The neobroker Scalable Capital wants to cushion the loss of payments from trading venues as a source of income and is therefore entering new business areas. The company announced on Wednesday in Munich that Scalable Capital is now also offering securities loans. In the future, customers would be able to borrow money and secure it with their portfolio. “The loan-to-value levels depend on how volatile a portfolio is and how diverse a portfolio is,” said company founder and co-chief executive Erik Podzuweit.
Scalable Capital’s portfolios currently consist of around 70 percent exchange-traded funds (ETFs) and around 30 percent stocks. The company, founded in 2014, is, together with Trade Republic, one of the most important neobrokers in Germany. Fixed assets now amount to more than 15 billion euros. Scalable offers, among other things, trading in ETFs, stocks, funds, cryptocurrencies and derivatives on its platform. Bond trading has also been added since March, with the neobroker particularly focusing on bond ETFs.
Scalable needs to look at how it can diversify its business and position itself more and more broadly, company boss Podzuweit told the Reuters news agency. The EU decided in June to ban payments that brokerage firms receive from trading venues to which they forward their customer orders. These so-called “Payments for Order Flow” have so far been an important source of income for many neobrokers. “For us it’s a small part of our income. Because we also have an asset management business,” said Podzuweit.
After the ban on “Payments for Order Flow”, there will be a transition phase until 2026. “It already triggers price pressure and can make the business more expensive for customers, so that they may have to pay one or two euros more per trade,” admitted the Scalable boss. With its smartphone app for securities trading, Scalable is particularly popular with young customers. It also offers a “robo-advisor” for automated asset management. “We want to be the first stop where people do their securities transactions,” said Podzuweit.