
Robinhood: $0 commission stock brokerage - stevenj
https://www.robinhood.io
======
sheetjs
They appear to charge TAF and other regulatory fees ([https://brokerage-
static.s3.amazonaws.com/assets/robinhood/l...](https://brokerage-
static.s3.amazonaws.com/assets/robinhood/legal/RHF%20Retail%20Commisions%20and%20Fees%20Schedule%20Rhfv1.2%2020131210.pdf))
-- and based on the fee numbers it looks like they don't have significant
volume -- but the website shows "FEES $0" in the app screen. The fees may not
seem to be a lot, but saying that fees are zero is a factually incorrect
statement.

The fact that they don't list exchange fees seems to suggest that they may end
up routing orders to a market maker and collect fees from that (the exchange
fees are generally 30 cents per 100-share lots). If so, they should note on
the website that they are making money by selling flow

~~~
noname123
> Exchange fees

According to their site, they claim that you'll "buy and sell at the best
possible price"; I'm not sure how they are able to make this claim if they
cannot route your orders directly to the exchanges.

On their mockup on their site, the orders screen has an "Estimated Price"
which is a strange field as typical order types should be either "Limit" or
"Market" and should show the bid/ask spread on the current security; so I'm
guessing that the best "possible" price is the "market price" and they are
doing a combination of

1) Internal matching; orders aren't being routed to exchanges but if are
internally matchable, just reconcile the books internally and they collect the
bid/ask spread on both side of the trade.

2) Payment for order flow: they route your orders first to Citadel and
Timberhill where marketmakers love to take the other side of retail order
flow.

3) Internal marketmaking: they'll take the other side of your trades
themselves and try to immediately close their negative positions by routing
the order to an exchange for rebates and a better price.

~~~
ars_technician
>Internal matching; orders aren't being routed to exchanges but if are
internally matchable, just reconcile the books internally and they collect the
bid/ask spread on both side of the trade.

Doesn't that violate national best bid? Also, a lot of retail dumps market
orders, so how do you determine the price to match buy-sell pairs at?

~~~
noname123
Well, you are matching the buy and sell order of your internal orderflow at
market prices, e.g.,

Retail trader Bob wants to buy 100 shares of MSFT at the market price Retail
trader Sue wants to sell 100 shares of MSFT at the market price

NBBO of MSFT is at 36.70/36.72

You fill Bob at 36.72; and you fill Sue at 36.70. So Sue's account is credited
with 3670 cash while Bob's account is debited by 3672 cash for the privilege
of owning 100 shares of MSFT; while you collect the $2 difference and get
RegNMS compliance.

~~~
PhantomGremlin
I don't think this works for typical retail brokers. There's just not enough
volume, except for in a very small handful of the most active stocks.
Remember, nowadays people expect execution confirmation in less than 1 second.

Now, on the other hand, if you're Getco, you get to see these orders from
every broker in the country. If you can trade against that, you can make money
even with a bid/ask spread of $.02.

So if you're Getco, (hypothetically, I have no direct knowledge of them,
except that they're big in market making) you can go to the retail broker and
offer them price improvement.

E.g. in return for the order flow from that broker, Getco fills them "inside"
NBBO. Getco bids 36.7001, Getco asks 36.7199. (I get confirms like that
constantly from my retail brokers). Getco also gets rebates from the exchanges
for "adding liquidity". I.e. NYSE or NASDAQ pays Getco for certain types of
orders. Getco can kick back a portion of those rebates to the brokers.

This type of market making (known as specialists on the NYSE) was wildly
profitable up until decimalization about a decade ago. Now there are only a
few firms left, because the spreads are tight, so the volume needs to be high
in order to make any money.

Plus, one bad day because of a computer error can totally destroy your
company. E.g. when Knight Capital Group blew up just one year ago and was
subsequently acquired by Getco.

------
JumpCrisscross
Ah, I think I figured it out. Un-informed retail flow is valuable. When I was
an options market maker we paid a sweet premium for a particular retail
brokerage’s flow and still made a killing on it. Robinhood.io would appeal to
individuals who value smaller commissions over better execution, i.e. those
with limited capital or investing experience. So that gives them one side of
their revenues.

But that’s not enough - the fixed and variable costs to providing even decent
execution are staggering.

