Discussion
DonkeyApple said:
It's capital at risk and they don't state what they're doing with the client money and their balance sheet very small so one has to decide if the risk on one's capital is worth the return. As always, just play with funny money not the real stuff needed for one's actual life.
TBF the platform does state client money is protected by FSCS and regulated by the FCA. Up to £85k any uninvested cash is as protected as any UK bank then, surely?
Similarly, any actual stock etc investments would still belong to the client too if T212 went bust as it states on the website. If not, why not given FSCS and FCA regulation?
YorkshireStu said:
TBF the platform does state client money is protected by FSCS and regulated by the FCA.
Up to £85k any uninvested cash is as protected as any UK bank then, surely?
Similarly, any actual stock etc investments would still belong to the client too if T212 went bust as it states on the website. If not, why not given FSCS and FCA regulation?
Nope. The intent is for novice punters to make that leap. It's a pretty standard industry ruse to announce one activity's protection and then bleed into another which isn't but in a way that most will not notice as they always just want to believe. Up to £85k any uninvested cash is as protected as any UK bank then, surely?
Similarly, any actual stock etc investments would still belong to the client too if T212 went bust as it states on the website. If not, why not given FSCS and FCA regulation?
The product is t allowed in other markets such as Aus because of this confusion risk but the FCA is far more lax as we saw for years with the minibond market which was allowed to market as an interest product when it was 100% speculative capital at risk as most subsequently learned when they lost 100% in low risk investments.
So, Trading 212 UK Ltd is the FCA regulated subsidiary of the Bulgarian business. When you select to receive interest in your money habe you noticed the process? It's not a click of a button is it? Have you even wondered why they don't just pay interest on free cash by default? Why pay zero but then off a super high rate, in fact suspiciously high rate if someone agrees to a series of legal terms?
. That is your absolute page 1, chapter 1 wheeze reveal there. That's the point at which you know the game is afoot and only suckers progress blindly. So, a supposed investment firms deliberately pays zero on free cash. Now that's either because they're a bookmakers not an investment firm or because it's part of the scheme to get punters to elect themselves out. Or it could be both. It might bizarrely be neither but all we know at this stage is that someone has farted in the lift and could well be about to crap everywhere with a spot of explosive diarrhoea.
So what's in those legal terms you strangely have to agree to just to get a bit of interest on your money? We know you haven't read them because you still think the money is backed by the FSCS at this moment.
What is it that the Australian regulator has spotted and blocked that the FCA thinks is absolutely fine? The thing that U.K. punters never want to see because they want to think that they're super smart which is what makes them so easy to delude every single time, again and again as infinitum. They sell The rise to themselves which is what makes it so easy.
Let's start with what is a QMMF and why they are explicitly not covered by the FSCS which is why you are signing up to new terms when you buy this product from 212 that elect you out of this cover.
At this point it is really important to learn why a QMMF isn't covered.
We can even go to 212's site where they have written their version aimed at reassuring basic retail consumers:
'What’s a qualifying money market fund (QMMF)?
A qualifying money market fund holds mainly short-term, low-risk financial assets, aiming to maintain a stable value. These funds are designed to be safe places to keep your cash while earning a bit of interest, and they're often used for the cash portion of retirement or investment accounts. They're called "qualifying" because they meet certain regulations that allow them to be considered as cash equivalents.
Who uses QMMFs?
Pension funds, insurance funds, banks, and other major financial institutions.
These institutions typically use QMMFs to hold large amounts of money in a safe way. Over €1 trillion is held in QMMFs in Europe and over $6 trillion in the USA as of January 2024.'
Just read that explanation of what a QMMF is. Mainly holds. Not exclusively but sort of mainly but no qualification of what mainly is. Aims to be stable. Not is stable, just aims to be. Like a gambler aims to win their bet. Or like Stevie Wonder aiming a bow and arrow. 'Often used in retirement' oh well that is clear then, if a QMMF is used by professionals for little old ladies then all QMMFs are golden.
So having read 212s explanation as to what a QMMF is do you now know what a QMMF is? Of course you don't. You actually know nothing more than you did earlier but what you do feel is reassured that this product that you still know nothing about has been used by industry professionals in pension funds so that must mean it's great. It's a meaningless definition and is in fact a platitude for mug punters, clear as day to the point of being laughably clumsy and base.
Now the 'who uses QMMFs?' bit. Why only list a few of the users and the ones most likely to impress a mug punter who wants to believe? Ooh, an insurance fund might use a QMMF go that means all users and all QMMFs are equal and perfectly safe and good. Again, that explanation doesn't explain anything it is marketing schpeel for mug punters.
What you end up with is people who never read the legals, never want to understand, will just believe the marketing platitudes and dump money in but worse then try and act like they're savvy and worse still try and punt it to others.
Right now there will be mug punters out on social media pitching something they know nothing about and have completely misunderstood to other punters such is the way it works whether Icelandic banks, Christmas clubs, P2P lending, minibonds, crypto income the list is endless and relentless because mugs are limitless and will always believe what they want to believe.
