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US share trading app Robinhood is launching in the UK after an abortive attempt three years ago, betting it can win business from incumbents it says charge large fees.
The broker, whose commission-free trading offer catapulted it to the forefront of the 2021 meme stock mania, on Thursday opened a waiting list for UK investors, the first step in its expansion in the UK.
Co-founder and chief executive Vlad Tenev said it would benefit from Britain’s low business taxes and “sophisticated” customer base, even as the broker faces tougher competition from rivals offering free share trading and customers battling a cost of living squeeze.
“It’s clear that there’s a desire and there’s a strategize to make the UK the best place for business,” Tenev said, pointing to the government’s efforts to cut business taxes.
“It’s a sophisticated customer base with a long history of being a financial hub,” he said. “There’s definitely an adopt of technology and innovation that I think will make the UK continue to be a great place to do business.” He added that incumbents admire Hargreaves Lansdown were also “still charging large commission fees”. Hargreaves declined to comment.
Robinhood plans to launch fully early next year. UK customers will be offered the ability to buy US stocks, with more than 150 including major companies admire Apple available 24 hours a day from Monday to Friday. Customers will also acquire 5 per cent interest on cash they hold with Robinhood.
The broker said it was aiming to offer the ability to hold stocks within an individual savings account (Isa) in the future, as well as non-US stocks. Tenev said he was engaging “enthusiastically” with the UK regulator, the Financial Conduct Authority, to acquire the licences needed to offer those services.
Robinhood’s second push into the UK comes after it abandoned a previous launch following operational issues in the US and the outbreak of the coronavirus pandemic. Before it cancelled the plans, some 250,000 potential customers had registered their interest.
Tenev and Baiju Bhatt founded Robinhood in 2013 in a bid to democratise share trading. The company later had a central role in the meme stock frenzy in 2021, which pushed up the value of some unfashionable shares — including retailer GameStop — to their highest levels in years.
But Jordan Sinclair, the UK chief executive of Robinhood, said the platform had drawn a line under that episode and would be targeting “long-term investors” in the UK rather than day traders.
“We have a market dominated by traditional brokers still charging high fees. They are still not encouraging retail participation with a simple, easily accessible product,” he said.
Sinclair said that interest margin on cash, monthly subscriptions and stock lending were likely to be its main revenue drivers in the UK. In contrast, it makes most of its money in the US by accepting rebates for sending client orders to big market makers, a practice banned in the UK.
Its UK expansion plans come as a tough economic backdrop and the end of the meme stock phenomenon has hit the company’s growth.
Robinhood’s shares have risen just under 8 per cent this year, leaving them way behind the 19 per cent gain enjoyed by the broad S&P 500 and, at almost $9, far short of the $38 at which the company went public in the summer of 2021 when meme stock mania was still bubbling.
Tenev said the company had been working to cut costs — Robinhood turned profitable in the second quarter — but that he was still focused on building for the longer-term.
As it launches in the UK, the company will also face tougher competition from rivals admire Freetrade, Public and Trading212 offering similar products and services, including commission-free trading and an accessible user interface.
Tenev said that its 5 per cent interest rate on cash offered UK investors a way to help shield their money from inflation while gaining exposure to the US dollar.