I think the second bit, margin lending and API access, might be them selling
sheeps’ clothes to the wolves. As a sophisticated trader, it may be of value
for me to mix my flow with that of unsophisticated retail traders. It’s an
interesting model and a careful balancing act. As a market maker I would keep
a close eye on the information content of their trades and cut them off the
moment they started looking too sensible. Compounding the problem would be
that the informed traders will tend to dominate the un-informed, in terms of
volume.

My alternate hypothesis is they're going to offer commission-free trading in a
limited pool of symbols - you should be able to get sufficiently reliable
retail flow for, say, AAPL to be able to internally cross most orders.

P.S. Not sure using FINRA affiliation to vouch for your security credentials
is compliant

~~~
Shinkei
Laughing at 'unsophisticated retail traders.'

So, now I'm unsophisticated because I would like to own some individual
stocks? You assume the execution is all that matters, but if you are investing
in the long-term profitability of a company, then I certainly hope a few hours
or even a day doesn't matter. But a $10 commission on a $1000 trade starts you
at 1% in the hole.

~~~
goldenkey
If 1% puts you in the hole for a long-term trade, you better rethink your
strategy.

~~~
tertius
100% minus 1% is 99%. You thus have less than your principal. I.e. in the
hole. It's pretty simple.

~~~
goldenkey
Right, in the hole initially. If you don't crawl out of the hole, you're long-
term investment failed either way -- and 1% isn't gonna make or break you,
unless you are extremely diversified. If you are extremely diversified, you
probably won't be using one of these services anyhow -- you'll be putting in
lots of funds to a real platform that gives you rates for large sums of cash.

------
thatthatis
If you want a real brokerage that uses technology to keep costs down, check
out Interactive Brokers.
([http://interactivebrokers.com](http://interactivebrokers.com))

With IAB, a small player (5k+ in IRA or 10k+ in normal account) can trade on
terms comparable to what a mid-sized fund can get.

When it comes to financial assets, I'd rather pay an established player $1 per
trade than a fly-by-night operation $0.

~~~
shogunmike
I've had experience with IB in a quant fund setting. I was impressed with it.
Significantly further ahead of the curve in regards to their API offering
compared to other brokerages.

At my last check it was mostly geared towards C++/Java with less than ideal
documentation. However there are some good open source wrappers available
(Python): [https://github.com/blampe/IbPy](https://github.com/blampe/IbPy)

As stated in the parent comment, the minimum account balance is $10k.

~~~
noname123
Not to mention PDT requirement is $25K and more like $30K if you want to get a
good buffer zone. You can also trade it via FIX. They open sourced their API
here: [https://github.com/InteractiveBrokers/tws-
api](https://github.com/InteractiveBrokers/tws-api)

~~~
shogunmike
Thanks for the Github link. I hadn't realised they had become open source!

Although (I had a 404), I think it's actually:
[https://github.com/InteractiveBrokers/tws-api-
public](https://github.com/InteractiveBrokers/tws-api-public)

Indeed the PDT requirement is a pain...

------
murbard2
tl,dr; brokers don't charge commissions because it costs them anything to
execute your trade, the fair price for a retail trade is actually less than
$0. When you're paying e-trade $10, you're paying for their marketing.

For those wondering why they can offer $0 commission, it's because retail
brokers actually _make_ money on every trade you make. When you send your $10
through etrade or some other brokers, they don't actually send your order to
the market, they _sell_ it to getco or some other market maker.

The reasons are complex and linked to NMS regulation. In short, there are two
types of traders, informed and uninformed. Market makers do not want to trade
with informed traders, because they tend to lose money on those trades.
However, reg NMS mandates that every one gets the same best bid and offer. So
the spreads you'll see on the market reflect conditions where adverse
selection is anticipated, which is why it's very profitable to trade at those
prices against uninformed flow.

Now why don't brokers offer to pay rebates (less than $0) to customers? Well
they're not legally allowed to do that. The SEC regulates the maximum rebate
and it's not that big.

So why does Ameritrade for instance will charge you for trades? They don't
execute anything after all... Well, they're just the middle men. What you're
paying for is their advertising campaign that got you to open an account in
the first place.

