Zero-commission (on some trades), but a bunch of random fees for other things, and no guarantee that it will stay fee-free. They plan on making money by providing liquidity (ie. being a market maker) and offering premium services...
With my current brokerage, I get online trading in 10+ worldwide markets, I can hold a variety of currencies, I get excellent execution, and there's no fees, there's plenty of services available including charts, real-time quotes, reports and many things that would otherwise cost me money, and all I have to pay is a flat commission fee on my trades. I really don't see how Robinhood is superior, now or in the future... And many brokerages already offer API access, even if they don't advertise it.
TD Waterhouse (Canada). Commissions aren't the lowest, depending on the market too (I usually trade on European and Asian markets), but I'm very happy with the service. Keep in mind TD is also my main bank, so it is convenient to use them as my broker as well (part of the reason I don't mind the slightly higher costs).
If I were to switch, it would probably be to Interactive Brokers - their fees are significantly lower and they have an equally or possibly slightly more compelling set of features.
I use Scotiaitrade in Canada, and they are similar. You don't pay any commission if you have more than 50k invested with them (as far as I remember).
I feel happier letting a major bank hold onto my shares, do my trades, calculate interest and balances, etc. rather than some startup. I also use scotiabank for my banking, so it's very convenient.
> They appear to charge TAF and other regulatory fees (https://brokerage-static.s3.amazonaws.com/assets/robinhood/l...) -- and based on the fee numbers it looks like they don't have significant volume -- but the website shows "FEES $0" in the app screen. The fees may not seem to be a lot, but saying that fees are zero is a factually incorrect statement.
I believe Zecco's business model was "We'll just remove our marketing budget so you can pay $4.95 per trade", which isn't unsustainable, but their merger with TradeKing shows that they probably didn't execute it as well as they could have.
That was later. They started off with $zero commissions (I believe this was the inspiration for the name Zecco). It started as no commissions no matter the account size, then they added minimums which crept up for a while, then, as I recall, they removed free commissions entirely, then they were bought by TradeKing.
Yeah, I was a member way back in the day (like 2006 I believe). It started off as free trades, then it was only 25 free trades a month, then it moved to $4.95, then they were sold to TradeKing. Similar thing with ThinkorSwim, they were also bought out. Perhaps RobinHood's strategy is to just acquire users at a loss and then get bought out...
They don't compete with IB. IB is targeted at larger retail and small institutions. Their business models are similar when it comes to internalization but that is about it.
They are a tiny company. They don't compete with anybody, at least in the sense that another firm would view them as a threat. That said, the addressable market I would focus on is the one that IB does. Retail equity platforms are numerous, extensively marketed, and sticky.
Just seems like a bad product. Most people trail the market because they trade too often. If you want your investments to make money, you don't want a product like this in your pocket all the time.
I'm sorry but this just sounds bitter to me. I'm sure the people behind Robinhood did not get together and say, "let's make a product that actually solves no problems, and only pretends to disrupt." Somebody built a new app that seems like at least a cool idea to me. People had a vision and they executed on it. They built a company and they shipped. What companies have you started? What have you built?
I think Theodore Roosevelt said it best: “It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.”
Yes, I'm a bit bitter that the tech zeitgeist has been co-opted into believing that building stylized website facades for the status quo counts as innovation or for that matter even "technology".
And you're right, the founders probably didn't set out to pretend and they actually believe they're changing the world. So I guess it's more appropriately described as "amateur disruption porn".
Majority of money still flowing to well connected insiders? Check. (who do you think is on the other side of trades?)
Who are these "insiders" you refer to? Why does it matter who takes the other side of the trade? If you got filled and you got the price you wanted (or better), the system worked.
The professional stock traders and their supporting institutions who, given that this is their day job and you're part-time, are more knowledgeable, better connected, and quicker to react. "Amateur investing" is part herd following and part gambling, with a serious case of hindsight bias.
|RobinHood co-founder Baiju Bhatt stresses that if you want to do deep financial research, you probably want to sit down at a desktop.
The heavy traders who would really benefit from zero-commission (assuming that it actually is) are on desktops in front of 4-10 monitors. Because of what it implies, I think regular people probably shouldn't be making trades that need to be done RIGHT NOW before a desktop can be reached.
edit to add: Is the "Share" button on the bottom of the trade confirmation screen really necessary? Are rich people going to be clogging up twitter with brags like "Just bought 1,000 shares of AAPL on Robinhood!"
> "The heavy traders who would really benefit from zero-commission (assuming that it actually is) are on desktops in front of 4-10 monitors. Because of what it implies, I think regular people probably shouldn't be making trades that need to be done RIGHT NOW before a desktop can be reached."
