The Robinhood stock trading app is now available in the UK and charges no fees

Stock trading app Robinhood has opened its trading platform to all UK investors as it looks to take on established incumbents for a third time.

The US giant will initially offer free trading on more than 6,000 US stocks, with no annual or foreign exchange fees or fees.

Robinhood found itself at the center of the GameStop frenzy in 2021, as investors flocked to the platform to support so-called “meme stocks.”

It is the third time the American company has attempted to launch in Britain. It first announced a move to the market in 2020 before quickly shelving plans, and made an unsuccessful bid for crypto trading app Ziglu in 2022.

Jordan Sinclair, president of Robinhood UK, told This Is Money: ‘We’ve certainly learned from those experiences. We decided not to launch earlier and focused on the US business, which in retrospect was great.”

Robinhood reported a surprise profit in the fourth quarter after higher interest income from customers paying back loans and a rebound in trading.

“Robinhood has been around for 10 years, which means we’ve built things up over time and we can offer a mature experience. What we are launching has evolved,” Sinclair said.

What does Robinhood offer investors?

British investors will be able to trade fractional shares and Robinhood will offer 24-hour trading on certain stocks five days a week, something Sinclair says is a major barrier.

“We are so limited when the American market opens up. The market moves, something happens and Britain has to wait until tomorrow afternoon. What we are already seeing among (trial) customers is that a third of trading takes place outside market hours.’

Investors will be able to open a general investment account, but not an Isa, although there are plans to launch these alongside UK shares in the future.

Although exchange fees have been waived, British investors will have to deposit British pounds into their accounts, which will be converted into dollars. A currency surcharge of 0.03 percent will be charged.

The broker hopes features like fractional share rewards between $7 and $175 will entice investors away from other DIY investing platforms.

It also offers marginal lending, which allows customers to borrow money from Robinhood to invest in US-listed securities and use the extra leverage to buy shares.

This is very risky and therefore not offered by many other investment platforms. Robinhood says customers must apply for margin investing and will only be granted access if they meet eligibility requirements.

One of Robinhood’s standout offers is a 5 percent rate on uninvested cash, on an easy-to-access, no-cap basis, which is currently offered to its Gold customers in the US.

Freetrade offers 5 percent on £3,000 of uninvested cash for its Plus customers, who pay £11.99 per month, while other platforms offer around 3 percent.

Robinhood declined to reveal the number of British investors who had joined its waitlist by the end of 2023.

But it will be a big ask to challenge established platforms such as Hargreaves Lansdown and AJ Bell, as well as the more established challenger Freetrade, which offers commission-free trading but charges fees in foreign currencies.

Sinclair said: ‘In Britain there is opportunity in addressable wealth and needs that are not being met, creating a number of barriers to participation. The fees are high… if it’s your first $100 you invest and $15-20 goes to fees, I understand why people are reluctant to get involved.”

Cash deposited with Robinhood is eligible for insurance from the Federal Deposit Insurance Corporation up to a maximum of $2.25 million.