Trading 212 sent an email to clients on Friday afternoon detailing a number of changes to its legal agreements with UK customers.
The changes centre around the establishment of a new entity in Ireland. TradeInformer reported on the establishment of Trading 212’s new entity in April of last year, with ex-Numis CFO Michael Byrne brought in as its CEO.
The most striking of the changes that the brokerage group has made is with regard to how trades are executed across its CFD and cash equities products.
Previously Trading 212’s UK entity, along with a UK-based JP Morgan entity and Interactive Brokers’ main US entity, acted as market makers for the firm’s cash equities business. The company’s UK entity was the market maker for its CFD business.
The changes to the document mean that the broker will now face Interactive Brokers’ Irish entity and JP Morgan’s German entity for cash equities. That will be alongside Trading 212’s UK company and its Irish entity.
For CFDs, the firm has said it will now be able to hedge its exposure with the Irish entity.
In practice, the company will be heavily incentivised to send flow it receives, across cash equities and CFDs, to the Irish entity.
This is because the company can then book the large majority of its revenues in Ireland, where corporation tax is just 12.5%, compared to the UK, where the company would have been paying 25% on its profits in excess of £250,000. This is what other companies do, notably Plus500, to reduce their tax burden.
Trading 212’s most recent financial results show its group level entity – which was in the UK – generated net income of £52.9m in 2024.
