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Maybe. I’d be curious to see a breakdown of a traditional broker’s revenue compared to Robinhood. I bet Robinhood makes most of its money off order flow (it wa
by bcherny 6y ago
Maybe. I’d be curious to see a breakdown of a traditional broker’s revenue compared to Robinhood.
I bet Robinhood makes most of its money off order flow (it was founded by HFT traders, after all), while traditional brokers make more money off fees, reinvesting, upselling other products, etc.
- bostik 6y agoIIRC traditional brokers make most of their money off of interest on their float. I wish I could remember where this came up because without a solid reference it sounds utterly absurd.
- disgruntledphd2 6y agoThat doesn't surprise me at all, given that most insurers make all their money off investing the premiums before claims happen. When part of your service is to hold money, it's kinda the natural business model. Of course, this is not working out well for insurers in a world of very low interest rates (which is one of the reasons lots of insure-tech startups are getting funded now).
- thedufer 6y agoI'm not sure if this is the source you meant, but patio11 wrote a good overview of various brokerages' revenue sources: https://www.kalzumeus.com/2019/6/26/how-brokerages-make-money/ https://www.kalzumeus.com/2019/6/26/how-brokerages-make-mone...