It only acts as an intermediary that deposits its ETFs, stocks or other financial products. As such, it keeps its securities in a segregated account within a depositary bank. This means that if the broker were to declare bankruptcy, creditors would not be able to claim the investor's assets, since they belong to the investors. If etoro files for bankruptcy, your account is at risk and you could lose part or all of your account balance.
In general, BrokerChooser's view is that while eToro isn't a scam, it's not a fully transparent broker either. eToro also has some unique features, such as social trading (CopyTrader) and smart portfolios (formerly called CopyPortfolios). When trading CFDs on eToro, which includes currencies, commodities and indices, there are no fees to pay. On eToro, there are hundreds of ETFs, many of which are managed by top-tier institutions such as iShares, Vanguard and SPDR.
Therefore, by using eToro's cryptocurrency trading service, you don't qualify for any investor protection. Once the investment has been made, eToro will manage and rebalance the respective portfolio on behalf of the investors. eToro will now request a copy of the user's passport or driver's license for verification purposes. In addition, since eToro holds shares on behalf of its users as effective owners, users do not currently have the right to vote on the shares they own.
Like all online stockbrokers, eToro will not deduct capital gains tax or dividends from investments made on its platform. This makes eToro a profitable option when it comes to investing, as platforms such as Hargreaves Lansdown charge £11.95 per share trade. It is offered in each and every one of the supported markets and highlights the percentage of eToro users who buy and sell the respective asset. eToro is a privately owned financial technology startup, whose owners include venture capital funds such as Commerz Ventures Gmbh, the venture capital division of Commerzbank, as well as Israeli, US and Chinese investors.
