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US broker Robinhood is taking aim at Hargreaves Lansdown and AJ Bell by launching a slew of low-cost investment products in the UK as part of an aggressive British expansion.
The California-based company, which came to fame during the meme stock craze of 2021, is in talks with regulators at the Financial Conduct Authority about bringing its prediction market products to the UK.
Prediction markets products, which allow users to trade contracts based on future events, would be the latest in a range of products that Robinhood has launched in the UK over the past year to dislodge traditional investment platforms.
The foray by Robinhood would further shake up the UK’s personal investing market.
This week JPMorgan Chase announced plans to launch its own “DIY” investment service in the UK, directly challenging market leader Hargreaves Lansdown. The new service will target consumers with the US banking group branding for the first time in the UK and offering financial planning advice.
In August, Robinhood launched a tool called Digests that uses artificial intelligence to comb through analyst notes and media coverage to describe factors behind share price movements, to better educate retail investors.
Over the past year it has also launched options trading, stock lending and margin investing, where users can borrow money to leverage their shareholdings. The Financial Times previously reported that the company planned to launch a stocks-and-shares Isa with no fees in the coming year.
The new offerings are part of an attempt to take market share from the UK’s biggest investment providers.
“I do look at the UK market, and it feels a lot like the US did 10 years ago,” said Jordan Sinclair, Robinhood’s UK chief.
“In the US, the big incumbents charged commissions, they had account minimums. They had minimum trade sizes. They kind of excluded a lot of people. Our business came in with no commissions, no account minimum.
“You don’t need to have a Hargreaves Lansdown account and pay £11.95 . . . to trade. That’s the old world.”
Robinhood launched in the US in 2013 and drew users for its free or low-fee investing. The company gained notoriety in 2021, when US retail investors, many of them inexperienced, piled into trading in stocks based on discussions on social media. It currently has 26.7mn users.
Richard Flint, Hargreaves Lansdown’s chief executive, said the broker has more than 2mn customers, a number he described as a “milestone” for the company, which is backed by private groups including CVC.
“Our business has really solid foundations in terms of the range of investments that we offer and the trust that our clients have in us. However, we recognise the need to continually invest in our technology and products, and we are committed to doing that.”
Bloomberg News first reported that Robinhood was in discussions with the FCA.