~~~
cynicalkane
This isn't true. The money gained by selling the trade to market makers is
small, and can easily be much less than the commission. The commission is the
cost of doing business. Regulatory compliance and information technology ain't
free.

Maybe you mean the _marginal_ value of a trade is less than $0, but I'm not
convinced that's true ether.

However, AFIAK the rest of the information in this post is accurate.

~~~
sseveran
The Tx costs of a trade will probably yield a rebate but they will need to
move significant volume to generate enough revenue to cover their other costs.
There would be no commission if they sold their flow. The only other way to
make money here is to internalize even further and give bad fills or jack up
other fees.

------
winstonx
"Robin Hood" seems to be a misnomer for this service.

The character Robin Hood stole from the rich to give to the poor. In contrast
robinhood.io encourages every-day folks to compete against the elites in the
stock market. Which explains why elite capitalists are funding the
robinhood.io venture.

If you're not paying for the product, you are the product.

~~~
jebus989
> If you're not paying for the product, you are the product.

People have been restating this tedious point for years. Do you really think
if you pay a few bucks a month for something like Netflix, they just decide
"well we've already got this guy's 7.99, there's really no need to make any
use of his data for additional gains".

~~~
winstonx
You are pointing out that the converse of my statement isn't necessarily true.
I agree with you: if you are paying for something, you might still be a
product.

~~~
jebus989
The statement itself isn't true from the outset, consider NPOs, OSS, Wikimedia
projects... It's just a meaningless cliché.

~~~
winstonx
It's a truism, roughly equivalent to "there's no free lunch."

------
elmuchoprez
This looks really cool but I couldn't shake that feeling of, "If you're not
paying for it, you're the product."

I didn't feel any better about that when I saw that Google was one of their
major investors.

Still hoping for the best though.

~~~
loceng
You're the product even if you are paying for it. You don't think for-pay
services won't try to make more money or gain more value from the data you're
providing them?

~~~
elmuchoprez
For-pay services have an incentive not to do something with my data that
upsets me enough to leave. Let's say an advertising company offers eTrade
50-cents for info on every trade I make. That's free money for eTrade right up
until I, as the client, decide that's intrusive and take my business
elsewhere. Now eTrade is out my $10/trade, let alone the 50-cents.

But you don't have that leverage with a free service. To them, (in the long
run) making some money at the cost of pissing off their customers is better
than making no money at all.

~~~
thrill
Pissing off customers is more of a short-term approach to making money.

------
dpweb
Your fees is commission + the spread. Will be good if the executions are good,
but one cent in spread on 1000 shares is $10 anyway.. Also $50 to close the
acct.. what other unusual fees in there?

------
euizxcowqasdf
Long time HN member, but as a courtesy to some of my clients, this needs to be
on a throwaway account.

Free retail brokerage is something that needs to happen, and I applaud the
effort. Brokerages provide a real value add for some services. Offering
trading technology, market data, margin, dealing with block trades/portfolio
trades, access to OTC, dealing with regulations/back office -- those are real
services. Charging me to route an unleveraged, vanilla equity buy order to an
exchange and pass the exchange's execution report back to me just because, by
convention, exchanges don't want to deal with retail clients directly --
that's just introducing inefficiency and being a middle man.

That said, I don't like the fact that they have a "How We Make Money" section
without more extensive disclosure. In my mind, either don't have one (I
challenge you to find a single large brokerage that does), or have a more
detailed explanation of how the modern brokerage business works. The truth,
given the value proposition of free trading, is one that I'm happy to embrace.

I can't say with any certainty what they're actually doing; I can only speak
to the industry on the whole, but most retail brokerages make money from:

1\. Retail market making 2\. Netting across client order flow (probably not
applicable here) 3\. Asymmetric exchange fees/rebates

The rules on all three are highly country/exchange dependent, but here's an
abridged version.

1\. Retail market making involves selling order flow to third parties who are
able to execute it at a price better than anything that's currently showing on
a lit exchange. I've included more details on this below the fold since a) it
helps explain their estimated cost graphic, and b) it's one of the most hyped
and misunderstood practices in finance, so people should at least decide how
they feel about the practice based on correct information.