So why might the FSCS not cover QMMFs like they refused to cover mini bonds and P2P? Why might that be? These are apparently low risk, legitimate financial products used by serious market professionals? As such perfectly safe yet the FSCS doesn't cover them. That's odd is t it?
Well, once you realise that QMMF is just a generic term for something you can make up yourself and as long as you have it self certified as meeting the basic criteria you can sell it on then you might start to think that maybe all QMMFs might not be equal.
Now if I sat at BlackRock I might have a team who builds me a QMMF that is a portfolio of short dated blue chip, gilt edged bonds, mostly govt but some high end corporate. It won't yield the same as the FED rate (you wouldn't want a product that did as everyone knows that's the first sign that the game is afoot) but it's a good quality cash equiv for good quality clients.
Alternatively, I might ask a third party to knock up a QMMF that leverages corporate junk bonds to allow me to use third party mug cash to generate double digit income which I mostly keep for myself while paying the mugs a low rate designed to let them think it's all low risk.
In fact, why would I bother? I could just get someone to creat a QMMF and say that the assets are in there but we just pass all the mug punter cash through it and out the other end to wash around the world until it can never be found.
Who knows and because these products are so lightly regulated as they're not supposed to be so openly retail client facing you are not going to allow them to be covered by a compensation scheme that you pay into and are on the hook for.
Very long winded but for anyone skipping to the end, no, your money is not covered by the FSCS when you elect it up to be converted I to a QMMF and you also have absolutely no idea which QMMFs they will be buying with your money, who built them, what they're invested in or whether there is anything in them. Ergo, one should very obviously be very careful and not be so daft.
Hang on…
It was phrased as “uninvested cash”. It is pretty clear that moving it into the money market makes it an investment and no longer cash in the bank so to speak.
Regardless of whether fscs protection applies or not I’d have little faith if a platform went bust they would be able to deal with the complexity, especially when fractional shares are involved. As others have said, it’s for play money.
It was phrased as “uninvested cash”. It is pretty clear that moving it into the money market makes it an investment and no longer cash in the bank so to speak.
Regardless of whether fscs protection applies or not I’d have little faith if a platform went bust they would be able to deal with the complexity, especially when fractional shares are involved. As others have said, it’s for play money.
T212 needs to be more transparent about this, especially as paying interest seems to be the main focus of its advertising at the moment.
In fairness, under 'Is my money still protected?' it states:
"Where we hold your money with a bank, you are protected by the FSCS up to a limit of £85,000. Learn more about how your money is protected here.
"Money placed with a QMMF is treated as an investment and not as money held with a bank. In the unlikely event that the QMMF fails to maintain their low-risk strategy, as with any investment, the protection will not be available. We carefully select all QMMFs to ensure that they are highly liquid, stable in value and maintain their highly regulated status."
However, all of this is buried away within the FAQs. It definitely should be more prominent.
I wonder how many T212 investors have chosen to receive interest without properly understanding what's actually involved?
In fairness, under 'Is my money still protected?' it states:
"Where we hold your money with a bank, you are protected by the FSCS up to a limit of £85,000. Learn more about how your money is protected here.
"Money placed with a QMMF is treated as an investment and not as money held with a bank. In the unlikely event that the QMMF fails to maintain their low-risk strategy, as with any investment, the protection will not be available. We carefully select all QMMFs to ensure that they are highly liquid, stable in value and maintain their highly regulated status."
However, all of this is buried away within the FAQs. It definitely should be more prominent.
I wonder how many T212 investors have chosen to receive interest without properly understanding what's actually involved?
I had the idea of using T212 for a small portfolio of individual shares, outside of my main investments
........ I got as far as the word " Bulgaria" , which along with one of the other popular words " Cyprus" is in Terms etc of some of these emerging platforms.
That was the end of my research . Went with mainstream ( if there is such a thing) provider
........ I got as far as the word " Bulgaria" , which along with one of the other popular words " Cyprus" is in Terms etc of some of these emerging platforms.
That was the end of my research . Went with mainstream ( if there is such a thing) provider
C69 said:
I wonder how many T212 investors have chosen to receive interest without properly understanding what's actually involved?
All. Let's say 99.9%. More importantly absolutely no one knows what the holdings are, who has created them and whether they're truly third party. We can bang out a sufficiently compliant QMMF inside of a day and have it trading on an 'exchange' within a week or two. And I can set a management fee to send whatever wherever. It's a very lax area of the market that is now being rolled out to retail punters in a new way and certainly something people should be wary of.
Etoro run the same model.
And low risk isn't 5+%
. That ought to be a big enough clue before even considering that it is a truly appalling return for capital at risk when the gilt market is 4%, tax free and no capital at risk. DonkeyApple said:
All. Let's say 99.9%.
More importantly absolutely no one knows what the holdings are, who has created them and whether they're truly third party. We can bang out a sufficiently compliant QMMF inside of a day and have it trading on an 'exchange' within a week or two. And I can set a management fee to send whatever wherever. It's a very lax area of the market that is now being rolled out to retail punters in a new way and certainly something people should be wary of.
Etoro run the same model.
