The London Fintech Trading 212 is the number one trading app in the UK and has recently taken steps, similar to Robinhood, in order to block its members from buying penny stocks.
Trading 212 is the first and only platform to offer a totally free, zero-commission, stock trading service in the UK. This has made them a hotspot for WallStreetBets traders looking to buy penny stocks. Penny stocks refer to common stock that typically has a share price of below £1, making them a popular choice for amateur investors on the back of a social media frenzy.
Last month Trading 212 stopped accepting new accounts as a temporary measure to allow room for processing existing applications due to an unprecedented soar in the number of new account applications following the GameStop saga. Trading 212 have endeavoured to continue to ‘provide as much trading freedom as is possible within the regulatory framework’ however, they have now joined a number of other trading platforms that have chosen to respond independently to the extraordinary volatility surrounding certain high shorted stocks. Trading 212 released a statement with regard to this decision saying ‘If we don’t do so, we risk being suspended by both the relevant exchanges and market makers’.
The recent trading frenzy in penny stocks has resulted in concerns and ensuing investigations from regulators as the number of orders for particular microcap securities raises questions of market manipulation. As with Robinhood, the move by Trading 212 to block the purchase of penny stocks has been unpopular among traders, in particular, those who have already taken a position.
IG Group have also taken steps to suspend margin trading in over 900 shares in a move to minimise risk for the broker. It appears that the sudden increase in demand for these services has left brokers struggling to navigate what has become a highly volatile market. For traders looking for an alternative to Trading 212 from which to trade penny stocks, Fidelity offer a large number of penny stocks and no account minimum as well as a free online stock trade commission.
Antonia is the Financial Editor at InvestingReviews.co.uk and brings a wealth of experience, having written for various industries over the past 10 years.
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