Dutch broker reduces transactions costs turbos to zero

BinckBank has reduced the transaction costs in the Netherlands for its Binck turbo to zero. As of October 30, costs from trading and holding turbos and turbos XL for Dutch retail investors only consist of interest from finance level, which is an intrinsic product feature, according to the Dutch online broker.

By eliminating the transaction costs the online broker said it hopes to make Binck turbo's a more attractive proposition for existing and new customers. With the move BinckBank aims to achieve a higher and more stable turnover from turbo activities while at the same time the broker also emphasizes transparency about broker earnings models and this step 'show that explicit transaction costs are not the only source of revenue'.

The new rate and revenue structure for Binck turbos fits within BinckBank's new strategy, aiming for a more stable revenue stream from assets by diversifying its revenue streams more and become less dependent on the sentiment on the financial markets and the related transaction-related revenue, according to the broker.

'Thanks to our unique model, in which we are both publisher and supplier, we can now take the ultimate step in removing transaction costs,' said Jeroen Sonsma, country manager of Binck Netherlands in a statement. 'In approximately 15% of our transactions, a turbo is used and we expect this step to lead to further growth. The good thing of turbos is that it enables retail investors to invest easily in both-bullish or bearish markets in equities, indices, currencies and commodities. This allows a Binck turbo to be part of an offensive or defensive position in a portfolio. Additionally, we think it is important that customers understand about the cost structure of products and that transaction costs are just one element, next to components such as spread and securities lending.'

Income from Binck turbos rose by 230% during the first half of 2017, according to BinckBank. The broker reported in its half year 2017 results that financial assets held for trading amounted to €28.7m as of June 30, 2017 (December 31, 2016: €20.4m), an increase of €8.3m which was primarily the result of larger positions in the turbos during 2017. Against the position in the turbos held is the position of the turbos issued to clients under the financial liabilities held for trading which are economic hedge of the market risk of the position on issued turbos, according to BinckBank.

BinckBank has currently 14,350 live turbos and turbos XL on offer to retail investors in the Netherlands. The vast majority of the brokers leverage products are linked to shares (12,255) while another 1,062 turbos are linked to indices, including the local AEX (388), the German Dax (244) and the S&P 500 (247). BinckBank has also issued 233 turbos linked to commodities and 800 turbos linked to currency pairs. UBS acts as the market maker for the Binck turbo which can be traded via Cats, the bilateral trading platform of Citibank and Boerse Stuttgart.

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