Those people don't pay $10 per trade. If you do enough volume, you're usually able to negotiate much lower commissions. In addition, some of them will also specifically route their orders to ECNs and benefit from credit gained for providing liquidity to even further reduce their fees. All in all this is clearly designed for retail traders aka dumb money. I'd be willing to bet that their business model is based on selling the order flow they generate to institutions.
There is an entire market around the buying and selling of so-called "uninformed flow". While others do this as well, I would give a word of warning to all those potentially interested in this. If you aren't buying something, you are the thing being sold.
Uninformed isn't where the value is anymore. It's that the flow isn't toxic to hedge funds trying to do size. People who execute US equities trades through any venue are guaranteed NBBO. Its a win-win.
"Zero commission" does not actually mean zero commission.
The commission just ends up being baked in to the prices they show you.
e.g. If the market (institutional) bid/offer for MSFT were 39/41, they would show customers prices of 38/42. For an order of $1000, that would mean they charge you $25 of implicit commission on the trade. It just doesn't show up on your bill.
Get real. Their only innovation is hiding fees from their customers, not reducing them.
36 comments
[ 7.0 ms ] story [ 88.5 ms ] threadWith my current brokerage, I get online trading in 10+ worldwide markets, I can hold a variety of currencies, I get excellent execution, and there's no fees, there's plenty of services available including charts, real-time quotes, reports and many things that would otherwise cost me money, and all I have to pay is a flat commission fee on my trades. I really don't see how Robinhood is superior, now or in the future... And many brokerages already offer API access, even if they don't advertise it.
If I were to switch, it would probably be to Interactive Brokers - their fees are significantly lower and they have an equally or possibly slightly more compelling set of features.
I feel happier letting a major bank hold onto my shares, do my trades, calculate interest and balances, etc. rather than some startup. I also use scotiabank for my banking, so it's very convenient.
> They appear to charge TAF and other regulatory fees (https://brokerage-static.s3.amazonaws.com/assets/robinhood/l...) -- and based on the fee numbers it looks like they don't have significant volume -- but the website shows "FEES $0" in the app screen. The fees may not seem to be a lot, but saying that fees are zero is a factually incorrect statement.
I'm glad they fixed their homepage, but the table in the article (http://tctechcrunch2011.files.wordpress.com/2014/02/screensh...) is wrong.
https://brokerage-static.s3.amazonaws.com/assets/robinhood/l...
I'd view the competition as Interactive Brokers, not E*TRADE or Fidelity.
If I didn't love my job so much I'd be schwangling my way in to try and get in the door there.
Hip, populist sounding name? Check.
New slick-designed facade on old activity? Check.
Marketed as if they're eliminating middlemen? Check. (wow! no fees!)
Promoted as making a begrudgingly-done banality suddenly fun? Check.
Entirely predicated on the idea that the founders' simplicity will persevere? Check.
Majority of money still flowing to well connected insiders? Check. (who do you think is on the other side of trades?)
Eventually going to be assimilated into an incumbent and end up as a tired pig's discarded lipstick? Check.
Anyone else think this web design style is getting very cliche?
<snazzy background>
LOOK THERE IS ONE SENTENCE HERE
... scroll scroll scroll ...
WOW ANOTHER SENTENCE
... scroll scroll scroll ...
WOW SO DOGE
... scroll scroll scroll ...
...
I think Theodore Roosevelt said it best: “It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.”
And you're right, the founders probably didn't set out to pretend and they actually believe they're changing the world. So I guess it's more appropriately described as "amateur disruption porn".
Who are these "insiders" you refer to? Why does it matter who takes the other side of the trade? If you got filled and you got the price you wanted (or better), the system worked.
|RobinHood co-founder Baiju Bhatt stresses that if you want to do deep financial research, you probably want to sit down at a desktop.
The heavy traders who would really benefit from zero-commission (assuming that it actually is) are on desktops in front of 4-10 monitors. Because of what it implies, I think regular people probably shouldn't be making trades that need to be done RIGHT NOW before a desktop can be reached.
edit to add: Is the "Share" button on the bottom of the trade confirmation screen really necessary? Are rich people going to be clogging up twitter with brags like "Just bought 1,000 shares of AAPL on Robinhood!"
Those people don't pay $10 per trade. If you do enough volume, you're usually able to negotiate much lower commissions. In addition, some of them will also specifically route their orders to ECNs and benefit from credit gained for providing liquidity to even further reduce their fees. All in all this is clearly designed for retail traders aka dumb money. I'd be willing to bet that their business model is based on selling the order flow they generate to institutions.
https://www.youtube.com/watch?v=w9Sx34swEG0
https://vimeo.com/87163777