Concerns are rising among investors of the Swedish online brokerage Avanza regarding the safety of their assets amid wider economic uncertainty. Following inquiries from an investor wiht holdings valued at approximately $260,000 USD,questions have surfaced about whether standard deposit insurance would protect investments in stocks and funds should Avanza face bankruptcy [[1]]. While deposit insurance covers cash balances, former Swedish central bank governor Stefan Ingves has clarified that investments are subject to different protections, prompting Avanza to emphasize its role as an intermediary and the separation of customer assets.
Investors with holdings at Avanza, a popular Swedish online brokerage, are questioning the safety of their assets should the company face financial difficulty. One investor, with approximately 2.8 million Swedish krona (roughly $260,000 USD) invested in stocks and funds – some of which is leveraged – is concerned about whether deposit insurance would protect their investments in the event of a bankruptcy.
Stefan Ingves, former governor of Sweden’s central bank, clarified that deposit insurance covers cash balances, not investments in securities. According to Ingves, when trading stocks and funds, investors assume the risk, even when using a bank or online broker.
Missa inte: Vem ärver egentligen? Många svenskar missförstår arvsordningen. Dagens PS
Avanza is an Intermediary – Not an Owner
Avanza functions as an intermediary when a customer buys stocks, executing trades on the customer’s behalf. Ingves explained this process occurs “in its own name for another’s account,” meaning Avanza doesn’t own the underlying securities. This structure is common among online brokerages, separating the brokerage’s assets from customer investments.
Provided regulations are followed, customer securities are held separately from the brokerage’s own assets. In the event of a bankruptcy, and assuming proper procedures were followed, the customer would still own their investments and could transfer them to another financial institution.
“We are … obligated to keep your securities separate from the bank’s assets, and in this way your assets can never be mixed up with the bank’s assets. If we were to go bankrupt, you have the right to have your securities released from the bankruptcy estate and move them to another bank,” Avanza states. The clarification from Avanza aims to reassure investors about the security of their holdings amid broader concerns about financial stability in the market.
