
Zero-Commission Stock Trading App RobinHood Kicks Off Private Beta - irunbackwards
http://techcrunch.com/2014/02/27/trade-stocks-free-robinhood/
======
sheetjs
When this was on the front page last time, I pointed out that they charge
fees:
[https://news.ycombinator.com/item?id=6906374](https://news.ycombinator.com/item?id=6906374)

> 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.

I'm glad they fixed their homepage, but the table in the article
([http://tctechcrunch2011.files.wordpress.com/2014/02/screensh...](http://tctechcrunch2011.files.wordpress.com/2014/02/screenshot-2013-12-18-at-6-36-44-am.png?w=1360&h=424))
is wrong.

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mindslight
Ah, what cute example of disruption porn.

Hip, populist sounding name? Check.

New slick-designed facade on old activity? Check.

Marketed as if they're eliminating middlemen? Check. (wow! no fees!)

Promoted as making a begrudgingly-done banality suddenly fun? Check.

Entirely predicated on the idea that the founders' simplicity will persevere?
Check.

Majority of money still flowing to well connected insiders? Check. (who do you
think is on the other side of trades?)

Eventually going to be assimilated into an incumbent and end up as a tired
pig's discarded lipstick? Check.

~~~
rthomas6
I'm sorry but this just sounds bitter to me. I'm sure the people behind
Robinhood did not get together and say, "let's make a product that actually
solves no problems, and only pretends to disrupt." Somebody built a new app
that seems like at least a cool idea to me. People had a vision and they
executed on it. They built a company and they shipped. What companies have you
started? What have you built?

I think Theodore Roosevelt said it best: “It is not the critic who counts; not
the man who points out how the strong man stumbles, or where the doer of deeds
could have done them better. The credit belongs to the man who is actually in
the arena, whose face is marred by dust and sweat and blood; who strives
valiantly; who errs, who comes short again and again, because there is no
effort without error and shortcoming; but who does actually strive to do the
deeds; who knows great enthusiasms, the great devotions; who spends himself in
a worthy cause; who at the best knows in the end the triumph of high
achievement, and who at the worst, if he fails, at least fails while daring
greatly, so that his place shall never be with those cold and timid souls who
neither know victory nor defeat.”

~~~
mindslight
Yes, I'm a bit bitter that the tech zeitgeist has been co-opted into believing
that building stylized website facades for the status quo counts as innovation
or for that matter even "technology".

And you're right, the founders probably didn't set out to pretend and they
actually believe they're changing the world. So I guess it's more
appropriately described as "amateur disruption porn".

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conjecTech
There is an entire market around the buying and selling of so-called
"uninformed flow". While others do this as well, I would give a word of
warning to all those potentially interested in this. If you aren't buying
something, you are the thing being sold.

~~~
solaarphunk
Uninformed isn't where the value is anymore. It's that the flow isn't toxic to
hedge funds trying to do size. People who execute US equities trades through
any venue are guaranteed NBBO. Its a win-win.

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waylandsmithers
Here's the problem:

|RobinHood co-founder Baiju Bhatt stresses that if you want to do deep
financial research, you probably want to sit down at a desktop.

The heavy traders who would really benefit from zero-commission (assuming that
it actually is) are on desktops in front of 4-10 monitors. Because of what it
implies, I think regular people probably shouldn't be making trades that need
to be done RIGHT NOW before a desktop can be reached.

edit to add: Is the "Share" button on the bottom of the trade confirmation
screen really necessary? Are rich people going to be clogging up twitter with
brags like "Just bought 1,000 shares of AAPL on Robinhood!"

~~~
this_user
> " _The heavy traders who would really benefit from zero-commission (assuming
> that it actually is) are on desktops in front of 4-10 monitors. Because of
> what it implies, I think regular people probably shouldn 't be making trades
> that need to be done RIGHT NOW before a desktop can be reached._"

Those people don't pay $10 per trade. If you do enough volume, you're usually
able to negotiate much lower commissions. In addition, some of them will also
specifically route their orders to ECNs and benefit from credit gained for
providing liquidity to even further reduce their fees. All in all this is
clearly designed for retail traders aka _dumb money_. I'd be willing to bet
that their business model is based on selling the order flow they generate to
institutions.

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Mikeb85
Zero-commission (on some trades), but a bunch of random fees for other things,
and no guarantee that it will stay fee-free. They plan on making money by
providing liquidity (ie. being a market maker) and offering premium
services...

