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Robinhood launches 3% checking account

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Re: Robinhood launches 3% checking account

#571

Post by elliekelly »

SEJeff wrote: post #411
elliekelly wrote: post #84

Earlier quoted context omitted.

Oddly enough I suspect the result will be lobbying for stricter financial privacy regulations. Almost half of Robinhood's revenue is from selling data.[1] Big banks won't be able to compete on that front and most of the big players don't participate/make enough money on order flow sales that they'd miss it if it were prohibited. So the banks will do what they do best: lobby congress & regulators to legislate & regula…

I don't think this means what you think it means... Every single broker like Robinhood sells order flow to electronic trading firms. This flow is then executed faster due to improved market access. All of that to say that you're probably getting better execution because Robinhood wasn't stupid enough to try to go through some crappy broker or build their own order entry system. Also, the order data can not be mapped…

> I don't think this means what you think it means...

You might work in IT for a market making electronic trading firm (it's not big, I looked them up). I'm a securities regulation attorney. I've worked for banks, hedge funds, and RIAs. This is so far away from best execution that any attempt to argue that this is to the consumer's benefit shows you fundamentally do not understand the fiduciary duties that brokers are supposed to owe to their clients. You're parroting the party line without fully understanding how the system works (and why should you? you're just a distributed systems engineer) yet you have the audacity to tell me in another comment that I've "read Flash Boys" without doing any research and don't understand how the stock market works.

Okay, bud.

Re: Robinhood launches 3% checking account

#573

Post by perl4ever »

zackmorris wrote: post #282
subraizada3 wrote: post #257

Earlier quoted context omitted.

The SEC and FINRA (regulatory agencies) don't allow day trading for accounts with balances less than $25,000. If you exceed 3 (?) day trades in the past 5 days, your account is locked from day trading for 90 days (so if you buy a stock you will be unable to sell it that day). All exchanges enforce this rule, not just Robinhood.

I hope this gets challenged in court at some point. The rules went into effect on September 28, 2001 as a knee-jerk reaction to the dot bomb and 9/11: http://www.finra.org/investors/day-trading-margin-requiremen... The real story is that the plebes realized they could make 2% per day by day trading and selling short. I did this with my dad and we were up about $40k before 9/11 wiped out most people's gains (this was…

"I hope this gets challenged in court at some point. The rules went into effect on September 28, 2001 as a knee-jerk reaction to the dot bomb and 9/11:"

The rules were approved in February 2001, so they can't have been a response to 9/11, kneejerk or not.

Re: Robinhood launches 3% checking account

#574

Post by halr9000 »

rchaud wrote: post #358
deminature wrote: post #252

Earlier quoted context omitted.

Perhaps true, there's been an opening for a 'cool' millennial-oriented financial institution for a while now, so perhaps fewer customers will drop off than expected.

Seems like a weak market to go after, given that people likely to respond to a "cool" financial services brand may be a poorer demographic that maybe doesn't have any prior experience with "legacy" financial services providers. So just because they create accounts @3% doesn't mean they'll also open trading accounts.

> Seems like a weak market to go after, given that people likely to respond to a "cool" financial services brand may be a poorer demographic that maybe doesn't have any prior experience with "legacy" financial services providers.

Yeah but people do grow up. And I don't know about you, but I've got some super long term relationships with some banks. They are in it for the long game.

Re: Robinhood launches 3% checking account

#575

Post by krferriter »

c1b wrote: post #569
JamesBarney wrote: post #482

Earlier quoted context omitted.

2000/2008 didn't happen because someone did basic accounting math incorrectly.

I think you could argue that the rating agencies did the math incorrectly, at least in 2008.

They did the math correctly, it was just different math than what they were supposed to be using.

The incorrect ratings were intentional and designed to look like they were correct so that no one would find out. It's easier to make sure no one finds out the number is wrong if you know what the correct number is and how to tweak factors here and there to influence it.

Re: Robinhood launches 3% checking account

#576

Post by perl4ever »

snowwrestler wrote: post #189
zeroname wrote: post #144

Earlier quoted context omitted.

I don't think understand that correctly. There's no such thing as a SIPC-protected checking account that holds securities. A checking account holds cash. There's SIPC protection for your cash and securities (stocks etc.) that Robinhood holds for you, up to 250,000$ each. For obvious reasons, the value of a security in dollars fluctuates and therefore such losses cannot be insured. What is being recovered is the secur…

> It's not the cash/securities that Robinhood holds as part of their business, it's the one they hold for you. You may well choose to hold 100% cash or 100% securities. If I'm holding 100% securities, a) SIPC offers me no protection from losses, b) I better be making more than 3% return, and c) I would not call that situation "a checking account."

"If I'm holding 100% securities, a) SIPC offers me no protection from losses"

Sure it does. The point of SIPC is that if your broker goes under, and you had, say, 100 shares of MSFT and $100 in cash, you get those things even if your broker somehow comes up short. Now, what 100 shares of MSFT is worth in dollars is unrelated to SIPC and depends on the stock market.

The purpose of SIPC is to protect against a breakdown in financial abstractions at one particular level.

Re: Robinhood launches 3% checking account

#577

Post by zem »

ramraj07 wrote: post #555
zem wrote: post #533

Earlier quoted context omitted.

> Metacomment: geeks who believe they have outmathed a financial firm should ask themselves "Are financial firms likely to be bad at math?" and "Are financial firms incapable of hiring their own geeks?" reminds me of the first time i interviewed at google, and one of the interviewers asked "if you could set up your own project and get a team to work on it, what would you do?". i answered that i would get a bunch of m…

So did you get the job?

sadly no, though I did the second time around

Re: Robinhood launches 3% checking account

#578

Post by p1necone »

woolvalley wrote: post #458
philip1209 wrote: post #332

I just spent 3 months in London, and it's crazy how Monzo seems to have taken the market. Almost everybody seems to be paying with a Monzo card, regardless of age. Asking around, I consistently heard that Monzo's competitors like Revolut are going to be a future case study in scaling before great product/market fit. I don't know how many people have Revolut accounts, but nobody seems to be using their cards in public…

In America, I don't think contactless matters that much currently. It's really a crap shoot if any specific retailer supports contactless, no major metro system that I know of support direct debit / credit contactless cards and no major bank or credit card company issues contactless cards. If you want to use contactless in america, you add the card to apple / google / samsung pay and use your phone for NFC payments.…

In New Zealand a lot of retailers added contactless, but are now removing it again as supposedly the fees charged by Visa/Mastercard are rather high.

Re: Robinhood launches 3% checking account

#580

Post by jcrubino »

fullshark wrote: post #232
deminature wrote: post #225

Earlier quoted context omitted.

I assume they're trying to break the inertia people have with major banks. There's no reason to change bank unless there's some substantial incentive like favorable interest rate to offset the hassle involved. I'm not sure there's an ulterior motive here other than customer acquisition.

Agreed, they are trying to buy customers, if it turns out that they can't convert these customers into traders they will lower the rate to a breakeven amount and not care if they lose those accounts.

Is that (this akin to) what Paypal did in the early days with their money market accounts?
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