Coin World News Report:
US-based brokerage firm Robinhood announced on October 21st that it will introduce margin trading to its UK customers. The brokerage firm mentioned that margin trading options will allow UK investors to leverage their existing assets to accumulate more. However, Robinhood warned investors that margin trading is a high-risk investment that may increase losses.
The investment company reiterated that introducing margin trading will help investors diversify their portfolios. Robinhood explained that trading positions will increase investors’ purchasing power based on their shareholding.
The exchange stated that advanced investment options are very rare in the UK market due to regulatory restrictions. Financial regulatory authorities in the region are concerned about the risks associated with options such as margin trading, so the trading feature is limited to wealthier investors and businesses.
However, the US exchange has obtained approval from the Financial Conduct Authority. Jordan Sinclair, President of Robinhood UK, stated that after multiple discussions with the FCA to convince financial regulatory authorities of investor safety, this plan was approved.
The US-based company is now one of the few investment firms in the UK that offers margin trading, including CMC Markets, Interactive Brokers, and IG. The company was established in the UK in November 2023, after experiencing delays from the FCA since 2019.
Robinhood provides flexibility for UK customers
The brokerage firm emphasized the flexibility provided to investors through the margin trading feature. According to the exchange, retail investors have limited options in the UK market due to the high fees and competitive pricing reserved for wealthy investors by traditional brokerage firms. Therefore, the platform promises greater flexibility to its UK customers.
“With the introduction of margin trading, we provide greater flexibility and tools for our UK customers to enhance their investment strategies.”
– Jordan Sinclair, President of Robinhood UK
The company also outlined that if UK customers meet the requirements to participate in the margin trading market, they can expect competitive rates. Sinclair stated that competitive rates will improve the overall user experience of Robinhood. For investments ranging from below $50,000 to over $50 million, rates will range from 5.20% to 6.25%.
The US-based exchange confirmed that UK investors can start using this service from October 21st. The company further assured investors that the availability of this service in other regions will improve in the coming weeks. Robinhood will require investors to apply for margin trading through the Robinhood UK application.
UK investors will have access to a wide range of tools
In March of this year, Robinhood fully launched its stock trading application for UK customers. According to the US exchange, customer feedback showed increasing interest due to the lack of forex and commissions from this brokerage firm. UK investors can also enjoy FDIC insurance of up to $2.5 million through the Robinhood Brokerage Cash Sweep program.
The brokerage firm emphasized the different needs of its UK customers, thus the introduction of new features such as margin trading was necessary. It is worth noting that Robinhood introduced stock lending to its UK customers in September, allowing investors to transfer assets to borrowers for a period of time.
