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This is similar to thanking Google for bringing the cost of email down to $0. There sure is a lot of upside to the average user, but a lot of the costs are just

This is similar to thanking Google for bringing the cost of email down to $0. There sure is a lot of upside to the average user, but a lot of the costs are just shifted behind the scenes (data collection, privacy). I'm not saying it has no place in the market, but a more informed user might calculate the risk and decide to use a fee-based brokerage instead (like ProtonMail vs Gmail).

mike00632 6y ago
Right, but with Robinhood the hidden costs are actual money. They give their users inferior prices and then collect on the arbitrage.
- koolba 6y ago
  > They give their users inferior prices and then collect on the arbitrage. That’s false. They’re legally required to get the national best bid or ask just like any other broker. Routing trade flow doesn’t change that, it just gives the recipient the ability to match or beat those prices. If there was a better price elsewhere they’re mandated by law to attain that price. If they’re not doing that the SEC would be en route.
  - tedunangst 6y ago
    Literally settled with SEC a month ago for exactly that. https://www.sec.gov/news/press-release/2020-321 https://www.sec.gov/news/press-release/2020-321
    - koolba 6y ago
      Ha! That’s incredible. I can’t believe anyone would keep their account there after something so brazen comes to light.
  - mike00632 6y ago
    If a Robinhood trade is being matched with a better price after it routes then Robinhood didn't offer them the best price. It's how Robinhood makes money. This is the heart of their deal with Citadel Securities. And, yes, the SEC is indeed on their case about this. It's how we know about it. "How Robinhood makes money on customer trades despite making it free" https://www-cnbc-com.cdn.ampproject.org/v/s/www.cnbc.com/amp/2020/08/13/how-robinhood-makes-money-on-customer-trades-despite-making-it-free.html https://www-cnbc-com.cdn.ampproject.org/v/s/www.cnbc.com/amp...
  - cma 6y ago
    Robinhood basically sells right of first refusal on "dumb flow," which is valuable. The buyer can route it to someone else if they don't like it, but they get to decide before them. Also they get information from retail investor orders before the rest of the market gets to see them and can adjust pricing on other offers in related symbols before others get to react.
geoduck14 6y ago
I had a Hotmail account before Gmail was a thing.
- cocoa19 6y ago
  Maybe Gmail was not the first free email, but was definitely the first massively adopted free email with a very high storage capacity. At Gmail's launch, Hotmail was offering only 2MB of free space, while Gmail was offering 1GB. At the time, that was a game changer, and how they captured a good chunk of the market.
  - webmaven 6y ago
    > At Gmail's launch, Hotmail was offering only 2MB of free space, while Gmail was offering 1GB. At the time, that was a game changer, and how they captured a good chunk of the market. The 1GB storage was so ridiculously large, that many assumed it was an April Fool's joke (also because GMail was launched on April 1st).

mike00632 6y ago

Right, but with Robinhood the hidden costs are actual money. They give their users inferior prices and then collect on the arbitrage.

koolba 6y ago
> They give their users inferior prices and then collect on the arbitrage. That’s false. They’re legally required to get the national best bid or ask just like any other broker. Routing trade flow doesn’t change that, it just gives the recipient the ability to match or beat those prices. If there was a better price elsewhere they’re mandated by law to attain that price. If they’re not doing that the SEC would be en route.
- tedunangst 6y ago
  Literally settled with SEC a month ago for exactly that. https://www.sec.gov/news/press-release/2020-321 https://www.sec.gov/news/press-release/2020-321
  - koolba 6y ago
    Ha! That’s incredible. I can’t believe anyone would keep their account there after something so brazen comes to light.
- mike00632 6y ago
  If a Robinhood trade is being matched with a better price after it routes then Robinhood didn't offer them the best price. It's how Robinhood makes money. This is the heart of their deal with Citadel Securities. And, yes, the SEC is indeed on their case about this. It's how we know about it. "How Robinhood makes money on customer trades despite making it free" https://www-cnbc-com.cdn.ampproject.org/v/s/www.cnbc.com/amp/2020/08/13/how-robinhood-makes-money-on-customer-trades-despite-making-it-free.html https://www-cnbc-com.cdn.ampproject.org/v/s/www.cnbc.com/amp...
- cma 6y ago
  Robinhood basically sells right of first refusal on "dumb flow," which is valuable. The buyer can route it to someone else if they don't like it, but they get to decide before them. Also they get information from retail investor orders before the rest of the market gets to see them and can adjust pricing on other offers in related symbols before others get to react.

geoduck14 6y ago

I had a Hotmail account before Gmail was a thing.

cocoa19 6y ago
Maybe Gmail was not the first free email, but was definitely the first massively adopted free email with a very high storage capacity. At Gmail's launch, Hotmail was offering only 2MB of free space, while Gmail was offering 1GB. At the time, that was a game changer, and how they captured a good chunk of the market.
- webmaven 6y ago
  > At Gmail's launch, Hotmail was offering only 2MB of free space, while Gmail was offering 1GB. At the time, that was a game changer, and how they captured a good chunk of the market. The 1GB storage was so ridiculously large, that many assumed it was an April Fool's joke (also because GMail was launched on April 1st).