Third Time Lucky: Robinhood Opens Its Doors To UK Traders

Robinhood, which rose to fame following its role in the GameStop mania, has officially launched in the UK.

The firm made unsuccessful efforts to enter the UK market in 2020 and once more in 2022, following discussions about acquiring the trading app Ziglu.

Key Takeaways

• Robinhood is now available to British investors, offering commission-free trading on over 6,000 US stocks and currency pairs.
• UK traders will get $2.25 million in FIDC insurance, surpassing the £85,000 available through the FSCS.
• Robinhood offers up to 5% interest on uninvested cash, similar to rival XTB (5%) but less than eToro (5.3%).

Peaks And Troughs

Robinhood is a stock broker that’s proven popular in the US for its user-friendly app and “free” trading model, helping it attract over 23 million users.

Its entry into the UK market has been hotly anticipated, especially by British investors on the waiting list since the end of last year.

However, Robinhood’s trading practices, notably in-app gamification elements like falling confetti and scratch card-style promotions, have been criticized for encouraging excessive trading.

Legal Challenges

Lawsuits also cast a long shadow, including allegations from Massachusetts regulators that the platform “encouraged inexperienced investors to place risky trades”, alongside concerns about data breaches and inadequate cyber security measures.

In 2021, Robinhood also faced a record FINRA fine of $57 million for system outages and misleading retail investors, with $13 million owed in restitution.

So, despite its UK launch, doubts about Robinhood’s operating practices and the true cost of its “free” trading model persist.