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Robinhood, the US dealer that shot to prominence within the 2021 meme inventory craze, plans to tackle UK funding platforms reminiscent of Hargreaves Lansdown by launching a stocks-and-shares Isa with no charges earlier than the tip of the tax yr.
The transfer to create the tax-free account is a step by Robinhood, which pioneered zero-commission share buying and selling, in the direction of providing buying and selling in shares of UK-listed corporations because it seeks to broaden its enterprise.
It comes because the Labour authorities pushes to encourage savers to channel more cash into UK corporations and reinvigorate the London Inventory Change.
Jordan Sinclair, head of Robinhood UK, mentioned in an interview with the Monetary Occasions that he anticipated his firm to launch a stocks-and-shares Isa earlier than April 2026. The agency mentioned it had all of the regulatory approvals wanted to supply the accounts and UK share buying and selling.
“UK equities is one thing we hear from our clients that they need [to be able to invest in],” mentioned Sinclair. “An Isa is one thing we need to do first. You’ll see that earlier than the following tax yr, undoubtedly.”
Robinhood’s plan comes as chancellor Rachel Reeves prepares to evaluation the marketplace for tax-free particular person financial savings accounts to encourage buyers to plough among the £300bn held in money Isas into shares.
The Treasury is contemplating reducing the £20,000 annual tax-free allowance for money Isas and Metropolis minister Emma Reynolds mentioned this with financial institution executives final week, the FT beforehand reported.
Sinclair mentioned the UK’s push to extend retail funding in equities was “actually optimistic” and that the corporate wished to be “the only [investment] platform for a buyer within the UK”.
The corporate needed to postpone a deliberate UK launch in 2020 on account of a buying and selling glitch and the pandemic. It will definitely entered the British market final yr, providing buying and selling in additional than 6,000 US shares and 5 per cent curiosity on uninvested money, later lowered to 4 per cent because the Financial institution of England reduce charges.
Robinhood has been pushing past its home market and buying and selling of common US shares. It gained notoriety in 2021, when US retail buyers, a lot of them inexperienced, piled into buying and selling in shares based mostly on discussions on social media.
The dealer was compelled to halt buying and selling in some shares and needed to increase capital to shore up its funds because it was hit with a wave of orders. Retail merchants have been outraged by the restrictions and politicians ordered the corporate to elucidate its position within the frenzy.
Within the UK, it has aimed to undercut opponents reminiscent of Hargreaves Lansdown, IG and AJ Bell, which cost between £4 and £12 in fee for every share commerce.
Platforms use numerous charging techniques, together with a flat month-to-month payment or taking a share of property as a administration payment. Some provide “zero-commission” buying and selling and “no account charges” however nonetheless impose different prices.
Robinhood as a substitute says it makes cash by charging curiosity for lending out securities and from loans that supply leverage on choices trades.
Within the US it has competed with corporations like Schwab and ETrade by providing incentives like zero-commission buying and selling and a cellular app which pulled retail merchants into property together with equities, choices and cryptocurrencies.
Sinclair mentioned the UK may be taught from the success of Sweden’s Investeringssparkonto, a tax-efficient financial savings product, by not charging charges on stocks-and-shares Isas.
“I see UK brokers that also cost you a payment for having the stocks-and-shares Isa. Is that actually wanted?” he mentioned. “The way in which we’ve approached account varieties within the US, it’s simple to extrapolate that clients right here shouldn’t be charged for opening up an account.”
He additionally mentioned there was a possibility for Robinhood to permit US buyers to purchase UK equities. “Once we speak about capital flows, a small slice of the US market is big,” he mentioned.