2\. Netting comes about when you're dealing with lots of order flow at a
bank/brokerage with multiple lines of business. Your clients might be, on
average, and across some time horizon, buying and selling roughly the same
amount of a security. You can fill your client at market price, taking the
inventory down on your own book, or cross it immediately against an existing
position. Most countries/exchanges still require you to 1) pay taxes and
exchange fees and 2) print the trades on a market venue for disclosure/price
discovery purposes, but there's still some benefit to be had as you can avoid
market impact (moving the market when transacting a large order), crossing the
spread (paying the differential between the buy price and the sell price), and
"long sell" short restricted securities (many countries have regulations on
short selling, some banning it all together, so having natural long inventory
to sell against is valuable).

3\. Asymmetric fees are the most straight forward. Many U.S equity exchanges
charge a fee for taking liquidity (crossing the spread) and offer a rebate for
posting it (submitting limit orders that don't cross the spread). By charging
people this fee when their order does cross the spread and not giving them the
rebate when it doesn't there's an easy differential to capture. Also, as noted
in their fee structure, they're passing along all regulatory fees to the
customer.

It's important to note that no matter what a brokerage does, the net effect is
always a price that's better than or equal to what's showing on any public
exchange, and what you as a client could get otherwise. In my mind at least,
arguing that "I could have gotten a better price on my own if I had access to
the same unfair advantages (read: technology/scale)" makes about as much sense
as begrudging Google/AWS for buying hardware in bulk, spending billions on
data centers that make more efficient use of power and bandwidth, and
subsequently undercutting you in a web services platform pricing war. Anyone
who wants to come along and usurp the throne is free to spend the money and
hire the right people to do so. For me, I'm happy to let my broker engage in
these activities if it gets me a better price than I could get for myself
otherwise, after fees. I pay Google/AWS/Linode/Heroku to do things cheaper
than I could practically speaking do them for myself.

Taking the above points into account, the feasibility of a free or nearly free
brokerage (again, note the reg fees) is very real. I'm excited to see how this
plays out.

==

Details on retail market making

U.S equities exchanges are highly fragmented compared to those in most other
countries. It's common to have a single name trade on several lit venues, and
when you count dark pools/other forms of liquidity, that number can easily
approach twenty or thirty. As an investor you have a regulatory right to
specify how your order gets routed. However, most people just want the best
price (this sounds like a truism, but sometimes other considerations outweigh
saving a millionth of a cent per share), and access to private dark pools
isn't a god given right. There are thousands of pages of regulations regarding
order routing, right down to what type of client account it is (is this
pension fund money? is this an IRA account?) but the redux is -- you can never
fill a client at a price worse than what's being offered on any public
exchange.

Enter the retail market maker. For certain types of orders/accounts (back to
the thousands of pages of regs...), if the client doesn't explicitly specify
an exchange, the order can be routed to a retail market maker. Said market
maker can fill the order at a price better than what the market has to offer,
or immediately pass it along to the exchange. Surprisingly, they'll actually
pay the brokerage for the privilege of doing so. Why would they do that? The
name of your game as a market maker is netting. If you have a large, unbiased
stream of order flow, statistically speaking you hope to see it balance out
with market indices/other correlated equities (hedging) or itself (crossing)
over a short time frame. Until it does so you have risk exposure, so from an
economics/efficient market standpoint your job as a market maker is to provide
liquidity and price risk premium.

These groups have access to good technology and are well integrated with all
of the lit venues/dark pools. Their volumes are huge so they get exchange
discounts and dark pool fees (as any individual trader who dealt in those
volumes would). They also have good credit and large account balances, so
their clearing/margin/and funding costs are lower. As such, the brokerage
makes money (risk free), the retail market maker might or might not make money
(depending on how good they are at their job, and the space is competitive
enough that only the good ones are left), and the client gets a better fill
price than they would have on the exchange. Ironically the only people hurt by
this are the HFT guys who now have highly refined (read, directionally correct
over a few second time span) orders hitting the exchange.

~~~
mbesto
Agreed. Furthermore this statement:

> _Robinhood is venture-funded by Google, Andreessen Horowitz and many others,
> which affords us the freedom to focus on building a wonderful brokerage
> experience rather than short-term profits._

...just smells of lock-in. Is "free trades" for perpetuity?

