum, Founders Fund, Project A, Sequoia, TCV, and Thrive Capital. The company based in Berlin was founded in 2015 by Christian Hecker, Thomas Pischke, and Marco Cancellieri and employs more than 400 people.