How trustworthy is the Trade Republic App in Germany?

Trade Republic is a Berlin fintech, on the market since mid-2019. With its very lean fee structure – all orders at a price of 1 euro – it belongs to the genre of so-called neo-brokers that want to introduce new customer groups to securities trading. The model for such pricing models is the U.S. broker Robinhood. Instead of (only) receiving money from investors, neo-brokers also receive money from their trading partners, for example the stock exchange through which the trades are settled. This is fine as far as it goes and is listed in the fine print of each statement.
Since January 2020, you can also use Trade Republic App in Austria, France, Germany, Italy, Netherlands and Spain. Previously, Trade Republic App was only available for German users. The broker is supported by HSBC for trade processing and by Solarisbank, Deutsche Bank and Citigroup for the management of customer funds, which are thus protected by the German deposit guarantee up to 100,000 euros.

Yes, the company has obtained a license as a securities trading bank from BaFin (“Bundesanstalt für Finanzdienstleistungsaufsicht”, German Federal Financial Supervisory Authority). In addition, the company is supported by Solarisbank, Deutsche Bank and Citigroup for deposits and HSBC.

Once you have applied for an account, the opening process is really fast for Trade Republic. You download the Trade Republic app for Android or iOS and open it. The app guides you through the different steps. You have to enter your personal data, previous experience with securities, as well as a “withdrawal account” – this means your existing checking account.
If your ETF later pays dividends or you receive sales proceeds, these will first land on your so-called settlement account on the Trade Republic App. If you do not want to buy other securities with it, you can transfer the money from the clearing account to the withdrawal account.
In order to verify your identity, you will have to make a short video call to the Trade Republic call center. You will need your ID card, which you have to hold up to the cell phone camera when the employee tells you to do so. A few minutes later you will receive the IBAN for the settlement account and can make the first transfer to it to have funds for a securities purchase.
In order to open a Trade Republic account, you must be a German resident and taxpayer, be at least 18 years old and have a European cell phone number and a current account from an EU country or the rest of the SEPA area. If you are a citizen of the USA, you cannot become a customer (as with many other banks).
Shortly after the opening of the account, Trade Republic will transfer one cent to your withdrawal account (at your existing bank). In the remittance slip you will find your personal Trade Republic PUK: a code that you will need later if you want to change the withdrawal account, your cell phone number or your PIN for the app. You should therefore keep this PUK.

If you already have stocks, funds or certificates in another custody account, you can transfer them to Trade Republic if you wish. The transfer from a German provider is free of charge. In the settings menu of the Trade Republic App you will find a form to transfer all or selected securities. Well-known ETFs of major brands and well-known stocks can be transferred without any problems. For rarer securities, you should use the search function to find out whether the securities are tradable on the Trade Republic App – otherwise a transfer is not possible and you will have to continue with your old securities account. Second solution: You first sell the securities that you cannot transfer and only then initiate the switch to Trade Republic. Remember, however, that taxes and fees may be incurred on the sale.

You can buy or sell around 7,500 different stocks and around 1,500 ETFs via the securities account. The start screen of the app shows the previous performance of your investment. If you own different securities, they are listed one after the other.
Use the search function to find the security you want to buy. Finanztip recommends low-cost funds that track a global stock index (ETFs). This way, you participate in a broad mix and avoid the risk of making a mistake when selecting individual stocks. But in principle, you can buy all securities at Trade Republic that are traded on the partner exchange Lang & Schwarz Exchange.
To clearly assign a stocks or a fund, it is best to use the identification number, the so-called ISIN. The numbers of the ETFs that Finanztip recommends are listed in our ETF calculator. If you type in the name of an ETF or a stock, the ISIN will also appear – then you should compare to be sure.
In case of a single purchase, you enter the desired number of units, for example five units of a specific ETF or five stocks. The price of a stock or ETF unit fluctuates and can change every second. Therefore, Trade Republic can only estimate the purchase price for your action. In the Trade Republic App, before the purchase, it says “Total (indicative)”.

