{"id":123575,"date":"2021-05-03T19:23:28","date_gmt":"2021-05-03T19:23:28","guid":{"rendered":"https:\/\/precoinnews.com\/?p=123575"},"modified":"2021-05-03T19:23:28","modified_gmt":"2021-05-03T19:23:28","slug":"robinhood-raked-in-331-million-from-clients-trading-activity-during-the-first-quarter","status":"publish","type":"post","link":"https:\/\/precoinnews.com\/markets\/robinhood-raked-in-331-million-from-clients-trading-activity-during-the-first-quarter\/","title":{"rendered":"Robinhood raked in $331 million from clients&#x27; trading activity during the first quarter"},"content":{"rendered":"<ul>\n<li>Robinhood collected $331 million in payment for order flow in the first quarter of 2021, according to a recent Securities and Exchange Commission regulatory filing.<\/li>\n<li>Of these payments, $133 million came from equity trades and $198 million came from options trading.<\/li>\n<li>Robinhood is expected to go public on the Nasdaq in the first half of 2021.<\/li>\n<\/ul>\n<p>Robinhood raked in a record amount of revenue from customer trades in the first quarter of 2021, as the retail trading juggernaut nears its public debut.<\/p>\n<p>The millennial-favored stock-trading app collected $331 million in payment for order flow \u2013 the money brokerage firms receive for directing clients&#x27; trades to market makers \u2013 in the first quarter of 2021, according to a recent Securities and Exchange Commission regulatory filing.<\/p>\n<p>This compares to the $221 million Robinhood earned from payment for order flow in the fourth quarter of 2020 and the $91 million earned in the first quarter of 2020.<\/p>\n<p>Robinhood and others in the online brokerage industry rely on what&#x27;s known as payment for order flow as a source of revenue in lieu of commissions. The pioneer of &quot;free trading,&quot; Robinhood&#x27;s business model hinges on the back-end payments,\u00a0in the absence of commissions.\u00a0<\/p>\n<p>Market makers, such as Citadel Securities or Virtu, pay e-brokers like Robinhood for the right to execute customer trades. The broker receives a small fee for the shares that are routed, which can add up to millions when customers trade as actively as they have this year.<\/p>\n<p>Robinhood \u2014 which is expected to go public on the Nasdaq in the first half of 2021 \u2014 made $133 million in in payment for order flow from equity trades, while $198 million came from options trading.<\/p>\n<p>The boom in order flow coincided with record retail trading activity and new customer accounts across the industry. <\/p>\n<p>The Silicon Valley start-up found itself in the middle of a firestorm in January amid the short squeeze in GameStop, which was partially fueled by Reddit-driven retail investors.\u00a0JMP Securities estimates Robinhood added nearly 6 million new clients in the first two months of the year.<\/p>\n<p>Payment for order flow is a common practice, but it&#x27;s often criticized for its lack of transparency. The GameStop trading mania shined a light on the revenue stream and many legislators scrutinized the practice. Main Street argued that it gives Robinhood reasons to incentivize more trading.<\/p>\n<p>Over the weekend, legendary investor Warren Buffett said Robinhood has\u00a0&quot;become a very significant part of the casino aspect, the casino group, that has joined into the stock market in the last year or year-and-a-half.&quot;<\/p>\n<p>Robinhood rebutted that &quot;people are tired of the Warren Buffetts and Charlie Mungers of the world acting like they are the only oracles of investing.&quot;<\/p>\n<p>Become a smarter investor with\u00a0<strong>CNBC Pro<\/strong>.\u00a0<br \/>Get stock picks, analyst calls, exclusive interviews and access to CNBC TV.\u00a0<br \/>Sign up to start a\u00a0<strong>free trial today.<\/strong><\/p>\n<p><em>\u2014 with reporting from CNBC&#x27;s Kate Rooney.<\/em><\/p>\n<p>Source: <a href=\"https:\/\/www.cnbc.com\/2021\/05\/03\/robinhood-made-331-million-from-clients-trading-activity-in-q1-2021.html\" target=\"_blank\" rel=\"noopener\">Read Full Article<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Robinhood collected $331 million in payment for<\/p>\n","protected":false},"author":3,"featured_media":123574,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[23054],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.7 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Robinhood raked in $331 million from clients&#x27; 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