A woman silhouette holds a smartphone with the Robinhood Markets logo in the background.
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Online investment application robinhood said on Thursday that it intends to launch its platform in the UK in early 2024, marking the company’s third attempt at breaking international expansion.
Features include the ability to choose from 6,000 US stocks and 24-hour trading five days a week. Robinhood currently offers 24-hour trading in the US, allowing trades to take place outside of 9:30 am ET and after 4 pm ET.
Robinhood will not offer UK stocks to begin with but will look to add them as it brings more products onto the platform. The UK version will also not include options and other derivatives at launch.
Jordan Sinclair, the UK head of Robinhood, said he expects 24-hour trading to be popular because it will let users trade on market-moving news.
“You wake up in the morning, you read the news headlines, and then you have to wait,” Sinclair said. “Clients can actually make a trade and choose their investment strategy and actually act on that market news.”
Robinhood has already tried to launch in the UK twice.
A waiting list it launched in 2019 saw more than 300,000 people sign up, but the company pulled its UK expansion plans, citing rising demand at home during the Covid pandemic as interest in retail investment increased dramatically.
Then, last year, it sought to acquire British crypto trading app Ziglu. That deal faltered, however, and Robinhood was forced to write off the value of its investment, with the company reporting a $12 million impairment charge on the failed transaction.
Britons will be able to join a waiting list from Thursday and will be notified when they can sign up for early access at a later date. To gain more traction quickly, Robinhood also asks users to share a unique referral link with friends and family to move them up the queue.
“My aspiration is to be one of the biggest employers in England, nothing makes me happier,” said Tenev. “And, you know, there’s a lot of great talent. So this, this could be a center of excellence for Robinhood.”
Dan Moczulski, UK managing director of EToro, a rival share trading platform, said the arrival of more competition in the retail trading market marked an “exciting time for the industry”.
“More competition is always going to be a good thing for investors,” Moczulski told CNBC. “As one of the leading trading and investment platforms in the UK, it also keeps us on our toes and pushes us to continue to innovate and broaden our product range for our users.”
Don’t be afraid of ‘deja vu’
Robinhood CEO Vlad Tenev said he is not afraid of “déjà vu” with the company’s third attempt to launch in the UK.
“We made sure that we take care of all the details, the platform is much more robust,” Tenev told CNBC in an interview. “So I don’t think it’s going to be déjà vu. I think we’re very confident that we’re going to be able to strongly serve the customers here.”
Robinhood is launching with a license from the Financial Conduct Authority, the UK’s market regulator, and Tenev says the company has a good relationship with the regulator.
The FCA has previously warned about “gamification” of investments, which 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 that companies are required to respect the consumer standards set by the regulator.
Regulators worry brokerage apps like Robinhood, eToro and Public, which engage investors with incentive features like push notifications, colorful graphics and a game-like interface, can encourage excessive trading that hurts investors but is profitable for market makers.
Customer cash will be held in segregated accounts protected by Federal Deposit Insurance Commission insurance, Robinhood said, rather than the UK’s Financial Services Compensation Scheme. Robinhood users will be able to make a 5% annual return on cash held in their accounts.
Robinhood will not launch pay for order flow in the UK, which refers to the practice of routing trades through market makers such as Citadel Securities in exchange for a share of the profits. PFOF is banned in the UK Instead, the company expects to make money from other lines of business, including securities lending, margin lending, interest on uninvested cash, and its premium Robinhood Gold subscription service.
Paying for order flow can create conflicts of interest, critics say, because brokers have an incentive to direct order flow to market makers offering such arrangements over the interests of their clients.