How Robinhood Financial, Securities, and Crypto make money
Our mission is to democratize finance for all. Earning revenue allows us to offer you a range of financial products and services at low cost, including commission-free trading.
Robinhood Financial and Robinhood Securities primarily earn income from the following sources:
- Margin lending
- Stock lending
- Income generated from uninvested cash
- Rebates from market makers and trading venues
- Robinhood Gold subscriptions
Robinhood Crypto primarily earns income from the following:
- Rebates from market makers and trading venues
- Robinhood Connect
We earn income from lending securities to counterparties.
Robinhood Securities earns fees from banks that participate in its brokerage sweep program when it sweeps uninvested cash in individual investing accounts to those banks. Robinhood Securities also generates income on uninvested brokerage cash that isn't swept to such banks, primarily by depositing this cash in interest-bearing bank accounts.
Rebates from market makers and trading venues
Rebates from market makers and trading venues When customers buy or sell stocks, ETFs, and options through their individual investing accounts, their orders are sent to one or more market makers or exchanges for execution. To compete with exchanges, market makers offer rebates to brokerages and typically offer better prices than exchanges.
Robinhood Securities, our clearing broker, developed a routing system to incentivize the market makers Robinhood has relationships with to compete for order flow based on the amount of price improvement realized on customer orders. This algorithm, known as the smart order router, prioritizes sending customer orders to a market maker that’s likely to give you the best execution, based on historical performance. We also route a small portion of orders in stocks and ETFs to an exchange to preserve the ability to maintain trading in case one or more market makers are unable to execute orders. Under applicable exchange fee schedules, we generally pay the exchange when we take liquidity and are paid when we provide liquidity.
Similarly, Robinhood Crypto has relationships with crypto trading venues that allow customers to receive competitive prices. As of May 13, 2022, for every $100 of notional value for executed crypto orders, Robinhood received $0.35 in rebates from its trading venues.Robinhood Crypto receives variable volume rebates from those trading venues for executed crypto orders.
Robinhood Connect is an extension of Robinhood Crypto. It facilitates the purchase and transfer of crypto directly to self-custody wallets and dapps. Fees may also apply depending on how you fund Robinhood Connect transactions.
Check out Robinhood Connect and the Robinhood Crypto Fee Schedule for more details.
Robinhood Gold, a suite of powerful investing tools, gives you access to Morningstar research reports, NASDAQ Level II Market Data, bigger instant deposits, and margin investing at a discounted rate, if eligible. You pay a monthly or annual fee for the subscription. When you invest on margin, you’re borrowing funds from Robinhood Securities. If you use more than $1,000 of margin, you’ll pay a yearly interest on the settled margin amount you use above $1,000.
We make money from a range of other, smaller revenue streams, including proxy service revenue and fees listed in the Robinhood Financial's Fee Schedule.
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FAQs
Robinhood Financial and Robinhood Securities primarily earn income from the following sources: Margin lending. Stock lending. Income generated from uninvested cash.
How does Robinhood make money from crypto? ›
Robinhood Crypto does not charge commission fees for trading crypto. We do generate revenue through volume rebates from trading venues. For example, for every $100 of notional value for executed crypto orders, Robinhood receives $0.35 in rebates from its trading venues. *No commission on trades of crypto.
Can Robinhood become profitable? ›
“We delivered significant profitable growth in 2023,” said Jason Warnick, Chief Financial Officer of Robinhood. “We drove record full-year revenues and substantially higher margins, and in Q4 we had positive GAAP net income.
What is the difference between Robinhood financial and Robinhood Securities? ›
Investing accounts are offered through Robinhood Financial LLC (member SIPC), which is a registered broker-dealer. Robinhood Securities, LLC (member SIPC) is a registered broker-dealer and provides brokerage clearing services. Both are subsidiaries of Robinhood Markets, Inc.
How does Robinhood currently compare to major financial service firms? ›
Answer & Explanation. Robinhood is much smaller but growing quickly. Robinhood is smaller than major financial service firms but is rapidly expanding its user base and services.
