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From this Tuesday, Belgians can also download the stock market app Bux. This Dutch fintech group has already won over 300,000 customers in Europe. “It is possible to buy and sell shares free of charge or for 1 euro”, explains Bux CEO Nick Bortot.
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In 2000, Nick Bortot was one of the founders of the online broker Binck and in particular of Binck Belgium. He left the group in 2012. “I wanted to make investments more accessible for everyone. In other words, to make them less complex and less expensive. In 2013 the project was ready, and a year later we launched Bux. “
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“I notice that young investors operate differently. They are less interested in the price / earnings ratio than in the history of the company.”
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Bux started out with CFDs, a financial product that replicates the performance of a stock. The app has been deployed in several countries, but not in Belgium since CFDs are prohibited there. “CFDs were the easiest way to make investments cheap and easy at the time. You could buy Amazon for 10 euros.“
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Since 2018, if we believe Bortot, the European MiFID 2 directive has created a new possibility. “Orders relating to liquid European equities can be placed not only on Euronext or another competing stock exchange, but also via an internal service provider (in this case, the client is trading against the order book of a financial institution) . As a result, the price for brokers has fallen further. This has enabled the creation of Zero Bux, which allows you to buy stocks at no cost. “
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Watch out for the tax authorities
In reality, it is impossible for a Belgian investor to buy shares free of charge, as he has to pay a stock market tax of 0.35%. Bux will not withhold this stock market tax at source, which means that every three months you will have to submit a declaration yourself (via a specific form) and pay the tax. Bux does not withhold withholding tax on dividends either. You will also have to pay it through your annual tax return. If you forget or make a mistake, you will be considered a fraudster and you will have to pay a fine. “We will provide regular statements to our customers to make it easier for them. It is also possible that in the future, we withhold this tax at source. Everything will depend on demand,” says Bux.
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To register with Bux Zero, investors must open an account with ABN Amro in the Netherlands, which will also require them to declare the existence of an account abroad at the Central Contact Point (PCC) and at tick the appropriate box on their annual tax return. Money placed with ABN Amro is covered by the Dutch guarantee.
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In 2015, a British broker was already offering free stock trading in Belgium. But customers had to pay to collect dividends. What do you do for a living ?
Nick Bortot: If you buy US stock, you pay extra via a margin on the exchange rate. To allow clients to buy European stocks for free, we are reducing fees by consolidating purchases and placing a single order at the end of the day.
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If the client prefers a market order or a limit order, he must pay 1 euro. This euro represents an important part of our income. That is why it is important to have many customers in many countries.
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Apart from the exchange margin on Wall Street and one euro for limit orders in Europe, Bux does not charge any fees.
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Those who wish to negotiate a European share free of charge therefore do not know in advance the price they will have to pay (on the purchase) or that they will receive (on the sale). Are investors prepared to take this risk?
If you believe in Tesla for the long haul, the time you buy your stocks won’t make much of a difference in terms of returns. The trade at the closing price may even work in your favor, depending on how sales progress that day.
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When I was young we were very careful about the price / earnings ratio and we were interested in local businesses. Today, young people operate differently and are more interested in the history of the company, whatever their nationality. Do they believe it or not? Does the company have a positive impact on society and the environment? This is what worries young people today. Of course, older customers are also welcome! (he’s laughing).
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Do you take care of the financial education of your clients? Do they know what an action is?
Those who want to become customers have to take a knowledge test. Since the Dutch supervisory authority – the AFM (Autoriteit Financiële Markten, NDLR) – does not consider actions as a complex product, the number of questions is limited. As trackers are considered to be more complex products, there are more questions about these products.
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“In the United States, 40% of citizens have an investment account, compared to 15% in Europe. I believe that we are going to ‘Americanize’ in this area.”
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In the app, we have planned ‘stories’, comparable to those we see on Instagram. These ‘stories’ are in fact a link to our blog. We write educational content and stock market information in six languages every day.
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Ultimately, you want to lend your clients’ shares to ‘shorters’. Isn’t that dangerous? What if the borrower goes bankrupt?
Those who wish to become clients must accept that their shares can be loaned to third parties. We are not doing it yet because we need sufficient volumes to do so. When we do, we will outsource this activity to our financial partner ABN Amro. These securities will be loaned against collateral. In the United States, this is very common, while in Europe, this activity suffers from a negative image. Wrongly.
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How does Bux compare to the free US stock market app Robinhood?
I think we are comparable. We all want to become the European Robinhood. The main difference is that Robinhood collects money when it transmits orders to a financial partner. What is prohibited in Europe.
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In the United States, 40% of citizens have an investment account, compared to 15% in Europe. I believe we are going to ‘Americanize’ in this area. Young people increasingly understand that the stock market can be the answer to low interest rates, high house prices and pension uncertainties. They may only invest 100 euros per month. But in this case, it can help not to pay a fee of 5-6 euros.
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