Speaking of "big deals".... Back in my days of aspiring to build up my financial advisory client base... I made an offer that went something like this. "Let me look over your financial things. If I can't save you some money or make you some, I'll pay you $100 for having wasted your time". One guy who took me up on my offer had changed auto insurance companies to save "$1 in annual premium.". (One F'n, Dollar, spread over an entire year! Can you imagine?) He told me he "didn't have any money to save or invest and was "super cheap... challenged me to save him anything"..and was ready to collect his $100. Well, I found another insurance company who would save him $2, if I recall correctly... and didn't have to pay him the $100. (That promotion didn't work out all that well, as you might imagine. Didn't exactly attract the "money" crowd.) That was when I was just starting out. Drove a VW Beetle and didn't have nice business clothes. Later... bought a BMW and got a few custom suits made. Things got better.
This product is pretty much over https://www.bloomberg.com/news/arti...ns-about-robinhood-s-new-product?srnd=premium
Actually a ZH article incorrectly conflated the percent of their revenue that comes from order flow with the absolute amount they collect from order flow to arrive at that erroneous conclusion. Not uncommon given the (lack of) rigor in most things "published" there. If you have something else that shows they manage to get 10X the rate for order flow I'd love to see it. This product has serious issues and I'm not a fan of the company, but the hyperbole on both sides is a bit much.
Interactive Brokers Expanding Interest Payment Benefit to Smaller Accounts https://www.interactivebrokers.com/en/index.php?f=37231
I'm not sure where I originally read it, but here is a link that discusses the issue: https://seekingalpha.com/article/42...g-millennial-customers-high-frequency-traders RH doesn't directly disclose the per-share rate, instead using "per dollar of executed trade value". For the E-trade comparison included in that article, it works out to be the same if the average share traded is around $4. If the average share traded on the platform is $20, then RH is getting paid 4-5x as much per share as E-trade. We can only guess as to the actual figure but $4 seems low. In any case, I didn't mean to suggest there's anything wrong with this per se. A business needs to make money, after all.
So will this be like their brokerage email support..I'll pass and questions about whether they are actually insured as well
View in browser PRESENTED BY COLE HAAN Axios Edge 2. The too-good-to-be-true checking account Illustration: via Robinhood On Thursday, online brokerage firm Robinhood announced a new checking account paying 3% interest. It seemed too good to be true. It was. The big picture: Checking accounts are extraordinarily powerful things.They're one of the key mechanisms by which banks create money and help to keep the economy growing. They're also they key mechanism behind bank runs that can cause an economy to crash. That's why depositary institutions are the most regulated companies in the world. Deposits are a very low-cost unsecured loan from depositors to a bank. They're a stable and cheap source of funding, and non-banks tend to be very jealous of banks' deposit bases. As a result, the non-banks (including Robinhood) constantly try to invent products that look like bank deposits but aren't. When those products blow up (see the Reserve Fund breaking the buck in 2008), the consequences can be catastrophic. How it works: If you want to offer a real checking account, you need to submit to regulation not only by a bank regulator, but also by the FDIC, which provides the all-important deposit insurance. Those regulators insist that you have a minimum level of capital, and they ensure that your business model is sustainable. Getting a bank charter for a mobile-native app is extremely difficult: Only Varo Money is even close, and it has spent years getting to this point. Banks are the riskiest part of the financial system. Lenders can go bust no problem; their borrowers won't mind. Brokerages are basically safety deposit boxes for your securities. But if a bank fails, it takes your money with it. Robinhood was trying to game the system. It was a brokerage trying to be a bank. It wanted to get the advantages of being a bank, like deposit insurance and maturity transformation, without the concomitant regulatory oversight. It even contracted with a genuine bank, Sutton Bank of Ohio, to provide things like routing numbers and Mastercard-branded debit cards. But Sutton Bank wouldn't get the money. That would stay at Robinhood. Robinhood was less than clear about what it wanted to do with its depositors' money, but it seemingly felt happy investing it in bonds for its own account, just like MF Global. Lack of transparency seems to be an endemic problem at the company, which was last valued at $5.6 billion. The bottom line: Robinhood took down the checking.robinhood.com site on Friday evening and put up a blog post talking instead about a "cash management program" to be announced at an unspecified point in the future. The "do first, ask forgiveness later" approach, it turns out, doesn't work very well in financial services.