Robinhood has ramped up its UK investment offering with the launch of an investment product which allows investors to profit from the rise and fall of share prices. The US fintech, which disrupted the US investing market with commission-free trading, is also set to bring its US desktop platform geared towards investors to the UK market.
An alternative to stock trading, options trading is the buying and selling of financial contracts that give the buyer the right to buy or sell an underlying asset, such as stocks or ETFs, at a specific price within a set time.
Investors might trade options to hedge against a drop in stock price or to speculate on the future price of an investment.
According to Jordan Sinclair, Robinhood, UK president, options trading is a ”bit more accessible” in the US, compared to the UK, and said that its UK customers have been “asking us for the product since day one”. The news was first reported by Yahoo Finance.
He added:
"Access to options trading has historically been hindered for many UK investors due to high fees, complicated platforms, and limited educational resources. Our goal is to make options trading in the UK accessible, straightforward, and affordable for all."
Robinhood launched in the UK in March last year, pledging no commission fees and no foreign exchange fees on trades of over 6,000 US stocks, while providing five per cent interest on uninvested cash. It has since launched several other investment products including share lending and margin trading.
Sinclair said: "And that is a great base for an investment product. We are going to keep adding to that." The likes of share lending, margin trading and options trading can be deemed as riskier investment products, but Sinclair said Robinhood had all the right controls in place so that only eligible investors could use the products.
Sinclair said Robinhood would continue to bring existing US products and bespoke UK products to its app, pointing to the example of stock and share ISAs. One US product next likely to cross the Atlantic is its desktop platform tailored for active traders. Robinhood launched the product, called Robinhood Legend, in October last year in the US. The platform offers advanced trading tools, and real-time data.
Vlad Tenev, Robinhood CEO and co-founder, told CNBC:
“We have done very well on mobile historically among younger people.
“But about half the market is on desktop web, where you have more real estate on the screen, you can do more sophisticated things like have charts and data and the trading in the same interface. We weren’t really a player in that space.”
Sinclair said that UK customers had given Robinhood Legend the thumbs up, adding that “that is the type of customer feedback that can help guide our product roadmap”. However, Sinclair said that Robinhood would unlikely be bringing event derivatives trading to the UK.
In the US, Robinhood investors had the opportunity to make money by speculating on the outcome of the US election and it also wanted to offer betting contracts on the Super Bowl, however it subsequently withdrew its plans following pushback from regulators. Sinclair said event contracts were “not something that we are looking to offer our customers immediately”.
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