Robinhood to launch in the UK in latest international expansion bid

Online investments app Robinhood said Thursday that it’s set to launch its platform in the U.K. in early 2024, marking the company’s third attempt at cracking international expansion.

Features include the ability to choose from 6,000 U.S. stocks and 24-hour trading five days a week. Robinhood currently offers 24-hour trading in the U.S., allowing trades to happen outside 9:30 a.m. ET and after 4 p.m. ET.

Robinhood won’t offer U.K. stocks to begin with but will look to add them as it brings more products into the platform. The U.K. version won’t include options and other derivatives at launch, either.

Jordan Sinclair, Robinhood’s U.K. chief, said he expects 24-hour trading to be popular, as it will let users trade on market-moving news.

“You wake up in the morning, you read the news headlines, and then you have to wait,” Sinclair said. “Customers actually can make a trade and choose their investment strategy and actually act on that market news.”

Robinhood has already tried to launch in the U.K. twice.

A waiting list it rolled out in 2019 saw over 300,000 people sign up, but the company pulled the plug on its U.K. expansion plans, citing soaring demand at home during the Covid pandemic as interest in retail investing climbed dramatically.

Then, last year, it sought to acquire British crypto-trading app Ziglu. That deal faltered, however, and Robinhood was forced to write off the value of its investment, with the company reporting a $12 million impairment charge on the failed transaction.

Brits will be able to join a waitlist starting Thursday and will be notified when they can sign up for early access at a later point in time. In a bid to get more traction fast, Robinhood is also asking users to share a unique referral link with friends and family to move them up the queue.

“My aspiration is to be one of the largest employers in England, nothing would make me happier,” Tenev said. “And, you know, there’s a lot of great talent. So this, this could be a centre of excellence for Robinhood.”

Dan Moczulski, U.K. managing director of EToro, a rival stock trading platform, said the arrival of more competition in the retail trading market marks “an exciting time for the industry.”

“More competition will always be a good thing for investors,” Moczulski told CNBC. “As one of the leading trading and investing platforms in the UK, it also keeps us on our toes and pushes us to continue innovating and broadening our product range for our users.” 

Robinhood CEO Vlad Tenev said he doesn’t fear “déjà vu” with the firm’s third attempt to launch in the U.K.

“We’ve made sure we taken care of all of the details, the platform is much more robust,” Tenev told CNBC in an interview. “So I don’t think that it’ll be déjà vu. I think that we’re very confident we’ll be able to serve the customers here tightly.”

Robinhood is launching with a license from the Financial Conduct Authority, the U.K.’s markets regulator, and Tenev says the firm has a good relationship with the regulator.

The FCA has previously warned about “gamification” of investments, something the U.S. Securities and Exchange Commission is also worried about. When contacted by CNBC, an FCA spokesperson said the regulator wouldn’t comment on individual companies, but that companies are obliged to respect consumer duty standards set out by the regulator.

Regulators are concerned brokerage apps like Robinhood, eToro, and Public, which engage investors with stimulating features like push notifications, colorful graphics, and a game-like interface, may encourage excessive trading that harms investors but is profitable for market-makers.

Customer cash will be held in segregated accounts protected by U.S. Federal Deposit Insurance Commission insurance, Robinhood said, rather than the U.K. Financial Services Compensation Scheme. Robinhood users will be able to make a 5% annual yield on cash held in their accounts.

Robinhood won’t launch payment-for-order-flow in the U.K., which refers to the practice of routing trades through market-makers like Citadel Securities in return for a slice of the profits. PFOF is banned in the U.K. Instead, the firm expects to make money from other lines of business, including securities lending, margin lending, interest on uninvested cash, and its premium Robinhood Gold subscription service.

Payment for order flow can create conflicts of interest, critics say, as brokers have an incentive to direct order flow to market makers offering such arrangements over the interests of their clients.