You can avoid an unpleasant surprise with the purchase price if you do not select the preset option “market price”, but set a limit price. This unit price will then not be exceeded under any circumstances, even if the market price should rise during your purchase.
Example: The current price is 66.90 euros. If you set a limit price of 70.10 euros and order five stocks of the security, you would buy for a maximum value of 350.50 euros. If the price rises to 70.20 euros during the order process, no purchase is made until there is another offer for a maximum of 70.10 euros, the order expires or is deleted. If you do not set a limit, but order at the market price, as it says in the app, a purchase could also be made at higher prices.
If you want to regularly invest a certain amount in an ETF, you can also set up a savings plan with the Trade Republic App. Savings plans are not offered for all securities that are tradable through the app, but for many important ETFs and also for many individual stocks. Once you have called up the description of a security for which a savings plan is possible, Trade Republic App displays a corresponding button.
To start the savings plan, select the frequency (twice a month, monthly or quarterly) and the savings rate. A savings plan on the Trade Republic App must include at least 10 euros per installment. The purchase takes place automatically on the agreed date. The small book icon in the bottom menu bar is your “Order Manager”. There you will find the savings plans you have set up and you can change or delete them if necessary.

You can trade stocks and ETFs every trading day between 7:30 AM and 11:00 PM Berlin time. However, we do not recommend trading in the morning and evening hours. It is best to choose the time between 9:00 AM and 5:30 PM.
Why?
Because during this core time, the German leading stock exchange Xetra is also open. This ensures more favorable prices because more investors are involved in the stock market. Outside the Xetra hours, less favorable prices may appear.

Trade Republic is a securities trading bank and as such is licensed and controlled by the regulatory authority Bafin.
The settlement account of your Trade Republic account is managed by Solaris Bank. Solaris Bank has a German banking license and is a member of the statutory Deposit Protection Fund. This means that your balance on the clearing account is protected up to 100,000 euros in the event of a bank failure – i.e. the money that you have not yet or no longer invested in securities.
However, the ETF shares or stocks that you have bought through Trade Republic (or any other broker) are not protected by the deposit insurance. After all, their value can change constantly in stock market trading and theoretically fall to zero, but also increase extremely. Securities are legally special assets, so in case of insolvency they do not fall into the bankruptcy estate. Trade Republic holds your securities in custody in your name with the help of the bank HSBC at the usual depositories for securities.
If Trade Republic is not able to release your securities, the investor compensation according to European law applies. Here, as with other brokers, a maximum of 20,000 euros per investor is protected, up to a maximum of 90 percent of the liabilities from securities transactions.

All orders for only 1 Euro – this concept can be sustained by limiting the service to the essentials. Trade Republic therefore works with a pure app solution. The only trading venue is the Lang & Schwarz Exchange stock exchange.
At the beginning of 2021, Trade Republic caused annoyance among some customers because the broker had temporarily restricted trading in the highly sought-after stock of Gamestop and similar securities. However, long-term investors such as savings plan users were not affected by this, as far as I know.
A stock deposit account with no costs, stock and ETF trading for just one euro and, in addition, the largest range of ETFs – how can neo-brokers finance themselves at all if they do not collect any money from their customers? The business system is built on rebates or so-called “payment for order flow” commissions. This means that for every order that a neo-broker places with a particular trading venue, the broker receives a commission. For this purpose, the brokers work together with fixed partners.

Usually, with large brokers you can choose your own trading place and you will always be shown the buy and sell price. This is also known as bid-ask spread. The buy price is always slightly higher than the sell price. This difference represents the fees that investors pay to the trading venues.
If you are trading very large amounts, the spread is certainly an important issue. If you are trading small amounts of stock with manageable sums, the points mentioned above are certainly more important.

As mentioned above, Trade Republic has created an enormously lean cost structure and reduced all unnecessary costs. As a result, it needs less revenue to be profitable. The company makes money anyway: with so-called refunds from trading partners.
When you make a transaction, the broker receives a rebate from the trading partner. This and the one euro third-party fee are enough to finance Trade Republic with its favorable cost base.

In November 2019, Trade Republic introduced ETF savings plans – completely free of charge. So even the one euro per transaction is dropped. Only the usual management costs for ETFs – usually between 0.15 percent and 0.5 percent p.a. – must be paid (as with any other provider).
The Neo Broker from Berlin has found ETF partners with Blackrocks iShares, Amundi, DWS Xtrackers and Lyxor. About 1,500 ETFs from these providers can be saved. The minimum investment amount is 10 euros and there are three time intervals: twice a month (at the beginning and middle of the month), monthly (with a choice of whether at the beginning or middle) and quarterly (with a choice of whether at the beginning or middle).
In the app, there is now a new tab at the bottom called “Order Manager” (a book icon), which can be used to create the free ETF savings plans. Alternatively, you can also find a “Create savings plan” button on the detailed view of an ETF that can be saved.

