Capital Expands into Stock Trading Venture
Neobroker Shakes Up the Market with EIX
Scalable Capital, the Munich-based neobroker, has gone big by stepping into the stock exchange arena with the announcement of the European Investor Exchange (EIX). This strategic move is to prepare for the impending loss of rebates from Payment for Order Flow (PFOF). The whisperings of neobrokers setting up their own market makers for customer securities orders have now become a reality, as Scalable partners with the Hannover Stock Exchange, a part of the BÖAG Börsen group.
Scalable Pushes Boundaries
Choosing Hannover may have been unexpected, but the Lebersauer duo, Florian Prucker and Erik Podzuweit, show no signs of fear. They're seasoned trading professionals who know the ins and outs of securities trading. Plus, Scalable has been working on a "fully verticalized" tech platform from the get-go, enabling them to handle custody, stock exchange trading, clearing, settlement, and custody operations in-house.
Business as Usual with Baader Bank
Don't worry about your custodian partner, Baader Bank. They're not being frozen out but will no longer be handling all transactions. Scalable plans to primarily use their own platform, ensuring a streamlined and efficient process. BaFin prefers a diverse business portfolio to ensure risk diversification and operational stability, hence Scalable's intention to include deposit business by applying for a license with BaFin. Your money will still be dispersed among partners like Deutsche Bank and BlackRock (money market funds), providing flexibility in interest rate preferences and allowing Scalable to gradually scale their own deposit business.
Trade Republic: Stepping Up
Trade Republic has boldly stepped towards its own full banking license, but it couldn't ignore some infrastructure hurdles, resulting in a delay in dividend bookings for many customers. Now, it's their turn to play catch-up with Scalable and develop a trading model for the future. Just like Scalable has Gettex as an exclusive partner for trade flow, Trade Republic has an agreement with L&S Exchange.
Capping Gains: The New Challenge
Neobrokers face a new challenge: pricing per trade. Their ability to keep costs low (e.g., 1 euro per trade) has been largely thanks to rebates. But with the rebates slowly vanishing, neobrokers will need to tread carefully when increasing fees. Charging more than 1 euro could potentially lose the 'free broker' image they've carefully cultivated.
FNOR Launches in Hannover
BÖAG, the parent company of the Hannover, Düsseldorf, and Hamburg stock exchanges, welcomes Scalable's move as a success. The regional exchanges need to capitalize on niches, and Scalable will expand as a neobroker and investment platform in Europe, with the EIX in Hannover serving as the foundation for trading. Trading will have to prove itself under the planned new EU regime of a Consolidated Tape, where price quality requirements may increase. The more liquidity attracted, the tighter the bid-ask spreads can be.
**Enrichment Data**
Based on the available information, the European Investor Exchange (EIX) has been announced, and Scalable Capital has partnered with the Hannover Stock Exchange. Scalable Capital offers access to private equity through European Long-Term Investment Funds (ELTIFs) like the BlackRock private equity fund. The platform provides various financial products, including money market funds, ETFs, and iBonds, with interest rates up to 3.77% p.a. for certain products. Starting from May 2, 2025, clients can invest in Swiss stocks using the European Investor Exchange and gettex, as well as Xetra. Scalable Capital continues to expand its investment options and launch innovative financial products.
Scalable Capital continues to expand its business by partnering with the Hannover Stock Exchange for the European Investor Exchange (EIX), signifying a move towards fully verticalized finance operations, encompassing custody, stock exchange trading, clearing, settlement, and custody operations. This strategic move allows Scalable to handle a larger portion of investment activities, including investing in financial products such as money market funds, ETFs, and iBonds, offering competitive interest rates.
In the changing regulatory landscape of European finance, Scalable Capital is positioning itself for growth by applying for a license with BaFin for deposit business, aiming to diversify their business portfolio and increase operational stability. This move marks Scalable's progression from a neobroker to a comprehensive investment platform, offering diverse financial services to its clients.