~~~
jfoster
Can you explain the types of lock-in that might be faced a little more? I
understand that once you hold some stock with them they might introduce fees
prior to you selling it, but I'm assuming you have something more in mind.

~~~
sturmeh
Just general trading restrictions to prevent excessive intraday trading.

I guess that's why there will be a Premium service and an API.

With zero brokerage, you can write bots that make money and abuse the market
to no end with very small capital.

~~~
em70
It's not really that easy. The spread is still not zero and you may still get
bad fills if you are slow or if the latency is high enough (assuming that you
are taking liquidity).

------
jimbokun
This made me think about this old Saturday Night Live skit.

[http://screen.yahoo.com/first-citywide-change-
bank-2-0000005...](http://screen.yahoo.com/first-citywide-change-
bank-2-000000534.html)

"All the time our customers ask us, how do we make money doing this? The
answer is simple. Volume."

------
JimmyL
If you're Canadian and looking for an online discount brokerage, I've had good
luck with VirtualBrokers
([https://www.virtualbrokers.com/](https://www.virtualbrokers.com/)).

Their website is ugly and old-school, and their online interface - at least
the basic one - feels like it's from ten years ago, but it's cheap (and has
different pricing plans depending on how you want to trade).

------
PhantomGremlin
I don't think anybody has pointed out this fine print yet:

    
    
       $0 trade Commissions are currently only available
       for Robinhood Financial self-directed brokerage
       accounts via mobile devices
    

Note: only available for ... MOBILE DEVICES

More fine print: only available in CALIFORNIA

------
fsckin
Some context is appreciated... signup page is pretty sparse on the details.
Sounds like they'll charge for API access and margin trading.

[https://www.robinhood.io/faq/](https://www.robinhood.io/faq/)

~~~
gk1
My first thought was "sounds too good to be true, what's the catch?" and sure
enough one of the first links is "Learn how we make money." That link goes to
the FAQ section where they explain that.

~~~
ngd
They've got a few revenue generating plans:

* charge for API access * provide a margin facility (charge interest on a loan provided to facilitate trading).

------
z0a
It seems that this project emerged out of the Robinhood iOS application they
were previously developing. I spoke to the founder of Robinhood a few months
ago, and they looked quite centered around the idea of crowdsourced finance.
It's pretty interesting that they've decided to change their product
completely, and it seems like a smart decision in the long run.

------
gfodor
What about options? People who do enough trades where costs start to matter
are usually trading options. If you are just adding ETFs to your portfolio
every month Schwab already has commission-free ETFs, etc.

------
foobarqux
This is a bad business. Competing on cost against large incumbents without a
defensible low cost position in a competitive industry without most target
users paying high costs currently (interactivebrokers).

~~~
truthteller
how does interactivebrokers compare to this in terms of cost? are there any
hidden costs retail investors should be aware of?

~~~
foobarqux
The fees, listed on the website, are mostly transparent but complex.

You must pay at least $10 in commissions each month or they charge you the
difference. Depending on how much you trade this might be a deal breaker.
There is also a minimum initial deposit.

Virtualbrokers is another option with more choice of fee structure. I don't
think they have a minimum monthly fee but they charge you for data.

------
chucknelson
Seems OK - but is anyone going to trust this? One idea is a low-amount "test"
fund to keep around a year or so? Anyone have ideas on how to feel better
about actually using this for larger sums of money?

~~~
abus
[https://plus.google.com/+GoogleVentures/posts/XbTiwbzaL6e](https://plus.google.com/+GoogleVentures/posts/XbTiwbzaL6e)

------
memossy
From the FAQ it would appear that they are backed by Andreesen Horowitz and
Google (Ventures?) amongst others so cash burn may be ok for a while.

Its spot on that High Frequency traders pay nothing beyond regulatory fees (or
get money back) to trade as they provide (theoretically) market liquidity. Not
sure you can extend that argument to individual investors unless they scale
massively, but the technology for trading isn't terribly complex.

One wrinkle is in less liquid names, where their algorithms will likely lag
those of larger brokers for a while.

------
seiji
[https://www.loyal3.com](https://www.loyal3.com) kinda does the same thing and
it's live now. It works with the companies to provide fee-free stock for
longish term buy-in. Plus, you don't have to be an institution to grab some
IPO fluff. Plus, for non-recurring purchases you can fund with a credit card.

(You can't execute a trade at any given time during the day. You put in "Buy
$100 worth of AAPL" and they execute it at the end of the day. Same with sell
orders.)

