Robinhood Blows Past Rivals in Record Retail Trading YearAdvisor Perspectives
Robinhood Markets Inc. is outrunning its online-brokerage rivals, at least by one widely followed industry metric for customer activity.
The company, which runs a no-fee trading app in the U.S. that’s drawing millions of new users as well as a few critics, said that daily average revenue trades — known as DARTs — were 4.31 million in June. That’s about four times the number of fee-generating trades at E*Trade Financial Corp. for the same period, and higher than all of its publicly traded rivals. Robinhood is among brokers that still use the DART term even though they don’t charge fees.
The firm is revealing the data for the first time, in the wake of a surge in online dealing among people stuck at home during the coronavirus pandemic. Newbie investors this year have flocked in record numbers to zero-fee trading apps such as Robinhood and British platform AJ Bell Plc, but the rush has prompted concerns over whether they properly understand the financial risks they’re taking.
“It’s surprising that this organization’s only seven years old and has surpassed Ameritrade, which was founded in the mid ‘70s,” Larry Tabb, Bloomberg Intelligence’s head of Market Structure Research, said in an interview. “It’s really difficult to analyze information on a mobile screen.”
Company June DARTs
Robinhood 4.31 million
TD Ameritrade 3.84 million
Interactive Brokers 1.86 million
Charles Schwab 1.8 million
E*Trade 1.1 million
And just as Robinhood is disclosing DARTs, it’s blocking access to other trading data. Robintrack.net, the website with hourly updates on retail stock demand that became a minor obsession of Wall Street, will end its service after Robinhood curtailed access to the data on which it ran.
Robintrack used data from the app showing broad trends among Robinhood users’ trading to display which stocks were popular with its clients. The information became a proxy for the preferences of individual investors everywhere. Robinhood will stop providing the feed on which the site’s information is based out of concern that it misrepresents client activity. That could impact volumes for the third quarter, Tabb said.
Read the full article here by Sonali Basak, Advisor Perspectives