Home Money Stock trading app Robinhood is now available in the UK – and won’t charge fees

Stock trading app Robinhood is now available in the UK – and won’t charge fees

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Third time lucky: Robinhood launches again in the UK, hopes to take market share
  • Robinhood is now available for UK investors, offering 6,000 US stocks and no fees
  • UK investors will be able to trade fractional shares on the platform
  • Robinhood also offers 24/5 trading on select stocks.

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Stock trading app Robinhood has opened its trading platform to all UK investors as it seeks to take on established incumbents for a third time.

The American giant will initially offer free trading in more than 6,000 American stocks, without annual fees or trading or exchange fees.

Robinhood found itself at the center of the GameStop frenzy in 2021, when investors flocked to the platform to back so-called “meme stocks.”

Third time lucky: Robinhood launches again in the UK, hopes to take market share

Third time lucky: Robinhood launches again in the UK, hopes to take market share

This is the third time the American company has attempted to launch in the UK. It first announced its entry into the market in 2020 before quickly abandoning its plans and made a failed bid for crypto trading app Ziglu in 2022.

Jordan Sinclair, chairman of Robinhood UK, told This Is Money: “We have certainly learned from these experiences. We decided not to launch early and focus on the US business, which in hindsight was great.

Robinhood reported a surprise fourth-quarter profit after higher interest income from customers repaying their loans and a rebound in trading.

“Robinhood is 10 years old – that means there are things we’ve built over time that we can offer a mature experience. What we’re launching is more developed,” Sinclair said.

What does Robinhood offer investors?

UK investors will be able to trade fractional shares and Robinhood offers 24-hour, five-day-a-week trading on some stocks, which Sinclair says is a major hurdle.

“We are so constrained when the US market opens up. The market is moving, something is happening and the UK has to wait until midday tomorrow. What we are already seeing with (test) clients is that a third of transactions take place outside of market hours.

Investors will be able to open a general investment account, but not an Isa account, although there are plans to launch this in the future, alongside UK stocks.

Although foreign exchange fees have been removed, UK investors will need to deposit British pounds into their accounts, which will be converted into dollars. They will be charged a 0.03 percent exchange fee.

The broker hopes that features such as stock split rewards between $7 and $175 will lure investors away from other DIY investing platforms.

It also offers fringe lending, which allows customers to borrow money from Robinhood to invest in U.S.-listed securities and use the additional leverage to buy stocks.

This is very risky and, therefore, is not offered by many other investment platforms. Robinhood says customers will need to apply for a margin investment and will only have access to it if they meet the eligibility requirements.

One of Robinhood’s most notable offerings is an easily accessible, no-cap 5% rate on uninvested cash currently offered to its Gold customers in the United States.

Freetrade offers 5% on £3,000 in uninvested cash to its Plus customers, who pay £11.99 per month, while other platforms offer around 3%.

Robinhood has refused to disclose the number of UK investors who have signed up to its waiting list at the end of 2023.

But it will be difficult to challenge established platforms like Hargreaves Lansdown and AJ Bell, as well as more established challenger Freetrade, which offers commission-free trading although it charges exchange fees.

Sinclair said: “In the UK, there are opportunities for addressable wealth and the needs are not being met, creating barriers that hinder participation. Fees are important… if it’s your first £100 to invest and £15-20 goes towards fees, I understand why people are reluctant to commit.

Money deposited with Robinhood will be eligible for Federal Deposit Insurance Corporation insurance up to a maximum of $2.25 million.

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