~~~
Barraketh
Really liking Loyal3. The ability to buy into an IPO at the same price as
institutional investors is actually pretty cool. As a data point, IPOs priced
in the last couple months closed their first day of trading 34% higher[1] than
underwriter pricing.

1\.
[http://www.renaissancecapital.com/ipohome/pricings/priced.as...](http://www.renaissancecapital.com/ipohome/pricings/priced.aspx)

------
wtvanhest
I dont have the finra guidelines in front of me, but the statement that they
work with finra and imply that doing so means they have solid security seems
like a violation.

------
Tarang
This looks really cool. The first question that comes to mind from the .io tld
is does it have API access?

There was a company called Zecco (zecco.com) which also did something similar
with zero commissions (hence the name). Not sure if they're still active.

Update: looks like they (zecco) were bought by tradeking.

So from the FAQ Page it looks like they will make money from margin accounts
(presumably swap/interest) and also by charging for API access.

~~~
seiji
Why does a .io TLD make you think about API access?

~~~
blackjack48
"input-output"

~~~
seiji
"indian ocean"

~~~
Tarang
That may be where the tld belongs but you'll find a disproportionally large
amount of .io sites serving up APIs

~~~
brownbat
Huh, go figure. It really took off as the home for artisanal techie websites:

[http://www.russellbeattie.com/blog/artisanal-websites-the-
ri...](http://www.russellbeattie.com/blog/artisanal-websites-the-rise-of-io-
domains-for-well-crafted-web-services)

(Beattie credits evocative short name, stable British administration, lots of
available short and English word domains.)

~~~
seiji
Yup, nothing to do with APIs though.

Another clever new-ish one is .ac, but it's more expensive than the already
expensive .io.

~~~
Multics
The Rise of .io Domain Names for APIs:
[http://blog.programmableweb.com/2013/08/28/the-rise-of-io-
do...](http://blog.programmableweb.com/2013/08/28/the-rise-of-io-domain-names-
for-apis/)

.io domains are very popular in a ton of different areas, though!

------
rl3
As far as I can tell, this is amazing.

One could take trading systems previously designed to operate on large minimum
balances of $50,000+ (so as to render the impact of transaction fees
negligible) and run that same system on comparatively small account balances,
perhaps even as low as $500.

In theory, the percentage returns in both cases should be the nearly same.
Obviously a 25% annual return on $500 is a lot less exciting than a 25% return
on $50,000. However, the fact it's now possible to even do this (again, as far
as I can tell) is exciting.

As other comments have pointed out, trade execution quality may end up being
merely average on this platform. But, if your trading system is operating on a
sufficiently long time frame, then executions become far less important.

Concerning other comments regarding classification as a Pattern Day Trader and
being required to maintain a minimum $25k balance, I believe it only applies
to margin accounts. Obviously this means no short selling, but small loss,
considering.

------
djhworld
I recently got into the world of Bitcoin and was really impressed with the
ease of acquiring bitcoins and selling them on.

I wish trading stocks was as easy and cheap as this. This is one of the
reasons why I'm too nervous to buy invest in the stock market or just put some
money in it for fun, the barriers to entry are bafflingly complex.

~~~
maxent
In my experience, the barriers to entry into the bitcoin/cryptocurrency world
are much higher than the equities world for lay persons.

~~~
djhworld
The main issue for me has always been the fee for a trade and the need to have
a minimum balance or whatever

This is often cripplingly high. I mean, if you're just putting £100 on, you'll
wave goodbye to £10 for each trade you make. Even if you just buy one stock
and sell it one year later that's £20 gone plus any capital gains taxes.

I know the stock market is for people making long term investments with big
lump sums, but for people at the bottom, the barrier to entry is too high

