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Does Robinhood have an unnatural obsession with waiting lists? The company this week is opening up its commission-free trading service to the U.K. with; a waiting list. This is just the latest in a series of waiting lists the company has opened up since it first opened for business. The company started its app initially as nothing more than a stock tracking service before it then added its commission-free trading service. It famously opened a website with the idea to offer commission-free trades and managed to have over 1 million people sign up on the waiting list before the service even existed or was launched.
In addition to the waiting list for Robinhood UK, the company has another active list still open. It was back on October 8, 2019, that the company announced it would be offering Cash Management services to its users, where the company would move the cash balances to partner banks that would pay 2.05% APY. As of today the service still has a waiting list with nearly 700k users currently signed up for the service and the latest APY is now set to 1.8% for the program after the Federal Reserve lowered interest rates. At this point, it is unclear how long before this program officially rolls out to users. However, to keep the customers up to date and engaged, you can go into the app and have the opportunity to improve your place in the line by tapping the card on the wait-list up to 1,000x to move up in the line. It’s probably pointless, but it is a clever way to keep users engaged and competing with each other by ‘cutting’ in line.
Fortunately for users signing up for the U.K. service, Robinhood is anticipating they will have a 2020 launch of the service and have previously passed several major hurdles in passing regulatory rules to allow them to operate in the UK. Robinhood International, Ltd. was authorized by the Financial Conduct Authority, which regulates U.K. financial services, to operate in the U.K. What is unclear however, is how Robinhood intends to generate an income in the U.K. since, unlike in the U.S., the service will not be able to sell client stock orders in a process called payment for order flow. This particular type of service is typically a no-no in the eyes of the U.K. authorities and isn’t used by brokerages that offer direct trading. The main issue is that the retail customer orders are typically sold to high-frequency trading firms who then execute the trades where there is a gap between the bid and offer and keep a portion of that for themselves and provide a rebate to the brokerage in the form of payment for the order.