|On Balance Sheet||Held separately|
|Shares & Bonds|
|Money Market Funds|
At DEGIRO you can rest assured that your investments are held securely. DEGIRO uses a separate legal entity (SPV) to hold your assets. This means they are held separate from the assets of DEGIRO. The sole task of this entity is to administer and safeguard your investments. By law, it cannot perform any commercial activities. In the event that something would happen to DEGIRO, your investments will not be treated as recoverable assets to DEGIRO's creditors and will remain in the safekeeping of the separate entity. This entity will hold your assets with third parties. Where possible or legally required, DEGIRO will require these third parties to provide for asset segregation so as to protect the investments of the clients of DEGIRO against their bankruptcy. Rules with regard to asset segregation are different in every country (both within the EU and outside the EU). If there is no asset segregation in relation to a third party in the custody chain, then the financial instruments held with that third party might be lost in case of the bankruptcy of that party. For more information, please see ISI – Investment Services.
DEGIRO is not a bank but an investment firm. A bank may use the money that clients keep with it for its own (business) purposes, loans to third parties and other investments. Since this carries forth a risk, the deposit guarantee system is available for banks.
Because DEGIRO is not a bank, it is not allowed to hold the money of clients on its own balance sheet or use it for its own investments. You thus do not keep money at DEGIRO. Money that DEGIRO receives from you is immediately invested (based on a standing order) in a Money Market Fund.
Money Market Funds are investment funds that aim, with as little risk as possible, to achieve a return that is equal to the regular market rate in the currency concerned. The value of these funds may fluctuate, just as with any other investment. If you do not want to invest or invest less in Money Market Funds, you can invest the value into other Financial Instruments of your choice. Or, you can give DEGIRO the instruction to book money back to your bank account.
All assets within the Money Market Funds are held separately from the fund issuer and therefore do not run any risk in the event of bankruptcy of DEGIRO or the issuer. For more information about Money Market Funds you can click here.
When you become a client, you give DEGIRO the right to lend out your securities. This is done to be able to facilitate going short; ‘Debit Securities’. The risks of Securities Lending are managed as follows:
- Firstly, DEGIRO (and not the borrowing party) is the ‘counterparty’ and therefore guarantees the timely return of the lent assets with its own equity.
- Furthermore, DEGIRO requires security from the borrowing party. This is provided by the right of pledge that DEGIRO has on the balance of that client and the borrowed assets are included in the continual risk monitoring of DEGIRO.
- Damage for a client whose assets are lent therefore arises only at the moment when both the borrowing party and DEGIRO are no longer able to meet their obligations (i.e. are bankrupt) and the value of the asset has fallen or the value of the lent securities has risen. The amount of the damage is limited to the difference in value between the lent securities and the security provided by the borrower.
The Dutch Investor Protection Scheme (Beleggerscompensatiestelsel) is applicable, as DEGIRO is a licensed investment firm authorised by the Dutch Authority for the Financial Markets (AFM) for the provision of investment services.
Information about the Dutch Investor Protection Scheme can be found in English on the De Nederlandsche Bank (Dutch Central Bank) website here.
DEGIRO operates under supervision of The Dutch Authority for Financial Markets (AFM). Next to that, the Dutch Central Bank (DNB) offers prudential supervision.