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Robinhood Markets Inc. (HOOD.O) launched its long-awaited desktop trading platform, dubbed ‘Robinhood Legend,’ on Wednesday, expanding its offerings to include futures and index options trading in its mobile app. This move is part of the fintech company’s strategy to capture market share from traditional brokerages and cater to more advanced traders.
Founded 11 years ago, Robinhood gained prominence in 2021 by becoming a go-to platform for retail investors seeking commission-free trades. However, as it looks to mature into a full-service financial provider, Robinhood is now eyeing a more seasoned and institutional investor audience. The company hopes this evolution will position it to compete with well-established brokerage names like Vanguard, Charles Schwab (SCHW.N) and Fidelity Investments.
According to Robinhood, the new ‘Legend’ desktop platform will focus on active traders by offering advanced tools, real-time data and customizable layouts. Steve Quirk, Robinhood’s Chief Brokerage Officer, emphasized that the company has listened to customer feedback. “We’ve matured alongside our customers and have heard loud and clear that they want access to more advanced products and more active trading tools,” Quirk told Reuters.
The platform will be available at no additional cost, making it accessible to Robinhood’s large base of users which numbered 11.8 million monthly active users as of June 30. The company also boasted nearly 2 million premium 'Gold' subscribers who pay for additional services.
As part of the latest update, Robinhood is introducing futures trading for benchmark assets such as the S&P 500 index, oil and bitcoin. The company is also adding index options trading giving users more flexibility and access to advanced trading products previously reserved for institutional investors.
Robinhood’s premium Gold members can trade futures for as low as 50 cents per contract, while non-Gold users will pay 75 cents per contract. This pricing model undercuts competitors like Charles Schwab, which charges $2.25 per contract and ETRADE which charges $1.50 for futures and $2.50 for crypto futures. Robinhood’s fees for index options 35 cents per contract for Gold users and 50 cents for others are also significantly lower than industry averages.
Robinhood’s ambition to venture into futures and options trading, if successful, will allow it to capture an untapped market that is dominated by older companies. In the past, only large institutions traded futures because of their complexity as well as the minimum margin needed, but this is what Robinhood is looking to change for retail investors.
The launch of Robinhood Legend and its futures trading offerings are part of the company’s broader strategy to expand margins and drive “profitable growth” in 2024. Robinhood’s stock has surged over 100% year-to-date, buoyed by consecutive quarters of profitability and positive investor sentiment.
Robinhood, with its newly introduced desktop platform and broadened trading capabilities, hopes to further establish itself as a one stop comprehensive financial services provider, with resources for both novice and professional traders.
