Probably the most common company to stumble across ‘in the wild’ in the UK today is Trading 212. This is because of how popular it is for stockbroking.
However, over the past few years, I’ve also come across a few people, who when I go through the laborious and dull process of explaining what I do, will then talk about how they have punted on CFDs with the brokerage as well.
For a long time, I wondered about who would actually make the cross-sell leap from stockbroking to CFDs on the company’s platform.
Then I was having dinner with someone who is particularly prone to impulsive and low IQ behaviour. Midway through eating, he took his phone out, looked at something, and sighed. It turned out he was down almost £600 on index trading with Trading 212.
What this points to is the fact that Trading 212 still makes most of its money from CFDs.
We looked a few months ago at how eToro resembles the closeted character from an old episode of Law & Order – they need to market themselves as a stockbroker, but still earn the large majority of their money from CFD trading. That creates a peculiar duality, in which the company cannot admit how it actually makes money because doing so kills its brand identity.
This trend extends to Trading 212. They may sell stocks in the streets, but it’s 100% FX/CFDs in the sheets. Sadly, some people I’ve spoken to fall for this ‘beard’ marketing and think they really do sustain themselves from the former product.
The most obvious sign that this is extremely unlikely is XTB. The Polish broker operates with almost exactly the same fee structure as Trading 212. Like Trading 212, the only real fee they charge on stockbroking is an FX conversion fee. Aside from that they make money on the difference between the amount of interest they receive on idle cash and the proportion of that amount which they pay to customers.
The result? In 2024, XTB made less than 2% of its revenues from cash equities and about 95% of its revenues from CFDs. A small percentage – about 3% came from interest on client funds. There was little shift in this revenue mix last year.
The reason I use 2024 as an example is that this is also the last year we have for Trading 212’s accounts in the UK. Although it has since moved its holding entity to Ireland, the group entity was previously in the UK. So too – obviously – is the UK entity.
Both sets of accounts state that Trading 212 makes money from its stockbroking business as follows…
“For the stockbroking business, the company operates a zero-commission model where clients do not pay commission for trading nor suffer custody fees for the assets held. T212 earns fees from clients when they trade in a currency different to that in which their cash was deposited. T212 also keeps a portion of the interest earned on the uninvested client money and earns fees through a fully collateralised stock lending programme.”
The group entity does not go into much detail for revenue. However, for the UK entity, net income from interest in 2024 was £11.6m. Deposit fees on cards were £1.6m. Other fees, including from the company’s debit card, was £1.3m. The remaining ‘investment brokerage income’ was £150.1m.
The only other fees that are not included in this are stock lending and FX fees. There is no stockbroker on earth who is making a regular profit and survives only off these sources of income. But let’s take a look at one of the company’s peers.
Robinhood’s 2025 results show it made $190m from stock lending. However, that was with assets under management of $324bn (approximately £242bn). Our estimate last year had Trading 212 with AUM of around £6.6bn in 2024. If Trading 212’s revenue from stock lending was the same – as a percentage of revenues – as Robinhood, it would have made around £3.8m from that business line.
This is unlikely to be the case though. This is because Robinhood includes margin-based revenues in its net revenue figure for stock lending. Robinhood makes money from this by lending customers shares to short sell for a premium. It also lends out shares that customers buy on margin and, unlike its fully-funded programme, does not share revenue from that activity with clients. Trading 212 does not have margin trading, so it cannot make money from that latter activity.
That leaves FX fees. Currently Trading 212 charges 15 basis points on FX trades. This is peanuts. By way of comparison, XTB charges 0.5% and does not even include it as a revenue line in its report. The absolute maximum this could be is 1.6% of XTB’s revenue and that is with fees that are more than 3x what Trading 212 charges.
However, as you are all sharp, keen-eyed readers, you will have noticed I said XTB’s model is ‘almost’ the same as Trading 212’s. There is still one more underhand way that Trading 212 monetises its stock trading business.
Although it says FX, interest on cash, and stock lending are how it makes money, the company’s financial reports require it to list risks it faces as a business. One of these is Market Risk. This notes…
“For equities trading, the main market risk arises from the maintenance of inventory, and in particular the risk that the value of the inventory falls. However, the firm incorporates this market risk into its hedging strategy and so the Board approved risk appetite limits will also incorporate the market risk on the inventory and is monitored intra-day using the same trading risk management framework and processes.”
In other words, Trading 212 does not only make money on stocks from FX, interest on cash, and stock lending. It also acts as a market maker for commission-free trading.
This is not new and you can see it in the execution venues it names in legal documents. Along with JP Morgan and Interactive Brokers, the company has also listed its own entities as counterparties to cash equities trades for a few years. This used to be a UK company but recently switched to an Irish one, presumably for tax efficiency.
This is more interesting. Robinhood’s regulatory disclosures show that, via payment for order flow (PFOF), it gets 12.35% of spread during market hours and 9% in after hours trading for equities trades.
Trading 212 gets the whole spread, assuming it can capture it. How much they make from this is impossible to know as they don’t disclose it. I would also not be surprised if they were able to do something akin to PFOF with Interactive Brokers and JP Morgan. There is a prohibition on PFOF in the UK but if you could do a matched-principal trade, then it would not be. I strongly suspect Trading 212 is using matched-principal trades to monetise its business as well.
Equities are the least profitable product that Robinhood gets PFOF revenue from, so I still doubt this is making Trading 212 a big chunk of money. But it would certainly be more than the US broker is making and this is not a service, at least that I’m aware of, which other brokers, like XTB and eToro, have implemented in a meaningful way.
Nonetheless, that is not going to be enough to make the sort of money that Trading 212 does from its business, either in the UK or as a whole. It’s CFDs all the way baby – no matter what public facing persona they want to put on.
