Wednesday, 20 March 2024

Robinhood Launches UK Operations Without Margin Trading

by BD Banks

Robinhood Launches UK Operations Without Margin Trading

A Robinhood spokesperson told Reuters that margin trading was temporarily halted while ongoing discussions with regulatory authorities occur. Margin trading, which provides traders with leverage to amplify their market positions, carries a high risk due to the potential for significant losses if markets turn adverse.

Initially, Robinhood had a webpage for its UK audience detailing its margin trading services. The page stated that it could offer such services due to a “regulatory exemption” and would impose a 12% interest rate on borrowed funds. This page, however, was taken down mere hours after its appearance.

Beyond the halted margin trading service, Robinhood presents its UK clientele with access to over 6,000 US-listed stocks. It maintains its competitive edge by offering commission-free trading and a 5% interest rate on idle funds.

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In a move to attract UK investors to the American stock market, Robinhood announced that it would not apply foreign exchange fees to transactions involving US-listed stocks. Moreover, the brokerage firm is providing continuous trading services on weekdays.

After two unsuccessful attempts to enter the UK market, including a failed 2020 launch and an aborted acquisition of the UK trading app Ziglu, Robinhood has now successfully launched, aligning with its previous year’s announcement of a renewed effort to establish its presence in the UK.

Furthermore, the brokerage has expanded into the European Union with cryptocurrency exchange offerings. Robinhood’s entry into the UK market comes shortly after, another US brokerage firm, withdrew its services from the UK market eight months after its launch.

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