Share trade platform provides free $1 million protection for clients

Think your online broker can’t collapse? Many Australians have lost their life savings from their share trading platform going broke.
The post Share trade platform provides free $1 million protection for clients appeared first on Motley Fool Australia. –

share trade broking platform free offer represented by the word free lit up on wall

An online broking platform has offered free, $1 million insurance for its users in case it becomes insolvent.

Multinational platform, eToro, announced Wednesday that all its Australian, Europe and United Kingdom customers would receive the coverage automatically at no cost.

“The insurance will form the third layer of protection for clients after segregated trust accounts and regulatory protections,” stated the company.

“In the unlikely event that eToro were [sic] to enter a state of insolvency, the policy would kick in to cover clients for losses above the relevant financial compensation schemes to a value of AU$1 million, and in accordance with the purchased policy.”

The insurance will cover both cash held on the platform and open accounts, but exclude cryptocurrency assets.

Everyday Australians have lost millions in the past

You might think an online broking provider going bankrupt is a fanciful prospect. But there are several recent examples in Australia where everyday investors have lost money from their broker collapsing.

Only a couple of months ago, online customers of collapsed broker BBY found out they would only receive 44 cents for each dollar they were owed.

To rub salt in the wound, the liquidator accused former director and tennis legend, Ken Rosewall, of receiving $3.3 million while the company was insolvent.

Last year, online broker Halifax went down, taking $20 million of client money with it.

“The primary cause of the deficiency appears to be the use of client monies to fund operating losses since at least January 2017,” said administrator Ferrier Hodgson.

“The management accounts, audited accounts and lodgements with ASIC all appear to present with accounting irregularities.”

The lost $20 million represented about 9% of investors’ cash.

eToro stated its million-dollar insurance policy would provide “peace of mind” for its 15 million users.

“It signals the fintech’s ongoing commitment to providing the best possible user experience and safeguarding client wellbeing.”

The coverage is underwritten by Lloyd’s of London.

eToro was established in 2007 and is a platform that allows investors to mimic the portfolios of other successful users.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

See The 5 Stocks

*Returns as of June 30th

More reading

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Share trade platform provides free $1 million protection for clients appeared first on Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!