~~~
wbl
The incremental minimum for buying the S&P 500 Vanguard fund is $100. Minimum
of $1,000 in an account. Cost 0.05% per annum. That's not much of a barrier.

~~~
maxerickson
That 0.05% is for accounts worth more than $10,000. It's 0.17% otherwise (so
still low). Vanguard also charges accounts with less than $10,000 in a fund a
$20 service fee (clear information about the availability of the lower cost
'Admiral' shares does not seem to be readily available, but it seems for index
funds it may be the case that you have to maintain an account at Vanguard).

------
kanzure
Here's a bitcoin/tor "equivalent":
[http://torbrokerge7zxgq.onion/](http://torbrokerge7zxgq.onion/) or
[http://torbrokerge7zxgq.onion.to/](http://torbrokerge7zxgq.onion.to/)

~~~
jimktrains2
How long must they have let scallion/Shallot.
[https://github.com/katmagic/Shallot](https://github.com/katmagic/Shallot) is
quoting a 10char prefix on the order of decades for a single machine.

~~~
bjterry
It's an interesting question how much added flexibility decreases the time. If
you add a letter to the pattern it increases the complexity by a factor of 36
(26 letters, 10 numbers), but if you add an optional letter it actually halves
the complexity, because strings are acceptable either with or without the
match. If their pattern was torbroke?ra?ge? then based on the time quoted, if
it takes 2.5 years for 9 letters, we'd expect only 114 days for 9 letters plus
three optional letters. The fact that they only have one letter missing means
they probably didn't have much more than 2 optional characters, since you
would expect on average half of them not to appear.

------
nickthemagicman
Uh is this as cool as it looks?

No minimum balance, $0 commissions. Trading for the normal person.

The name Robin Hood is perfect.

~~~
Mikeb85
For the 'normal' person the barrier isn't commissions and fees, but knowledge.

~~~
dragonwriter
Knowledge isn't a barrier to participation, though it is a factor that affects
outcomes.

Commissions, fees, and minimum account sizes can be barriers that prevent
participation at all.

------
franksmule
Looks nice. Glad my data is secured by fingerprints, round green thing and
square green things.

------
rajacombinator
Ain't no such thing as a free lunch folks...

~~~
gaius
Always free cheese in a mousetrap

~~~
kolev
That's my favoring saying, by the way, but is this more expensive to build and
maintain than, let's say, Gmail? I doubt that. Also, there are many ways to
monetize - I'm sure Google has something better in mind that the simple
commission-based approach.

------
wheaties
Ok so...

1) How will they afford SIPC coverage? (That is the insurance for your money
in case they fail.)

2) Will they do any securities lending with purchased stock?

3) How much will they charge for selling a stock short?

4) Taxable reporting? Do they handle that or is that up to you, the investor?

~~~
AndrewKemendo
_1) How will they afford SIPC coverage? (That is the insurance for your money
in case they fail.)_

I would bet that a good portion of their outside investments would go toward
this while they are growing. If they can make enough on their API and margin
trading that would cover it long term. I would also bet their margin trades
will have a bit higher lending costs than a typical trading platform.

------
mhb
The enthusiasm for this suggests that there are many people trading frequently
enough and making low enough returns that existing discount brokerage fees are
significant. Are they doing HFT from home?

~~~
unreal37
Perhaps more aspirational than reality. How many of us would love to write a
computer program using a stock trading API just to see if we can beat the
market? But the up front fees make that expensive to even try.

~~~
jbredeche
Check out Quantopian, where you can do just that in Python. Backtesting /
paper simulation is free.

(disclaimer, I work there)

------
crystaln
Really? $10 is too much for a trade? And anyone with any reasonable amount of
capital is going to choose them based on this? I don't think so. I certainly
wouldn't.

And their going to make money on margin accounts and API access? Anyone
sophisticated enough to be trading on margin or paying for API access has
enough funds to not care about $10 trading fees. Seriously - on a $10,000
trade, that's a tenth of a percent. You've got to be a hedge fund with
millisecond precision to care about that.

~~~
TomGullen
I'd like to be able to spend <$1k per stock, $10 is a 1% fee on a $1k order,
and if you want to sell later and the stock hasn't appreciated in price
another $10 = 2% total fees.

$10 each way fee can seriously eat into the EV of people looking to make small
orders, and disadvantages this group against the wealthy (who already have a
host of other edges!)

I'd like to spend a few hundred on several stocks, but the fee makes this not
worth it. Leaves me with the option of don't, or put it all in one stock which
isn't a good idea.

~~~
crystaln
Exactly my point. If you're buying <$1k in a stock, you're likely not going to
be a big source of revenue for margin loans or API access.

