The Strategist

Online broker Robinhood earns record $331m from client trading activity

05/04/2021 - 06:30

Online broker Robinhood has collected a record $331M in the form of fees from market makers for the flow of orders on equity trades in Q1 2021. This was reported by CNBC, citing data from the US SEC.
Of those funds, $133M were received from market makers for stock trading orders; $198M - for options trading orders. This is 3.6 times what the company-owner of the popular online securities trading app earned in the Q1 2020 ($91 million) and $110 million more than revenue from the flow of orders in Q4 2020. 

Robinhood's business model is based on internal payments in the absence of commissions, and payment of order flow from market makers brings revenue instead of commission fees. 

Players such as Citadel Securities, Virtu and others offer online brokers money for the possibility to transact with clients. The online broker gets a small commission for those papers that are routed to the company. At that, the revenue may be very large provided that users are active enough. The company is forecasted to arrange an IPO in the first half of  this year and its shares will start trading on the stock exchange. 


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