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Robinhood opens in UK with low-cost US trading to woo clients

November 30, 2023 4:25 AM EST

FILE PHOTO: The logo of Robinhood Markets, Inc. is seen at a pop-up event on Wall Street after the company's IPO in New York City, U.S., July 29, 2021. REUTERS/Andrew Kelly

By Sinead Cruise

LONDON (Reuters) -Trading app operator Robinhood Markets Inc. said on Thursday it would roll out brokerage services in Britain, as part of an international expansion plan to "democratise finance" and increase access to markets.

Robinhood grabbed the attention of millions during a 2021 retail trading surge in the United States, when mom-and-pop investors flocked to the company's commission-free platform to back "meme stocks" - shares that gained a frenzied following during pandemic-era lockdowns.

Since then, trading activity has shrunk as people grapple with a cost-of-living crisis caused by high interest rates and inflation.

Robinhood's plans come one month after Britain's Financial Conduct Authority (FCA), which has been reviewing stock trading app design features, told platform chiefs it expected customers to be protected from reckless trading and scams.

Vlad Tenev, CEO and Co-Founder of Robinhood, said Britain was the "ideal place" for the company to launch its first international brokerage product, describing the UK as a hub for innovation, global finance and tech talent.

Robinhood said UK customers will have access to commission-free trading of more than 6,000 US-listed stocks and American Depositary Receipts (ADRs), without foreign exchange fees and no account minimums.

"For too long, UK investors have incurred high fees to invest in the U.S. markets and earned low returns on their uninvested cash," said Jordan Sinclair, president of Robinhood UK.

Customers could earn a 5% annual equivalent rate on uninvested cash, Robinhood said, with accounts insured by the U.S. Federal Deposit Insurance Corporation up to a total maximum of $2.25 million.

The online brokerage missed Wall Street estimates for third-quarter revenue earlier this month after a slowdown in trading activity.

Robinhood's transaction-based revenue slid 11% year-on-year to $185 million as monthly active users dropped 16% to 10.3 million from a year earlier.

(Reporting By Sinead Cruise, additional reporting by Kirstin Ridley. Editing by Jane Merriman and Barbara Lewis)

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