Robinhood

Definition

Robinhood is a financial services company that offers commission-free trading of stocks, ETFs, and cryptocurrencies via a mobile app. It aims to democratize finance for all by making investing more accessible to the general public.

5 Must Know Facts For Your Next Test

1. Robinhood was founded in 2013 by Vladimir Tenev and Baiju Bhatt.
2. The platform played a significant role in popularizing no-fee trading among retail investors.
3. Robinhood earns revenue through payment for order flow, premium subscription services like Robinhood Gold, and interest on uninvested cash.
4. In January 2021, Robinhood was at the center of the GameStop short squeeze controversy due to its decision to restrict trades on certain stocks.
5. Regulated by both the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA), Robinhood must comply with strict financial laws.

Review Questions

• What year was Robinhood founded?
• How does Robinhood generate revenue if it offers commission-free trading?
• Which regulatory bodies oversee Robinhood's operations?

Related terms

ETFs: Exchange-Traded Funds are investment funds traded on stock exchanges, much like individual stocks.

Payment for Order Flow: A practice where brokers receive compensation from third parties for directing orders to them.

Retail Investors: Individual investors who buy and sell securities for their personal account rather than for an organization.