So basically, they will attract lots of small, active trading accounts. I
don't see the model.

~~~
dllthomas
If they actually have lower expenses than competitors, they may be competative
on margin rates. If that is true, then anyone who manages to make some money
trading small amounts and wants to scale up is likely to stick around.

------
URSpider94
As others have mentioned, other brokerages have tried offering zero-cost or
ultra-low-cost trades, only to slowly restrict the number of free trades
available and eventually move to charging for all trades. Zecco was the most
prominent.

I'll be interested to see if they can find a sustainable business model. I'm
on the fence about whether I'm going to open an account. Even if they go
under, there's basically zero risk to customer funds, but it is a hassle to do
paperwork on another account.

------
shawndumas
Pedantic rabbit trail -- Robin hood reclaimed excessive taxes by force from a
tax drunk government and gave it back to it's over taxed citizens.

People seem to forget this often.

~~~
pjc50
Not in the mythos I'm familiar with; he robbed anyone who came past who had
sufficient money, and redistributed it.

Taxation in the 12th century was also pretty much limited to the landowning
few.

~~~
shawndumas
Yes, but the most prevalent mythos whence these articles come is the bad
prince John and his tax happy governance.

King Richard (the Lionheart) gets kidnapped while fighting in the Crusades.
Prince John burdens his brother's people with an excruciating tax which John
says is for the ransom to set their beloved king free.

------
sytelus
This is another area rip for disruption. Does anyone knows why all these firms
such as Fidelity get away with charging dollars on every trade? Is it because
exchanges charge these feeds? But then I guess HFT people must be enjoying per
trade fees of almost zero. Why they don't have to worry about per trade fees?

To me it looked like each trade is an electronic entry in market and should
cost near-zero dollars givens the volume of all trades.

------
quant111
$0 commission sounds surely alluring, but what about exchange fees? For some
securities, exchange fees are greater than broker commissions.

------
Mikeb85
This doesn't have enough features to be valuable to me. I'll gladly pay up to
50 dollars a trade if the features are worth it.

My current broker offers me great execution, trading on a number of
international markets, allows me to settle trades and hold a number of
different currencies, and good research tools.

At the moment this service seems to be worth exactly what they charge for
commissions...

------
tslathrow
I can guarantee that they will lose to Interactive Brokers on price. IB has
structural cost advantages in internal matching and zero customer service
(possible given the more advanced user base). It's also very very stupid for a
retail investor to chose a broker based on fees.

A 10-25bp difference in execution on a $10k+ trade easily covers any
commission.

------
asdfprou
I think this landing page design is great. First glance shows:

\- their tagline and what they do "$0 commission stock brokerage"

\- why I should sign up "stop paying $10 for every trade"

\- clear call to action "get early access"

\- giant iPhone graphic gets cutoff and leads you to scroll down

------
barumrho
Would this be restricted to American investors only?

------
rdl
I'd be more worried about quality of execution than $0-10 commission, for
reasonably sized (non single share) trades.

------
znowi
Robin Hood, $0 fees, pompous venture names - there must be a catch somewhere
:) I'm positive HN will find out.

------
fygwtclub
The names Awesome. I am LHW..(Laughing in a Healthy Way)

Wish you Super Duper Success :)

------
userbinator
I read the title as "$0 commision block storage"...

------
wudf
Well, they got my email address.

------
d0m
Very sweet homepage by the way.

------
tomasien
No fees baby - it's the future, and it's coming in 2014 to payments as well.

------
salient
Is this US only?

~~~
maxmcd
[https://brokerage-
static.s3.amazonaws.com/assets/robinhood/l...](https://brokerage-
static.s3.amazonaws.com/assets/robinhood/legal/RHF%20Jurisdictions%20Rhfv1.1%2020131101.pdf)

------
jaksmit
looks awesome. an area ripe for disruption.

------
djrconcepts
hoping this is not too good to be true.

------
dharma1
love the design

------
dschiptsov
..that's how we will build our user base and data-sets for ML algorithms and
perform beta/stress testing, and, of course, would never announce any fees, we
promise.)

------
marincounty
I just signed up, and I hope it's not just a new way of getting Emails? It
seems to good to be true?

