Investing glossary

A practice where a market maker pays a broker for the right to execute its clients' orders. It funded zero-commission trading but created a routing conflict of interest. Banned across the EU since 1 July 2026 under MiFIR Article 39a.

A P2P lending promise from a loan originator to repay principal and accrued interest on delayed loans, typically after 30–60 days. It transfers default risk from investor to originator — but only if the originator itself stays solvent.

EU-wide minimum protection of €20,000 per investor when a licensed broker fails and client assets or money cannot be fully reconciled. Established by Directive 97/9/EC; the €20,000 floor has not changed since adoption.

Protection of up to €100,000 for bank deposits in the EU. It covers bank accounts only — never brokerage accounts or P2P investments. Confusing DGS with investor compensation is one of the most common safety mistakes.

The UK's Financial Services Compensation Scheme. Protects £85,000 per person for investments and cash held at FCA-authorised firms that fail. The UK counterpart to EU investor compensation schemes.

The US Securities Investor Protection Corporation. Covers up to $500,000 per customer — including $250,000 in cash — when a SIPC-member brokerage fails. Applies to US-registered brokers only.

The European Crowdfunding Service Providers Regulation ((EU) 2020/1503). Requires P2P and crowdlending platforms to be authorised by a national regulator and listed on ESMA's public register. Unlicensed operators are illegal in the EU.

An exchange-traded fund domiciled in the EU under the UCITS framework — the regulated fund structure available to European retail investors. UCITS rules enforce diversification, custody segregation and a KID disclosure document.

Two share classes of the same ETF. Accumulating (Acc) reinvests dividends inside the fund, deferring income tax in most EU countries. Distributing (Dist) pays dividends as cash, taxable on receipt at national flat rates.

The IRS form declaring your non-US tax residence so US dividend withholding drops from the default 30% to your treaty rate — typically 15% for European investors. Valid three calendar years; an expired form silently reverts withholding.

The fee a broker charges to convert currency, expressed as a percentage over the interbank rate (e.g. 0.15%–0.50%) or in pips. Charged on every foreign-currency purchase AND sale — often the largest hidden cost for ETF investors.

The gap between the highest buy offer and lowest sell offer for an asset. Trading pays half this spread implicitly on entry and exit. Wide on illiquid assets and during off-hours; effectively zero on mega-cap stocks in open markets.

A recurring charge for holding securities in your account, typically 0.12%–0.25% per year or a flat monthly amount. Common among bank-affiliated German brokers; many EU-facing neobrokers advertise zero custody fees.

A monthly charge applied when you place no trades within a defined window (e.g. $10/month after 12 months without login). Avoidable entirely by choosing platforms without one — our reviews flag which brokers charge it.

Custody structure where a broker holds all clients' securities pooled under one account at a custodian bank, while tracking individual ownership internally. Segregated from the broker's own assets — the reason your shares survive a broker bankruptcy.

A single public feed of post-trade price data across all venues. ESMA authorised EuroCTP as the EU's tape provider in July 2026, making execution quality auditable — a direct consequence of the PFOF ban's transparency goals.