With my current brokerage, I get online trading in 10+ worldwide markets, I
can hold a variety of currencies, I get excellent execution, and there's no
fees, there's plenty of services available including charts, real-time quotes,
reports and many things that would otherwise cost me money, and all I have to
pay is a flat commission fee on my trades. I really don't see how Robinhood is
superior, now or in the future... And many brokerages already offer API
access, even if they don't advertise it.

~~~
melvinmt
Now I'm curious, who's your current broker?

~~~
Mikeb85
TD Waterhouse (Canada). Commissions aren't the lowest, depending on the market
too (I usually trade on European and Asian markets), but I'm very happy with
the service. Keep in mind TD is also my main bank, so it is convenient to use
them as my broker as well (part of the reason I don't mind the slightly higher
costs).

If I were to switch, it would probably be to Interactive Brokers - their fees
are significantly lower and they have an equally or possibly slightly more
compelling set of features.

~~~
cpncrunch
I use Scotiaitrade in Canada, and they are similar. You don't pay any
commission if you have more than 50k invested with them (as far as I
remember).

I feel happier letting a major bank hold onto my shares, do my trades,
calculate interest and balances, etc. rather than some startup. I also use
scotiabank for my banking, so it's very convenient.

------
spinlock
Just seems like a bad product. Most people trail the market because they trade
too often. If you want your investments to make money, you don't want a
product like this in your pocket all the time.

------
kkaiser
What the zero-commission brokerages don't charge in commission, they make up
for in execution.

~~~
domdip
I was thinking the same thing. At least it could be a fun toy for low-volume
trading.

------
pearkes
Thought I recognized the guy in the video! He loves financial services.

[https://www.youtube.com/watch?v=w9Sx34swEG0](https://www.youtube.com/watch?v=w9Sx34swEG0)

[https://vimeo.com/87163777](https://vimeo.com/87163777)

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rememberlenny
If you sign up, use your referral code in another browser, with a fake email
address. It boosts your position by 150,000 spots.

~~~
Thirdegree
No kidding. Was at 51k, now I'm at 11k

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domdip
Didn't Zecco already prove this wasn't a sustainable business model?

~~~
ianhawes
I believe Zecco's business model was "We'll just remove our marketing budget
so you can pay $4.95 per trade", which isn't unsustainable, but their merger
with TradeKing shows that they probably didn't execute it as well as they
could have.

~~~
bjterry
That was later. They started off with $zero commissions (I believe this was
the inspiration for the name Zecco). It started as no commissions no matter
the account size, then they added minimums which crept up for a while, then,
as I recall, they removed free commissions entirely, then they were bought by
TradeKing.

~~~
frequentflyeru
Yeah, I was a member way back in the day (like 2006 I believe). It started off
as free trades, then it was only 25 free trades a month, then it moved to
$4.95, then they were sold to TradeKing. Similar thing with ThinkorSwim, they
were also bought out. Perhaps RobinHood's strategy is to just acquire users at
a loss and then get bought out...

------
gtsui
"Zero commission" does not actually mean zero commission. The commission just
ends up being baked in to the prices they show you. e.g. If the market
(institutional) bid/offer for MSFT were 39/41, they would show customers
prices of 38/42\. For an order of $1000, that would mean they charge you $25
of implicit commission on the trade. It just doesn't show up on your bill. Get
real. Their only innovation is hiding fees from their customers, not reducing
them.

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navs
If I'm in New Zealand I'm guessing this isn't for me?

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

------
ilbe
I hate to be negative, but this is designed perfectly for gamblers. Invest in
index funds.

~~~
solaarphunk
Why not buy ETFs on Robinhood and save the trading commission? I'm sure it
will be a supported asset class soon.

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joncooper
Love this - and the team seems excellent.

I'd view the competition as Interactive Brokers, not E*TRADE or Fidelity.

If I didn't love my job so much I'd be schwangling my way in to try and get in
the door there.

~~~
sseveran
They don't compete with IB. IB is targeted at larger retail and small
institutions. Their business models are similar when it comes to
internalization but that is about it.

~~~
joncooper
They are a tiny company. They don't compete with anybody, at least in the
sense that another firm would view them as a threat. That said, the
addressable market I would focus on is the one that IB does. Retail equity
platforms are numerous, extensively marketed, and sticky.

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kirbyk
I still don't have access.