Since September 2020, there are also completely free stock savings plans on Trade Republic. These include 2,500 German and international stocks eligible for savings plans. Among them, of course, the best-known stocks such as Apple, Amazon, Tesla and Co. as well as exotic stocks.
What is special is that the Neo Broker is thus, according to its own information, the first broker to offer permanently free stock savings plans. The minimum investment sum with the stock savings plans is with 10 euro and thus clearly below that, which one knows from other brokers (25 or 50 euro).
The stock savings plans can be executed on a bi-weekly, monthly or quarterly basis.

To create a stock savings plan, click on the order book in the lower menu bar. This will take you to the “Order Manager”. From here you can click on “Add Savings Plan” and click on “Stock Savings Planf” at the top.
From here you can select your desired stocks and create a savings plan, i.e. choose interval, amount and confirm your savings plan. Of course, you can also create a stock savings plan directly from the individual view of a stock – just click on “Create savings plan” below the key figures.

Dividends are credited to your settlement account at Trade Republic in the normal way. There are no costs for this. In addition, you will receive a statement with each dividend payment, on which the details will be noted. At the end of the year, Trade Republic will of course summarize all dividends in the annual tax statement.
In addition, there is the possibility to place an exemption order up to 801 euros (or for married couples up to 1,602 euros) and thus receive the dividends tax-free up to this limit.

The Trade Republic App doesn’t allow you to choose on which trading venue you can trade, but here is the overview: Lang & Schwarz Exchange is the electronic trading venue where your orders are placed. This is where the purchase and sale of securities is processed. Due to the regulation by the Hamburg Stock Exchange, a high quality is also ensured.
HSBC is the largest securities processor in Germany in terms of the number of transactions. Your securities are safe in the custody of HSBC in Germany as well as abroad. Should Trade Republic not be able to survive on the market, your invested money is not lost. Trade Republic also cooperates with HSBC in derivatives trading.
BlackRock is a global asset manager and Trade Republic’s partner when it comes to ETF offerings.
SolarisBank is a “banking as a service platform” and holds the full banking license in Germany. This is where the money is kept that Trade Republic’s clients do not currently have invested in securities. Without negative interest rates, solarisBank holds customer funds in custody. Up to an amount of 100,000 euros, the statutory deposit insurance takes effect here, so that your money is not lost even in the event of bankruptcy.

More than 8.500 stocks and ETFs can be invested in on the Trade Republic App; additionally, you have more than 4.000 stock and ETF savings plans permanently free of charges, 40.000 warrants, knock-out products and factor certificates, and over 50 cryptocurrencies.

Buying shares on the Trade Republic App and using virtual credit for it would be ideal for practice purposes, especially for trading beginners. However, there is no Trade Republic demo account at all yet.

Looking for reviews of the Trade Republic customer service, you will notice that there are only few critical reports or reviews about the customer support. This is mainly due to the fact that the online help offered is very good, and that the Trade Republic App does not cause many troubles.
As a trader, you can make contact via live chat and get the answer or solution within minutes.

The interface for the Trade Republic Desktop has recently been launched. The service of the FinTech company can thus be used both mobile via app on the smartphone, as well as via the desktop browser.

If there is not enough money in the settlement account, Trade Republic cannot execute the savings plan. Therefore, the Trade Republic app notifies you via push message a few days before the execution of the savings plan if there is not enough capital in the settlement account.
The execution of the savings plan is impossible as long as there are not enough funds available. If the settlement account balance is sufficient again, the Trade Republic App will execute the stock or ETF savings plan at the next possible time. Affected users do not have to expect any penalty fees.

Investors can trade without commission
User-friendly design
Wide range of ETF savings plans
Simple handling
Click depth: 3 taps to buy securities or create a savings plan
Clear structuring
Transparent list of prices and services
Full banking license and thus supervision by Bundesbank and BaFin

Simple and fast operation tempts to speculate
Lack of telephone customer service
Lack of access to domestic and foreign trading venues

You can register and use the Trade Republic App in Austria, France, Germany, Italy, Netherlands, Spain. As a German bank, Trade Republic initially only accepts customers who have their permanent residence in the Federal Republic of Germany and are also liable to pay taxes here, and since then it expanded to Austria, France, Italy, Netherlands and Spain.