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Robinhood Clients in the UK Can Now Borrow Money for Margin Investing

Monday, 21/10/2024 | 07:38 GMT by Damian Chmiel
  • The fintech giant expands offerings in the UK market, with rates starting at 5.2%.
  • Six months ago, a zero-fee trading platform entered the local market, offering no foreign exchange commissions.
Robinhood
Robinhood expanded UK offering with options trading.

Robinhood announced today (Monday) the launch of margin investing for its UK customers, allowing retail traders to borrow money. The move comes just months after the company's initial entry into the British financial market.

Robinhood Unveils Margin Investing Rates for UK Customers

The new margin investing feature allows UK customers to borrow money from Robinhood using their existing portfolio as collateral. It enables them to purchase additional securities and potentially diversify their investments. Rates for approved customers range from 6.25% for balances up to $50,000, decreasing to 5.2% for balances exceeding $50 million.

Jordan Sinclair, President of Robinhood UK
Jordan Sinclair, President of Robinhood UK

“With the launch of margin investing, we're giving our UK customers even more flexibility and tools to enhance their investing strategies,” Jordan Sinclair, President of Robinhood UK, emphasized the company's commitment to empowering retail investors. “At Robinhood, we understand that investors want access to expand and diversify their portfolios at industry-leading rates, in an amazing user experience.”

Sinclair added in an interview with CNBC that the firm needed to ensure the local regulator was “comfortable” with its approach in order to receive approval for launching margin investing in the country.

The introduction of margin investing follows Robinhood's UK app launch in March. The company offers commission-free trading, no foreign exchange fees, as well as additional protections, including $2.5 million in FDIC insurance on uninvested cash through its Brokerage Cash Sweep Program.

Robinhood to Disrupt Local Market

Robinhood's move into margin investing in the UK market could potentially disrupt traditional brokerage firms, which often impose higher fees and reserve competitive rates for high-net-worth individuals. A step in this direction was also taken last week with the introduction of index options and futures trading to its platform in partnership with Cboe.

However, Robinhood faces significant competition in the local market. The UK-based Revolut is popular across Europe. Moreover, earlier this month, Freetrade strengthened its position in the increasingly competitive retail investing market by acquiring Stake's UK arm.

The company emphasized that margin investing access is not automatic and requires customers to apply and meet eligibility requirements. “Once a customer is approved to trade with margin, their rate is automatic based on the margin loan balance of their account,” the company commented in a statement.

Robinhood began rolling out the margin investing feature on Monday. Broader availability is expected in the coming weeks. Customers can apply for access through the company's mobile app.

Robinhood announced today (Monday) the launch of margin investing for its UK customers, allowing retail traders to borrow money. The move comes just months after the company's initial entry into the British financial market.

Robinhood Unveils Margin Investing Rates for UK Customers

The new margin investing feature allows UK customers to borrow money from Robinhood using their existing portfolio as collateral. It enables them to purchase additional securities and potentially diversify their investments. Rates for approved customers range from 6.25% for balances up to $50,000, decreasing to 5.2% for balances exceeding $50 million.

Jordan Sinclair, President of Robinhood UK
Jordan Sinclair, President of Robinhood UK

“With the launch of margin investing, we're giving our UK customers even more flexibility and tools to enhance their investing strategies,” Jordan Sinclair, President of Robinhood UK, emphasized the company's commitment to empowering retail investors. “At Robinhood, we understand that investors want access to expand and diversify their portfolios at industry-leading rates, in an amazing user experience.”

Sinclair added in an interview with CNBC that the firm needed to ensure the local regulator was “comfortable” with its approach in order to receive approval for launching margin investing in the country.

The introduction of margin investing follows Robinhood's UK app launch in March. The company offers commission-free trading, no foreign exchange fees, as well as additional protections, including $2.5 million in FDIC insurance on uninvested cash through its Brokerage Cash Sweep Program.

Robinhood to Disrupt Local Market

Robinhood's move into margin investing in the UK market could potentially disrupt traditional brokerage firms, which often impose higher fees and reserve competitive rates for high-net-worth individuals. A step in this direction was also taken last week with the introduction of index options and futures trading to its platform in partnership with Cboe.

However, Robinhood faces significant competition in the local market. The UK-based Revolut is popular across Europe. Moreover, earlier this month, Freetrade strengthened its position in the increasingly competitive retail investing market by acquiring Stake's UK arm.

The company emphasized that margin investing access is not automatic and requires customers to apply and meet eligibility requirements. “Once a customer is approved to trade with margin, their rate is automatic based on the margin loan balance of their account,” the company commented in a statement.

Robinhood began rolling out the margin investing feature on Monday. Broader availability is expected in the coming weeks. Customers can apply for access through the company's mobile app.

Topics
Margin trading
collateral
robinhood
About the Author: Damian Chmiel
Damian Chmiel
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About the Author: Damian Chmiel
Damian's adventure with financial markets began at the Cracow University of Economics, where he obtained his MA in finance and accounting. Starting from the retail trader perspective, he collaborated with brokerage houses and financial portals in Poland as an independent editor and content manager. His adventure with Finance Magnates began in 2016, where he is working as a business intelligence analyst.
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