And low risk isn't 5+%. That ought to be a big enough clue before even considering that it is a truly appalling return for capital at risk when the gilt market is 4%, tax free and no capital at risk.
Cheers for all the insight DA! More importantly absolutely no one knows what the holdings are, who has created them and whether they're truly third party. We can bang out a sufficiently compliant QMMF inside of a day and have it trading on an 'exchange' within a week or two. And I can set a management fee to send whatever wherever. It's a very lax area of the market that is now being rolled out to retail punters in a new way and certainly something people should be wary of.
Etoro run the same model.
And low risk isn't 5+%
. That ought to be a big enough clue before even considering that it is a truly appalling return for capital at risk when the gilt market is 4%, tax free and no capital at risk. I’m not with T212 but with eToro and Interactive Brokers and I’ve have had interest paid but tiny amounts since my play money is mostly invested at any one time. I only keep £5k - £10k in cash generally for day trade gambling, the rest is holding long trades for weeks/months.
YorkshireStu said:
Cheers for all the insight DA!
I’m not with T212 but with eToro and Interactive Brokers and I’ve have had interest paid but tiny amounts since my play money is mostly invested at any one time. I only keep £5k - £10k in cash generally for day trade gambling, the rest is holding long trades for weeks/months.
Yup. The key is to use these types of firms only ever with fun money. I’m not with T212 but with eToro and Interactive Brokers and I’ve have had interest paid but tiny amounts since my play money is mostly invested at any one time. I only keep £5k - £10k in cash generally for day trade gambling, the rest is holding long trades for weeks/months.
For example etoro ran for years and possibly still do the fx wheeze and also the PFOF and fractional share wheezes where you claim no commis on the trade but force an fx transaction at widened spread for collecting an even higher covert comm, with PFOF your kickback incorporates an elevated market spread which is usually greater than true market plus comm and fractionals have a chunk of comm in the spreads which tend to be wider still. These latter two systems allow for slippage on closing so you can let a punter in at break even but as the holdings are non transferable you know you will always have the closing side and that's where you slip for your money.
The two key tricks when selecting a broker is firstly to read their web content from the bottom up as the content at the top which is meant to be read first is what contains the most overt deceptions and the bottom contains the absolute minimum legal requirement to display clarity and reality (why the regulator forced OTC brokers to carry their loss declarations at the top of all pages and with a minimum font size and contrast colour setting). The second rule is to accept that not only is there no such thing as zero interest in borrowing or zero commission on trading but that where this is offered the true comms and charges will be much higher than the firms that offer market and comm overtly.
A third key is where the beneficial owners or parent company resides. Usually overseas in an ultra low regulation jurisdiction.
DonkeyApple said:
Yup. The key is to use these types of firms only ever with fun money.
For example etoro ran for years and possibly still do the fx wheeze and also the PFOF and fractional share wheezes where you claim no commis on the trade but force an fx transaction at widened spread for collecting an even higher covert comm, with PFOF your kickback incorporates an elevated market spread which is usually greater than true market plus comm and fractionals have a chunk of comm in the spreads which tend to be wider still. These latter two systems allow for slippage on closing so you can let a punter in at break even but as the holdings are non transferable you know you will always have the closing side and that's where you slip for your money.
The two key tricks when selecting a broker is firstly to read their web content from the bottom up as the content at the top which is meant to be read first is what contains the most overt deceptions and the bottom contains the absolute minimum legal requirement to display clarity and reality (why the regulator forced OTC brokers to carry their loss declarations at the top of all pages and with a minimum font size and contrast colour setting). The second rule is to accept that not only is there no such thing as zero interest in borrowing or zero commission on trading but that where this is offered the true comms and charges will be much higher than the firms that offer market and comm overtly.
A third key is where the beneficial owners or parent company resides. Usually overseas in an ultra low regulation jurisdiction.
You posted this in another thread some time ago and it has always stuck in my mind - easy to remember, simple to put into practice, and saves loads of time - and potentially a fortune.For example etoro ran for years and possibly still do the fx wheeze and also the PFOF and fractional share wheezes where you claim no commis on the trade but force an fx transaction at widened spread for collecting an even higher covert comm, with PFOF your kickback incorporates an elevated market spread which is usually greater than true market plus comm and fractionals have a chunk of comm in the spreads which tend to be wider still. These latter two systems allow for slippage on closing so you can let a punter in at break even but as the holdings are non transferable you know you will always have the closing side and that's where you slip for your money.
The two key tricks when selecting a broker is firstly to read their web content from the bottom up as the content at the top which is meant to be read first is what contains the most overt deceptions and the bottom contains the absolute minimum legal requirement to display clarity and reality (why the regulator forced OTC brokers to carry their loss declarations at the top of all pages and with a minimum font size and contrast colour setting). The second rule is to accept that not only is there no such thing as zero interest in borrowing or zero commission on trading but that where this is offered the true comms and charges will be much higher than the firms that offer market and comm overtly.
A third key is where the beneficial owners or parent company resides. Usually overseas in an ultra low regulation jurisdiction.
The best bit of advice I've read for some time...
Thank you!
Gassing Station | Finance | Top of Page | What's New | My Stuff