what do discount brokerage firms think about Robinhood?

Scataphagos said:
I don't know the details and specifics of Robinhood. But I've been "involved" with brokers who got into trouble with customer funds. All I'm saying is "buyer beware".
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No introducing broker may touch your funds. The clearing broker, for them APEX, is the only custodian of the cash and securities and provides SIPC.
 
I find it amusing once again that a company started by some 20 somethings out of blue offering free stock trading only a few years ago is now becoming a house hold name with close to 5 million accounts. Do I believe the value of this company is over extending...I do. Is it worth $5 billion? I don't believe it is....especially when compared to the likes of these big online brokers....

Ameritrade market cap is $35 billion
11 million accounts and
10,000 employees
40+ years in business


E-Trade market cap is $15 billion
Around 4 million accounts
3000+ employyes
30+ years in business

Schwab market cap is $75 billion
Around 11 million accounts
17000 emoyees
47 years in business
 
kj5159 said:
Most asset managers charge a fee of 1.-1.5% of AUM so if Robinhood is making approximately that amount in cash in client accounts they're just using a similar model. Plenty of outfits make big $$$ getting paid 1%. These days about half of the private wealth management business runs on making 1% on AUM, costs are low just need licensure and office space and support staff. Robinhood has licensure and office space and software, even lower cost model yet using the HNW pricing model. Very smart.
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It's on cash... I assume people that use Robinhood would actually buy stocks with it? Funds make that % on the total assets.

Maybe Robinhood should do the same. Charge 1-1.5% of total account.

Funds also don't trade that much, well... not the ones charging only 1-1.5%. They are buy-and-hold and maybe re-allocate quarterly. And some charge extra on initial purchase.

My guess, if you trade often with Robinhood, they will lose money on you.
 
Robert Morse said:
No introducing broker may touch your funds. The clearing broker, for them APEX, is the only custodian of the cash and securities and provides SIPC.
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I may not be up to speed on this... but the FCM has SIPC insurance? Doesn't their risk disclosure specifically state they do NOT have federal agency insurance??
 
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Scataphagos said:
I don't know the details and specifics of Robinhood. But I've been "involved" with brokers who got into trouble with customer funds. All I'm saying is "buyer beware".

When I established an account with Crossland years ago, I asked them about what they do with customer funds. They said, "We don't do anything with customer funds. They are segregated and that's that... we make our money on commission and various fees." Having had accounts with Chicago Grain, Refco, MF Global and others", I liked that.
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They all take advantage of customers funds. Why wouldn't they. As for Robinhood they clearly state how they make their money....using your money and hundreds of millions more to grab that 1-2% interest...trust me to run an app with basic coding and maybe a couple of hundred employees is costing them how much a year??
 
S2007S said:
I find it amusing once again that a company started by some 20 somethings out of blue offering free stock trading only a few years ago is now becoming a house hold name with close to 5 million accounts. Do I believe the value of this company is over extending...I do. Is it worth $5 billion? I don't believe it is....especially when compared to the likes of these big online brokers....

Ameritrade market cap is $35 billion
11 million accounts and
10,000 employees
40+ years in business


E-Trade market cap is $15 billion
Around 4 million accounts
3000+ employyes
30+ years in business

Schwab market cap is $75 billion
Around 11 million accounts
17000 emoyees
47 years in business
More...

And these tend to cater for a bit larger clients... not 1k average account.
 
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