THELOGICALINDIAN - Journalist Logan Kane of Seeking Alpha conducted a abysmal dive on the practices of accepted banal and cryptocurrency trading smartphone appliance Robinhood According to Mr Kane it seems that todays Robinhood takes from the millennial and gives to the highfrequency banker Not alone does Robinhood acquire acquittal for adjustment breeze but on a backoftheenvelope adding they arise to be affairs their barter orders for over ten times as abundant as added brokers who appoint in the convenance
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Robinhood App Accused of Selling Out Younger Investors
Robinhood has taken both the bequest retail banal barter bazaar and the cryptocurrency barter bazaar by storm, alms commission-free trades. In aloof a abbreviate time, the startup has becoming a multi-billion dollar valuation. These basal facts accept brought the close a lot of actual absolute media coverage, including, on balance, these pages. However, with success comes greater scrutiny, and abnormally back a alleged accident baton business archetypal is ascendant to its artefact adoption.
“It appears from contempo SEC filings that high-frequency trading firms are advantageous Robinhood over 10 times as abundant as they pay to added abatement brokerages for the aforementioned volume,” claims banking announcer Logan Kane in a recent, continued anatomy column on Seeking Alpha.
Mr. Kane is accusing Robinhood of actuality beneath than transparent. His concern was flamed while encountering the company’s business of commission-free trades. “After digging through their SEC filings, it seems that today’s Robinhood takes from the millennial and gives to the high-frequency trader,” he asserted. Furthermore, not alone “does Robinhood acquire acquittal for adjustment flow, but on a back-of-the-envelope calculation, they arise to be affairs their customers’ orders for over ten times as abundant as added brokers who appoint in the practice. It’s a battle of absorption and is bad for you as a customer.”
After pointing out industry skepticism apropos high-frequency trading, whereby some companies acquiesce barter to accept how orders are routed, he insists, “Robinhood not alone engages in affairs chump orders but seems to be authoritative far added than their competitors from it. Among brokers that accept acquittal for adjustment flow, it’s about a baby allotment of their acquirement but a big block of change nonetheless. Robinhood appears to be operating differently,” he continued.
Certainly Not Saints
Mr. Kane is afflictive with the firms Robinhood has called to advertise adjustment flow, abnormally Citadel. “The bodies Robinhood sells your orders to are absolutely not saints,” he scorned. “Citadel was fined 22 actor dollars by the SEC for violations of balance laws in 2017 […] It’s accessible to miss, but there is a actual aberration in the disclosures amid what Robinhood and added abatement brokers are assuming that suggests that article is activity on abaft the scenes that we don’t accept at Robinhood.”
Diving into Robinhood’s aphorism 206 acknowledgment with the US Securities and Exchange Commission (SEC), he compares the aggregation with other, added accustomed movers in the retail space, namely TD Ameritrade and Etrade, acquainted “both address their payments for adjustment breeze as almost a tenth of a penny per share.” For Robinhood, they address it as “per dollar of accomplished barter value,” which Mr. Kane stresses agency “the cardinal you see in their filing looks abate if you don’t accept the filings from their competitors in advanced of you, but it’s absolutely abundant higher.”
Openly apprehensive aloud why its abstracts are ten times that of added retail exchanges, he recalls how “before they founded Robinhood, the cofounders of Robinhood congenital software for barrier funds and high-frequency traders.” He finds it suspicious, to say the least, the aggregation has called not to acknowledge how abundant they’re accepting paid per share, and instead “report per dollar of barter amount area the cardinal can attending smaller.”
He believes this “raises questions about the affection of beheading that Robinhood provides if their accurate barter are” high-frequency trading firms. The no-commission archetypal has a addiction to aerate barter volume, authoritative the client, the investor, the artefact rather than the banking amalgamation or service. “The alone acumen high-frequency traders would pay Robinhood tens to hundreds of millions of dollars,” he explained, “is that they can accomplishment the retail barter for far added than they pay Robinhood. I additionally admiration if they are accepting paid so abundant by [high-frequency trading] firms, they ability be accepting paid by agnate firms in the crypto space. It isn’t bright whether regulators would crave them to acknowledge payments for cryptocurrency adjustment flow,” he noted.
As of this writing, the aggregation has not appear a response.
Do you accept a botheration with what Robinhood is reportedly doing? Let us apperceive in the comments below.
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