Robinhood confirms release of 鈥渇ully paid鈥� securities lending service
10 May 2022
California-based trading platform announces the roll out of a lending service that will be available to 鈥渁ll customers鈥� by the end of May, while Q1 transaction-based revenues contract 48 per cent YoY. SFT reports
Image: stock.adobe.com/gguy
Robinhood has confirmed the launch of its fully-paid securities lending product to what it describes as 鈥渁 small set of customers鈥�.
The online trading company indicates that this step will provide opportunity for retail customers to 鈥済enerate extra income on the stocks they already own鈥� [i.e. fully paid for], thereby adding a new source of passive income to their investment portfolios.
In a statement on 4 May, the company says that stock lending is currently rolling out to customers and is expected to be available to all customers by the end of May.
Through this principal-based programme, securities lending is offered to customers through Robinhood Financial LLC, with securities being lent to Robinhood 色花堂LLC.
According to the firm, this service will complement securities lending services that the trading platform offers for securities bought on margin.
In extending this facility, Robinhood indicates that 鈥渦nlike at other companies鈥�, it will not require customers to have hundreds of thousands of dollars in their account to participate.
鈥淲e are making fully paid securities lending, and the opportunity for passive recurring income that comes with it, available to customers who traditionally have not had access to it. It鈥檚 the Robinhood way,鈥� it says in the statement.
鈥淥ur version of stock lending empowers customers to put their investments to work while keeping it simple,鈥� said Steve Quirk, chief brokerage officer at Robinhood. 鈥淩obinhood does the work of finding borrowers and managing transactions while customers can add a potential source of passive recurring income to their portfolio.鈥�
鈥淲e are excited to break down yet another barrier and democratise a product that has been historically preserved for the wealthy with high barriers to entry,鈥� he adds.
The company warns that stock lending is not appropriate for every customer. 鈥淭here are operational risks associated with securities lending that could affect, for example, whether or when your securities are loaned or recalled, collateral is collected, or payments are made,鈥� it says. 鈥淭here is a risk that Robinhood 色花堂could default on its obligations to you under the stock lending programme and fail to return the securities it has borrowed. If Robinhood 色花堂defaults and is unable to return loaned securities, you will not be able to trade such securities as usual.鈥�
The release of this service was flagged in Robinhood Markets鈥� Q4 2021 and Full Year 2021 results, where it indicated that it was continuing to discuss the launch of a fully paid securities lending service with regulators and that it hoped to launch this programme during H1 2022.
Robinhood Markets has taken this step to expand and diversify revenue opportunities available through its trading platform at a time when first quarter total net revenue has fallen 43 per cent YoY to US$299 million.
Transaction-based revenues have slumped 48 per cent to US$218 million for Q1 2022 compared with Q1 2021. This was fuelled by a 73 per cent YoY slide in equity trading revenue to US$36 million.
Transaction-based revenue from options contracted 36 per cent to US$127 million, with revenue from cryptocurrencies also substantially down, falling 39 per cent to US$54 million.
This contributed to a net loss of US$392 million, or US$0.45 per diluted share, for Robinhood Markets during Q1 2022 鈥� albeit a reduction on the net loss of US$1.4 billion, or US$6.26 per diluted share, that it sustained in Q1 2021.
Robinhood Markets鈥� senior management cast a positive light on the longer term outlook and the company鈥檚 development strategy.
Jason Warnick, CFO of Robinhood Markets, says: 鈥淲e are seeing our customers affected by the macroeconomic environment which reflected our results this quarter. At the same time, we have also made progress on our long-term plans and continue to pursue them aggressively.鈥�
Vlad Tenev, CEO and co-founder of Robinhood Markets, comments: "This quarter saw our product development engine gain velocity with the rollout of some of our most requested features and capabilities.
鈥淲ith the introduction of the Robinhood Cash Card, the release of crypto wallets to all customers, the addition of new coins to our platform, and our agreement to acquire [UK-based cryptoasset and electronic money institution] Ziglu Limited, we have made huge strides against our roadmap.鈥�
The online trading company indicates that this step will provide opportunity for retail customers to 鈥済enerate extra income on the stocks they already own鈥� [i.e. fully paid for], thereby adding a new source of passive income to their investment portfolios.
In a statement on 4 May, the company says that stock lending is currently rolling out to customers and is expected to be available to all customers by the end of May.
Through this principal-based programme, securities lending is offered to customers through Robinhood Financial LLC, with securities being lent to Robinhood 色花堂LLC.
According to the firm, this service will complement securities lending services that the trading platform offers for securities bought on margin.
In extending this facility, Robinhood indicates that 鈥渦nlike at other companies鈥�, it will not require customers to have hundreds of thousands of dollars in their account to participate.
鈥淲e are making fully paid securities lending, and the opportunity for passive recurring income that comes with it, available to customers who traditionally have not had access to it. It鈥檚 the Robinhood way,鈥� it says in the statement.
鈥淥ur version of stock lending empowers customers to put their investments to work while keeping it simple,鈥� said Steve Quirk, chief brokerage officer at Robinhood. 鈥淩obinhood does the work of finding borrowers and managing transactions while customers can add a potential source of passive recurring income to their portfolio.鈥�
鈥淲e are excited to break down yet another barrier and democratise a product that has been historically preserved for the wealthy with high barriers to entry,鈥� he adds.
The company warns that stock lending is not appropriate for every customer. 鈥淭here are operational risks associated with securities lending that could affect, for example, whether or when your securities are loaned or recalled, collateral is collected, or payments are made,鈥� it says. 鈥淭here is a risk that Robinhood 色花堂could default on its obligations to you under the stock lending programme and fail to return the securities it has borrowed. If Robinhood 色花堂defaults and is unable to return loaned securities, you will not be able to trade such securities as usual.鈥�
The release of this service was flagged in Robinhood Markets鈥� Q4 2021 and Full Year 2021 results, where it indicated that it was continuing to discuss the launch of a fully paid securities lending service with regulators and that it hoped to launch this programme during H1 2022.
Robinhood Markets has taken this step to expand and diversify revenue opportunities available through its trading platform at a time when first quarter total net revenue has fallen 43 per cent YoY to US$299 million.
Transaction-based revenues have slumped 48 per cent to US$218 million for Q1 2022 compared with Q1 2021. This was fuelled by a 73 per cent YoY slide in equity trading revenue to US$36 million.
Transaction-based revenue from options contracted 36 per cent to US$127 million, with revenue from cryptocurrencies also substantially down, falling 39 per cent to US$54 million.
This contributed to a net loss of US$392 million, or US$0.45 per diluted share, for Robinhood Markets during Q1 2022 鈥� albeit a reduction on the net loss of US$1.4 billion, or US$6.26 per diluted share, that it sustained in Q1 2021.
Robinhood Markets鈥� senior management cast a positive light on the longer term outlook and the company鈥檚 development strategy.
Jason Warnick, CFO of Robinhood Markets, says: 鈥淲e are seeing our customers affected by the macroeconomic environment which reflected our results this quarter. At the same time, we have also made progress on our long-term plans and continue to pursue them aggressively.鈥�
Vlad Tenev, CEO and co-founder of Robinhood Markets, comments: "This quarter saw our product development engine gain velocity with the rollout of some of our most requested features and capabilities.
鈥淲ith the introduction of the Robinhood Cash Card, the release of crypto wallets to all customers, the addition of new coins to our platform, and our agreement to acquire [UK-based cryptoasset and electronic money institution] Ziglu Limited, we have made huge strides against our roadmap.鈥�
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