Robinhood to launch margin trading in UK expansion drive

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Robinhood is set to launch margin trading in the UK in the coming weeks, opening the door for individual investors to engage in the leveraged stock bets that have helped propel the US retail frenzy.

The move comes ahead of a big UK marketing push for the group, which is also considering launching long-term savings products as it seeks to position itself as a leading investment platform for younger investors.

Vlad Tenev, Robinhood’s co-founder and chief executive, told the Financial Times that margin trading is “launching in the next two weeks” and that the company is “looking to offer Isas and Sipps” as it tries to attract Britons. customers to use the platform and expand its appeal to day trading.

According to Tenev, the UK’s relative lack of a retail investment culture is an opportunity for the company, which wants to get clients to trade shares more actively.

“The UK hasn’t fundamentally changed the way the US market has,” he said. “There hasn’t been a huge increase in household investment.”

Robinhood launched its first overseas brokerage unit in the UK last year, trying to win business from larger retail brokerages, which it says typically charge higher transaction fees, and as it diversifies beyond meme stocks. Robinhood has halted margin trading since opening its UK brokerage in March while it talks with regulators. The Financial Conduct Authority declined to comment.

Margin trading allows investors to borrow money to amplify their gains and losses and is very risky. Thousands of retailers used leverage during the pandemic-era stock meme mania, in which Robinhood’s app played a central role.

The company was fined more than $70 million in 2021 by a Wall Street regulator for issues that included providing misleading information about margin trading.

Founded in 2013, Robinhood shook up the US retail investment market by offering commission-free trading and helping introduce a new generation of retail investors to speculation through betting on stocks, including options.

It was later thrust into the spotlight during the coronavirus pandemic, when retail investors using Robinhood and other platforms flocked to trade meme stocks like GameStop, fueling a stock price rally that then crashed. The California-based company launched its UK brokerage last year, giving UK clients access to trade more than 6,000 US stocks.

Robinhood is also trying to push deeper into crypto markets and bought European exchange Bitstamp for $200 million in June. Tenev said Europe, which was “far behind” the US in regulating artificial intelligence, was ahead in allowing the use of digital technologies, such as the tokenization of securities using blockchains, in trading.

“European regulators are more accepting of financial innovation and part of that is they want to be seen as competitive,” he said. “They want more market share compared to the US.”

Tenev suggested that tokenized share trading – where traditional shares are converted into digital tokens that can be traded 24 hours a day and ported from one platform to another – could be adopted in Europe first. “Fintech platforms are looking at this very closely. . . we’d like to be at the forefront of that,” he said.