Robinhood opens in Britain with low-cost US trading to woo clients
LONDON, Nov 30 – Robinhood Markets Inc., the popular trading app operator, has announced its plans to expand brokerage services to Britain. The move is part of the company’s international expansion strategy, aimed at democratizing finance and increasing accessibility to global markets.
Robinhood gained significant attention during the 2021 retail trading frenzy in the United States, when small investors flocked to the platform to trade meme stocks during pandemic lockdowns. However, trading activity has since declined as more Americans face challenges such as a cost-of-living crisis, high interest rates, and elevated inflation.
For its first international brokerage product, Robinhood has chosen the United Kingdom. CEO and Co-Founder Vlad Tenev described Britain as the ideal place for the launch, citing the country’s reputation as a hub for innovation, global finance, and tech talent.
The company announced that UK customers will have access to commission-free trading for over 6,000 US-listed stocks and American Depositary Receipts (ADRs), without foreign exchange fees and with no minimum account requirements. This move aims to address the historically high fees incurred by UK investors when investing in US markets, as well as the low returns on uninvested cash.
Robinhood’s President of the UK division, Jordan Sinclair, mentioned that customers could earn a 5% annual equivalent rate on uninvested cash. Additionally, the accounts of UK customers will be insured by the US Federal Deposit Insurance Corporation with a maximum coverage of $2.25 million.
However, Robinhood recently missed Wall Street’s revenue estimates for the third quarter, as trading activity slowed down. The company’s transaction-based revenue dropped by 11% year-over-year to $185 million, and its monthly active users declined by 16% to 10.3 million.
Robinhood’s entry into the UK market is expected to attract British investors seeking affordable trading options and increased access to US markets. By offering commission-free trading and higher returns on uninvested cash, the company aims to capture a significant share of the UK market.
The move comes as Robinhood continues to face scrutiny and regulatory challenges in the US. Nevertheless, the company remains optimistic about its global expansion plans, which include other markets beyond Britain.
As Robinhood expands its reach across borders, it aims to provide a platform that challenges established brokerage firms and encourages individuals to actively participate in the financial markets. With its entry into Britain, the company seeks to replicate the success it achieved in the United States and disrupt the traditional financial industry.
Overall, Robinhood’s expansion into the UK signals a new era of accessible and low-cost trading, allowing a broader range of investors to participate in the US markets. As the company aims to democratize finance, it remains to be seen how it will navigate the challenges and opportunities ahead in an increasingly globalized and competitive financial landscape.
