Robinhood launched its long-awaited desktop platform on Wednesday and added futures and index options trading capabilities to its mobile app. The fintech company wants to take market share from traditional brokers.
The 11-year-old commission-free trading app, which became synonymous with retail investors in 2021, now aims to mature into a full-fledged financial services provider and compete with established brokers that serve institutional investors.
The Menlo Park, California-based company said its desktop trading platform, called “Robinhood Legend,” will focus on active traders.
“We have matured alongside our customers and heard loud and clear that they wanted access to more advanced products and more active trading tools,” Chief Brokerage Officer Steve Quirk told Reuters.
“Our long-term goal is for Robinhood to be the premier financial services provider that meets all of customers’ needs.
The platform, available at no additional cost, will offer advanced trading tools, real-time data, and custom and preset layouts.
With the app, users can trade futures on the S&P 500 Index, oil and Bitcoin, among other things. Customers can also trade index options
FIGHT FOR MARKET SHARE
The U.S. brokerage industry, long dominated by big names like Vanguard, Charles Schwab and Fidelity Investments, saw its first shakeup in decades in 2013 with the arrival of Robinhood, the pioneer of commission-free trading.
A decade later, Robinhood is expanding to cater to more sophisticated investors. Futures and options trading has typically been the domain of large banks, hedge funds and asset managers due to higher margin requirements, increased volatility, complexity and commissions.
Subscribers to Robinhood’s Gold premium tier can trade futures for just 50 cents per contract, while non-Gold users must pay a commission of 75 cents.
For comparison, Schwab charges $2.25 per contract, while Morgan Stanley’s E*TRADE charges $1.50 for futures and $2.50 for crypto futures.
Robinhood’s fees for index options are also lower than other providers, at 35 cents per contract for Gold members and 50 cents for other members.
The company had 11.8 million monthly active users and 1.98 million premium “Gold” customers as of June 30.
Analysts have already said Robinhood’s entry into futures trading this year could be met with some reluctance from retail traders if the company charges a fee, but it could also create new opportunities to expand its market share.
Earlier this year, the company committed to increasing its margins while focusing on “profitable growth” in 2024. Three consecutive quarters of earnings reports have fueled investor enthusiasm and helped the stock rise over 100% year-to-date.
