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📺 Useful Vids 📺
Robinhood Alternatives 👉 https://www.youtube.com/watch?v=3YHe9-mN2Hs
Robinhood vs. Coinbase 👉 https://www.youtube.com/watch?v=Jqp47jZrB7c
– TIMESTAMPS –
2:29 Robinhood Overview
4:50 Payment for Order Flow
9:17 Why Pay For it?
11:26 More Rules Incoming?
13:12 Impact of those Rules?
16:40 For the Love of Defi
⛓️ 🔗 Useful Links 🔗 ⛓️
Payment for Orderflow: https://centerpointsecurities.com/payment-for-order-flow-guide/
Robinhood S1: https://www.sec.gov/Archives/edgar/knowledge/1783879/000162828021013318/robinhoods-1.htm
Robinhood Risks: https://www.wsj.com/articles/robinhood-is-warning-you-about-certain-risks-before-you-invest-in-its-ipo-11627497638
Robinhood Execution Policy: https://robinhood.com/us/en/about-us/our-execution-quality/
Robinhood SEC Fine: https://www.sec.gov/information/press-release/2020-321
Robinhood Under Scrutiny: https://www.businessinsider.com/why-robinhood-payment-for-order-flow-system-issue-for-users-2021-7
Bernie Madoff PFOF: https://seekingalpha.com/article/112537-payment-for-order-flow-madoffs-earlier-days
🏹 Robinhood Overview 🏹
A fee free dealer that permits you to purchase fractional shares to your coronary heart’s content material. All on a clear and environment friendly cellular app that’s tremendous simple to arrange and use. This was the explanation for Robinhood’s huge success over the previous 2 years.
In 2018, they’d 1.8 million month-to-month energetic customers. At the start of 2019 that quantity stood at 3.3 million and in 2020 they reached 4.3 million.
In the lockdowns and residential merchants in 2020, this meant that there have been many individuals who wished to get in on the Robinhood motion.
💴 Payment for Order Flow 💴
This is when a dealer is paid by a 3rd get together to direct their orders to stated third get together.
It’s a enterprise apply that has been alive on Wall road for many years and is likely one of the predominant strategies that retail brokers use to earn cash.
Brokers are supposed to decide on these brokers that give them one of the best execution however you’ll be able to see the battle of curiosity when they’re being paid for this info.
There are SEC guidelines round PFOF disclosure. Robinhood breached these guidelines and therefore the explanation that they needed to pay a $60m advantageous to the regulators.
💴 Why Pay For Order Flow? 💴
They can arbitrage the charges between the spreads.
Basically, they’ll purchase or promote an asset between the bid-ask unfold and seize the revenue relying on whether or not the shopper positioned a purchase or promote order.
However, the majority of the cash is made by way of understanding how dealer’s orders are positioned and buying and selling in opposition to them. They may entrance run a few of these order by batching them. The bulk orders bought will imply that they’ll promote to those patrons at a better value.
🤔 Impact of Regulation? 🤔
There are growing calls from various regulators which may see extra stringent guidelines positioned on order movement. Hence, if there may be any kind of regulation it may both ban it fully or there might be strict reporting necessities for these customers.
There is a big threat to Robinhood’s enterprise mannequin. They have highlighted this of their S1 submitting the place they state that they don’t have any recourse from the market makers ought to they select to stop their agreements.
There are additionally dangers to Robinhood from the truth that they’ve had losses prior to now and it’s doubtless they may undergo these sooner or later.
🤔 Why I really like Defi 📈
I really like its clear blockchain. Decentralised Finance or Defi is making a world the place you will not want a Robinhood or every other intermediary for that matter. There isn’t any central entity that may management what you do on it and, as a result of it’s constructed on an open supply blockchain, you’ll be able to see precisely what’s going on.
There aren’t any regulators which can be figuring out how they operate, they’re ruled by code solely. They are open for buying and selling 24/7/365 and tokenized belongings that may be written on something that has a value.
📜 Disclaimer 📜
The info contained herein is for informational functions solely. Nothing herein shall be construed to be monetary authorized or tax recommendation. The content material of this video is solely the opinions of the speaker who isn’t a licensed monetary advisor or registered funding advisor. Trading Forex, cryptocurrencies and CFDs poses appreciable threat of loss. The speaker doesn’t assure any explicit end result.
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