A silhouette of a woman holding a smartphone with the Robinhood Markets logo in the background.
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Online investing app Robinhood said on Thursday it will launch its platform in the UK in early 2024, marking the company’s third attempt at international expansion.
Features include the ability to choose from 6,000 US stocks and trade 24 hours a day, five days a week. Robinhood currently offers 24-hour trading in the US, allowing trades to take place outside of 9:30 a.m. ET and after 4:00 p.m. ET.
Robinhood will not offer UK stocks initially, but will look to add them as more products come to the platform. The British version will also not contain any options or other derivatives at launch.
Jordan Sinclair, Robinhood’s UK boss, said he expected 24-hour trading to be popular as it would allow users to trade on market-moving news.
“You wake up in the morning, read the headlines, and then you have to wait,” Sinclair said. “Clients can actually make a trade, choose their investment strategy and actually react to that market news.”
Robinhood has already tried to launch in the UK twice.
Over 300,000 people signed up on a waiting list launched in 2019, but the company withdrew its UK expansion plans, citing surges in domestic demand during the Covid pandemic as interest in retail investment increased dramatically.
Then last year, the company tried to acquire British crypto trading app Ziglu. However, that deal fell through and Robinhood was forced to write down the value of its investment, with the company reporting a $12 million impairment charge for the failed transaction.
Brits can join a waiting list from Thursday and will be notified when they can sign up for early access at a later date. To quickly gain traction, Robinhood also asks users to share a unique referral link with friends and family to move them up in the queue.
“My goal is to be one of the biggest employers in England, nothing would make me happier,” said Tenev. “And you know, there’s a lot of great talent. So this could be a center of excellence for Robinhood.”
Dan Moczulski, UK managing director of EToro, a rival stock trading platform, said increasing competition in the retail market was “an exciting time for the industry”.
“More competition will always be a good thing for investors,” Moczulski told CNBC. “As one of the UK’s leading trading and investing platforms, it also keeps us on our toes and encourages us to continue to innovate and expand our product range for our users.”
Don’t be afraid of “déjà vu”
Robinhood CEO Vlad Tenev said he fears no “déjà vu” in the company’s third launch attempt in the UK
“We made sure we took care of all the details, the platform is much more robust,” Tenev said in an interview with CNBC. “So I don’t think it will be déjà vu. I think we are very confident that we can serve customers well here.”
Robinhood launches with a license from the Financial Conduct Authority, the U.K.’s markets regulator, and Tenev says the company has a good relationship with the regulator.
The FCA has previously warned against the “gamification” of investments, something the US Securities and Exchange Commission is also concerned about. When contacted by CNBC, an FCA spokesperson said the regulator would not comment on individual companies, but companies are required to comply with consumer duty standards set by the regulator.
Regulators worry that brokerage apps like Robinhood, eToro and Public, which appeal to investors with stimulating features like push notifications, colorful graphics and a game-like interface, could encourage excessive trading that harms investors but is profitable for market makers.
Customer funds are held in segregated accounts protected by insurance from the U.S. Federal Deposit Insurance Commission, Robinhood said, rather than the U.K.’s Financial Services Compensation Scheme. Robinhood users can earn a 5% annual return on the cash in their accounts.
Robinhood will not introduce a payment-for-order flow system in the UK, which refers to the practice of clearing trades through market makers such as Citadel Securities in exchange for a share of profits. PFOF is banned in the UK. Instead, the company expects to make money from other businesses, including securities lending, margin lending, interest on uninvested cash and its premium subscription service Robinhood Gold.
Paying for order flow can create conflicts of interest, critics say, as brokers have an incentive to direct order flow to market makers who offer such arrangements over their clients’ interests.
Source : www.cnbc.com