Saturday, November 27 2021

Robin Hood, the Silicon Valley-based stock trading app that was recently valued by investors at $ 7.6 billion, received regulatory approval in the UK, breaking coverage of its proposed s ‘set up in London (as reported exclusively by TechCrunch seven months ago).

Specifically, Robinhood International Ltd., a subsidiary of Robinhood, has been authorized by the Financial Conduct Authority to operate as a broker in the UK (with some restrictions based on the authorizations requested by the company). This sets Robinhood up for a UK launch, although the company is keeping a tight tab on exactly when.

In addition, Robinhood announces that it has appointed Wander Rutgers President of Robinhood International. He’s from London fintech Plum, where he led the startup’s investment and savings product, and prior to that, he reportedly led the product, compliance and operations teams at TransferWise.

At Robinhood, Rutgers will lead the UK business and oversee the company’s new London office, which has already started recruiting. Sources told me in April that Robinhood was busy hiring for a number of roles in the UK including recruiting, operations, marketing / public relations, customer support, compliance and products.

The company tells me that they are also putting together a London-based user research team so they can better find a suitable product for the market here. Roughly building a localized version of Robinhood obviously won’t be enough.

Meanwhile, the news that Robinhood is ramping up its planned UK launch is interesting in the context of local fintech startups launching their own no-fee trading offerings.

Freetrade, based in London, initially chose to create a true “broker challenger”, notably by obtaining the required license from the FCA, rather than simply partnering with an established broker. The app allows you to invest in stocks and ETFs. Transactions are “free of charge” if you are satisfied with the execution of your buy or sell transactions at the close of business each day. If you want to execute immediately, the startup charges £ 1 per transaction.

And last week Revolut finally launched its free, albeit tentatively, stock trading feature. For now, the functionality is limited to certain Revolut customers with a Premium Metal card (which itself carries a monthly subscription) and covers 300 stocks listed in the United States. The company said it plans to expand into UK and European equities as well as exchange-traded funds in the future. Note: As I understand it, Revolut does not have its own broker license, but is partnering with US broker DriveWealth for some of its technology and regulatory clearance required (this also explains why, for now, Revolut offers access to US equities only).

In contrast, Freetrade has long argued that in order to innovate in trading you need to build and own the complete brokerage stack. It was the first driver in this regard among the new generation of ‘free’ trading apps in the UK, although others, including Bux in the Netherlands and now Robinhood, have since followed the same path. Only time will tell if Revolut will be forced to do the same.

Another detail is that Revolut and Robinhood share investors, namely Index and DST. This makes for an interesting subplot as the two unicorns encroach on each other’s lawn. No conflict, no interest.


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