How does Robinhood make its money? ›
Robinhood Financial and Robinhood Securities primarily earn income from the following sources: Margin lending. Stock lending. Income generated from uninvested cash.
How is Robinhood doing financially? ›
Over the past twelve months, Net Deposits were $17.3 billion, which translates to a growth rate of 27% relative to AUC at the end of Q3 2022. Average Revenue Per User (ARPU) increased by 27% year-over-year to $80.
How much money is in the average Robinhood account? ›
Average account size of brokerage apps 2023 ($)
| App | Average account size ($) |
|---|
| Robinhood | 4,000 |
| Hargraves Lansdown | 108,000 |
| E-Trade | 127,000 |
| Charles Schwab | 234,000 |
Mar 15, 2024
Your securities and cash are protected by SIPC
Robinhood Financial LLC and Robinhood Securities, LLC are both members of SIPC, which protects securities for customers of its members up to $500,000 (including $250,000 for claims for cash) for each investing account, including IRAs.
Does Robinhood take a percentage of profit? ›
Investing with a Robinhood investing account is commission free. We don't charge you fees to open or maintain your account.
Pattern Day Trade (PDT) Protection alerts you as you place your 2nd, 3rd, and 4th day trades in a 5 trading day period in an effort to help you avoid being flagged as a pattern day trader (PDT). On the 2nd and 3rd day trades, you'll be given a few options to help avoid getting flagged. Switch to a cash account.
What is the downside of Robinhood? ›
Robinhood's range of offerings is extremely limited in that it only offers stocks, ETFs, options, and cryptocurrency trading. Robinhood doesn't support mutual funds or fixed-income products, and you can't trade commodities, forex, or futures.
How does Fidelity make money with no fees? ›
So, with the favorable low or no-fee structure, how does Fidelity make money? Fidelity makes money from you via: Interest on cash: Fidelity makes money from the difference between what it pays you on your idle cash or through money market mutual funds and what it earns from the cash balances.
Can financial advisors beat the market? ›
In other words, even professionals can't beat the market with consistency. That means that the right expectation is typically to target a portfolio that tracks the market as closely as possible with a balance between risk (stocks) and stability (bonds) that matches your goals and risk tolerance.
Who financially backs Robinhood? ›
In May 2020, it was announced that Robinhood had raised $280 million in venture funding at a pre-money valuation of $8.3 billion led by Sequoia Capital, and 3 months later, the company announced a $200 million Series G funding round from a new investor, D1 Capital Partners, on August 17.
What is the best trading platform? ›
Summary: Best Online Brokerage
| Company | Forbes Advisor Rating | Learn More CTA text |
|---|
| TD Ameritrade | 4.4 | Learn More |
| Fidelity Investments | 4.4 | Learn More |
| Charles Schwab | 4.3 | Learn More |
| Tastytrade | 3.9 | Open Account |
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Do You Own Crypto on Robinhood? With Robinhood, users don't really own their crypto assets. They are not able to purchase Bitcoin or other cryptocurrencies and then transfer these assets from Robinhood to a crypto wallet or cold storage.
Is my money safe in Robinhood crypto? ›
Your securities and cash are protected by SIPC
Robinhood Financial LLC and Robinhood Securities, LLC are both members of SIPC, which protects securities for customers of its members up to $500,000 (including $250,000 for claims for cash) for each investing account, including IRAs.
How does Robinhood make money with no fees? ›
Robinhood is an online discount brokerage that offers a commission-free investing and trading platform. In 2023, the company generated the majority of its revenue from its net interest revenues segment due to the favorable interest rate environment. Payment for order flow also contributed largely to revenues.
When I sell crypto on Robinhood, where is my money? ›
Instant access to crypto proceeds
You'll receive the proceeds from your sales to purchase stocks, options, or other crypto immediately. However, the ACH settlement period still applies when you withdraw the funds from your Robinhood Crypto account to your bank account.
