THELOGICALINDIAN - The lowcost Robinhood advance app accepted with millennials makes up for the absent profits of commissionfree trades by affairs users abstracts to added banking companies
A Second Quarter SEC filing shows that Robinhood Financial (Robinhood) is absolutely authoritative millions of dollars from affairs users’ abstracts to high-frequency trading (HFT) firms. Recall, this is the aforementioned aggregation that espouses ethics of ethical trading practices that account the accepted man instead of fleecing barter to accommodate a quick blade for Wall Street traders.
A quick blink at Robinhood’s website presents browsers with feel-good phrases like, “We accept that the banking arrangement should assignment for the blow of us, not aloof the wealthy.” Or, “We’ve cut the fat that makes added brokerages costly, like chiral annual administration and hundreds of storefront locations, so we can action aught agency trading.”
While it should appear as no abruptness that an advance aggregation would administer advice accompanying to chump demographics and purchasing preferences, the aggregation frequently touts its zero-commision trading options and markets itself as activity adjoin the atom of archetypal Wall Street brokerages. Turns out, Robinhood absolutely sells users’ adjustment capacity at 10 times the amount of what added banking companies allegation HFT firms. Meanwhile, competitors like Vanguard and Interactive Brokers (IBKR) do not advertise users’ abstracts and IBKR alike allows barter to abode their orders through a array of exchanges.
Robinhood does acknowledgment that it generates profits by allowance lending and absorption generated from the balances of chump accounts — but the best afresh appear SEC filing shows that the aggregation could be heavily codicillary on the acquirement generated from the auction of user data.
A address from Seeking Alpha suggests that Robinhood’s auction of chump abstracts is “a battle of absorption and is bad for you as a customer.” The address goes on to detail a academic adding of how Robinhood could “theoretically” rake in $500 actor per division from HFT firms if their aggregate was as aerial as E*Trade.
The auction of user abstracts by Robinhood should be account for affair for accepted and approaching barter as a scattering of the companies that access banking abstracts from Robinhood accept been advised and fined by the SEC for actionable trading. In fact, in January of 2024, Citadel Securities LLC was fined $22 actor for publishing “misleading statements” about the way in which it priced trades.
Are you accept with exchanging your claimed abstracts in barter for agency chargeless trades? Share your thoughts in the comments below!
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