Robinhood – we should all share the fruits of capitalism

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Stop paying $10/trade.

Robinhood wants us all* to share the fruits of capitalism.

*unless you’re an Android user

Robinhood is a new commission-free brokerage venture backed by Google/Index/Andreesen Horowitz. They want to eliminate the $10 per trade “tax” that normal investors pay whilst High Frequency Traders pay almost nothing to access the market.

Having spent time on Wall Street building market access platforms for large firms, the two Stanford roommates Vladimir Tenev and Baiju Bhatt puzzled over why HFTs pay effectively nothing to access the market while everyday investors get ‘taxed’ $10 per trade.

These guys figure they can build a leaner brokerage from the ground up by avoiding/automating many of the “costly duties” existing brokerages maintain as a holdover from the pre-Internet era.

Over the last decade, technology has enabled building the most efficient businesses in history. Building an automated, electronic brokerage from the ground up allows Robinhood to eliminate the costly touchpoints where other brokerages require human intervention or paper receipts… Robinhood maintains a lean bottom-line, allowing it to attract and retain customers far more cheaply.

It’s an interesting freemium model – they hope to offer margin trading and ‘premium’ services in the future. Web/iOS only – No Android support, though they’ll offer API access to ‘select customers’ in 2014.

Disclaimer still reminds you that you [only] get what you pay for:

System response, execution price, speed, liquidity, market data, and account access times are affected by many factors, including market volatility, size and type of order, market conditions, system performance, and “other factors”.

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