As a responsible business, we are always looking for ways to mitigate risks.
In order to lower our credit risk, in addition to holding client funds with highly respected banks, we will be holding client funds in Qualified Money Market Funds (QMMFs).
What is a QMMF?
A Qualifying Money Market Fund is mostly made up of low-risk investments such as government bonds. What makes it “qualifying” is that the QMMF must meet higher regulatory standards for quality and liquidity than other money market funds.
QMMFs offer an alternative way for eToro to hold your funds without compromising their security. They are a standard tool used by large financial institutions to diversify credit risk.
eToro will be placing funds in some of the largest and most established QMMFs in the world, managed by leading fund managers such as Blackrock and JP Morgan Asset Management, which hold over $50bn in assets each.
What does this mean for you?
In the coming weeks, you will see a notification on the eToro app, asking for your consent to place your funds in QMMFs.
For those who consent, there will be no impact whatsoever on your eToro experience — as always, your funds may be withdrawn at any time and there will be no additional cost.
You may choose to opt out from having your funds held in QMMFs at any time in the future by contacting our Customer Service team.
Your assets are safeguarded
When you hold funds in a QMMF, deposit guarantee schemes are no longer relevant. QMMF allocations follow the same strict safeguarding rules that are in place for stocks and cash deposits. This means that your assets are segregated from corporate assets and are fully recoverable in the highly unlikely scenario that eToro has to wind down its business.
It’s important to note that when placing your money in a QMMF, it will not be held in accordance with the requirements for safeguarding client funds as set out in MiFID II. However, funds placed in a QMMF are subject to strict regulatory standards of safety, as what is known as “safe custody assets” and are held in a segregated clients’ account. As always, your funds may be withdrawn at any time.
As a company regulated in multiple jurisdictions around the world, we will continue to look for ways to create a more secure, transparent and enjoyable experience for eToro users.