DeGiro logoIt has been little more than a year the discount broker DeGiro started operations. A sort of a sister operation of a small hedge fund, it was new in the business. They understood correctly investors won’t switch to another broker for marginal lower fees. Option fees are a fraction of those at formerly discount brokers Binck and Alex.

They’re currently rolling out their service to the rest of Europe. Apart from Scandinavia, Italy and the UK they are covering the entire continent, even banana republics countries like Greece and Spain.

All investors switched to DeGiro and lived happily ever after? Unfortunately, no. Everyone should switch at least a portion of their portfolio to DeGiro. But while I’m a fan of price competition, always support the underdog and believe they have a reliable and friendly CEO – there’s a lot to improve at DeGiro. Executing trades in the market is a commodity, once a fixed set of conditions are met. Here are the nine things I hate about trading with DeGiro.

Update : This is a post from October 2014. Some points have been improved in the meantime, read the bottom of the post for the full update. Other worries about this broker can be found on other posts on this site about it.

1. Impossible to change password

Was flabbergasted to discover it’s impossible to change your password. You have to stick with your first password, well.. forever. Okay, there’s a work around (“Sorry, I forgot my password“). Don’t tell the hackers in Russia about it. Maybe the rest of DeGiro’s security technology is state of the art. Am afraid not.

2. DeGiro gives No trade confirmations

You can’t bother them with new passwords, and they won’t bother you with trade confirmations. They don’t write, they don’t call. When orders are executed there is not such thing as trade confirmations in your mail or as a text message. The Russian hackers can safely destroy your account. You won’t notice until you login again.

3. Dividend mess

Some stocks give the opportunity to select cash or stock dividend. Clients of DeGiro will have no possibility to make decision. They get the cash. It gets even worse when receiving US dividends. The dividend witholding tax for Dutch clients used to be 15% – but is raised to 30% as DeGiro switched from ABN AMRO to Morgan Stanley. They don’t know anything about taxes. Clients are on their own. Nothing is communicated about the matter.

4. Website is a mess

The website interface is horrible and hard to navigate. Finding stocks quickly is difficult. Connected to a lot of exchanges, but finding a regular Dutch stock is giving a headache. When Cees Smit compared DeGiro with a Rumanian version of the Lidl – this was what he ment (also see this review – nl). Finding simple US stocks based on the ticker code isn’t possible. They assume you’ll be using ISIN codes. Sure. No option chain available. Help section is a joke.

5. No fixed rules

In bowling, there are rules. At DeGiro you can’t rely on a set of rules. For example expiring in the money options can be exercised, according to a reaction from their director. Depending on “circumstances and market expectations”. And they take half of the profit (seriously!). Same story with rights offerings. Clients who forget to subscribe to a rights offering and don’t sell their claim can’t rely on DeGiro. Sometimes DeGiro takes action, subscribes to the claim, sells the shares and takes half of the profit. It depends. Case by case.

6. Inexperienced back office

From several traders I’ve understood they felt the need to check closely all trades apart from the ordinary. Once they used the wrong prices when options were cash settled in a take over situation. Trader had cash settlement prices straight from the exchange, but DeGiro used other prices. Was hard to convince them to correct their mistake. However, some KBC clearing veterans joined ship so things will probably have been improved. Also see point 3 on taxes.

7. Limited trading possibilities

Straightforward trading possibilities are lacking. Most painful are the lack of combinations and spreads in the option market. Time spreads, straddles and strangles : all have to be executed in single legs. Less relevant, but still annoying are the weekly stock options which are missing out. The US stock market is served but prices are lagging 15 minutes. While the background of the delayed prices is understandable, the lack of communication about delayed prices is not. You will realize you’re looking at old prices as soon as you try to send an order.

8. No app

DeGiro hasn’t got an app for your phone or tablet. You can do without, using the regular browser – but the website is hard to navigate on a regular computer let alone on a small screen. Don’t even try. It’s probably coming in the future.

9. No communication, no twitter

It’s 2014 and there’s no active twitter account for DeGiro. There’s one, but it seems to be asleep. When website is down or clients seek help – nothing. Especially with all uncertainty about the brokerage and lack of communication about everything this is a missed opportunity. Response time from the helpdesk varies, but it’s weird the exchange Euronext is teaming up with DeGiro on a marketing deal. No trade confirmations, no twitter account and no fixed rules ; but DeGiro is taking over the “retail investor services” from Euronext (pdf – nl). Ironic.

* update June 2015 *

With DeGiro expanding to every European country, this post remains popular. Every new country invaded by the discount broker ignites a new wave of visitors (hi!). And truth be told, a lot of things have been improved in the meantime. So it would be fair to to write a short update.

1. impossible to change password – solved
2. no trade confirmations – not solved, but they are working on it

3. dividend mess – 
Solved, they offer w8-ben forms for US stocks, clients pay only 15% tax
4. website is a mess – Improved a lot. Every country has got it’s own list of shares, making it easy to find. However, finding an ETF is still difficult – no segments or styles over here. The exchange isn’t easy to identify (for instance EPA means Euronext Paris – but never clear).

5. no fixed rules – Progress. 
New rules in place, if you do not exercise your options they will do it for you when it is more than 2% in the money. They take a 20% cut for the risk. 
6. inexperienced back office. A lot of back offices in Europe, but at least in Amsterdam I can confirm some experienced people joined them.
7. limited trading possibilities. Solved. Daily and weekly index options on the AEX index have been introduced, as well as weekly stock options. Combination orders in the option market are said to arrive in July.

8. no app – Solved. Not top of the bill, but a mobile site has been introduced.

9. no communication, no twitter – I still believe an active twitter account for every country would be a good thing from marketing perspective. They happen to see it differently. Not a dealbreaker.

 

Jack
Jack