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Robinhood roblox ipo12/14/2023 ![]() Robinhood doesn’t have anywhere near the scale needed to generate enough revenue from other services to offset the loss of payment for order flow revenue. Fidelity and Schwab can afford to continue offering free stock trading without the payment for order flow revenue thanks to their ability to leverage superior scale to generate meaningful revenue from other services, like asset management. If payment for order flow is ever banned, I don't believe Robinhood could continue offering commission-free trading, which would put the company at a significant disadvantage to rivals Fidelity and Charles Schwab. ![]() An outright ban on payment for order flow would immediately and severely impact Robinhood’s revenue. Payment for order flow is already banned in the United Kingdom, which not only limits Robinhood’s international expansion, but also sets precedent for Congress to enact laws against the practice. ![]() In June 2021, SEC Chairman Gary Gensler said that the SEC was reviewing payment for order flow, which led to speculation that it could be banned, according to the Wall Street Journal. While Robinhood argues that payment for order flow allows them to offer free trading to their customers, and it is currently not illegal, regulators argue that payment for order flow violates a broker’s duty to provide the best execution of trades. Robinhood has been heavily criticized for its use of payment for order flow (PFOF), which accounted for 81% of its 1Q21 revenue. ![]() This point applies not only to social media companies, but it also applies to Robinhood. As the saying goes, “If you’re not paying for a product, you are the product.” ![]()
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