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‘Zero commission’ stock trading app Robinhood gets UK regulator approval

Self-described “zero commission” stock trading app Robinhood has been given the go-ahead by regulators to launch in the UK.

The controversial broker – which has been accused of ripping off millenials – was founded in 2013 and allows users to invest in US-listed companies, and the company was most recently valued at $7.6bn (£6.4bn) by investors.

Ahead of a planned public listing this year, the company announced the UK’s Financial Conduct Authority has awarded it a license to operate as a broker in the country – its first international market.

Image: The investment management app allows users to invest in US companies

Although the broker license has been granted, it is not yet possible to sign up for Robinhood in the UK. The company has not announced when that will change.

“Today marks the beginning of a new chapter for Robinhood, and we’re excited to take the first important step towards bringing our investing platform to customers in the UK,” said Wander Rutgers, the company’s president.

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“I’m thrilled to be a part of Robinhood and our effort to expand into a new international market.”

The company’s UK operations will be based in London and it is currently hiring compliance and communications staff to be based there.

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According to Robinhood, the broker generates its revenues from its subscription margin trading service, which starts at $5 a month in the US, as well as from interest from customer cash and stocks and – crucially – rebates from market makers and trading venues.

These rebates have been a major source of criticism for the company from financial analysts who claim they mean the company is not benefiting its users.

Writing for financial analysis website Seeking Alpha, Logan Kane criticised the company for “making millions selling out their millenial customers to high-frequency traders”.

Mr Kane said the company was receiving payment for order flow, a controversial type of compensation not paid by the broker’s clients but by selling its customers’ orders to high-frequency traders.

The company has confirmed that a significant portion of its revenues are generated via payment for order flow.

SOURCE : https://news.sky.com/story/zero-commission-stock-trading-app-robinhood-gets-uk-regulator-approval-11779891

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