Robinhood Trading App Replies to Critics Regarding Its Business Model

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Sat, 09/22/2018 - 12:43
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Yuri Molchan
The startup rejects allegations of selling user data
Robinhood Trading App Replies to Critics Regarding Its Business Model
Cover image via U.Today

After several publications with allegations against Robinhood, the trading app responds to the critics, disagreeing to the accusations of preferential attitude to high-frequency traders over retail investors.

Logan Kane in his original article claimed the Robinhood sells data regarding orders of retail traders to high-frequency ones charging almost a dozen times more than similar brokers selling identical data.

Robinhood puts forward defense

In an interview, Robinhood reps said that any brokerage firm with a license has to execute client orders charging the best possible fee for it from any national or local stock exchange. This is widely known as national best bid offer. These words can be interpreted this way: the app states that it must help its users perform trades at the best possible fees and this is out if its control.

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More counterarguments

At Robinhood, they also mentioned that like any other startup in the trading sphere, their app takes part in rebate programs whose goal is to assist customers in obtaining extra price improvement for their orders by setting up competition among exchanges and providers of liquidity. They added that any rebates received by Robinhood do not necessarily affect this best execution obligation.

Also, Robinhood management team have denied the fact of selling their customer data with identifying information.

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About the author

Yuri is a crypto journalist interested in technology and technical innovations. He has been in crypto since 2017. Believes that blockchain and cryptocurrencies have a potential to transform the world in the future in many of its aspects. ‘Hodls’ major cryptocurrencies and has written for multiple crypto media outlets. 

His articles have been quoted by such crypto influencers as Tyler Winklevoss, John McAfee, CZ Binance, Max Keiser, etc.

Currently Yuri is a news writer at U.Today and can be contacted at yuri.molchan@u.today.