How They’re Really Making Money On Your Free Robinhood Trades
Odd Lots
Bloomberg
4.5 • 2K Ratings
🗓️ 30 July 2020
⏱️ 45 minutes
🧾️ Download transcript
Summary
With so many people working at home, bored, and with no sports to bet on, there’s been an incredible explosion of retail stock market trading. One service, Robinhood, in particular has gotten a lot of attention due to its free trading, and videogame-like appeal to young users. But how are they really making money on those free trades, and how does the economics of the business work these days? On this episode, we speak with Larry Tabb, the Head of Market Structure Research at Bloomberg Intelligence, who explains how it all works.
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Transcript
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| 0:00.0 | When you get your news from Bloomberg, you don't just get the story. You get the story behind the story. |
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| 0:24.2 | Bloomberg.com to get context. Hello and welcome to another episode of the Odd Lots Podcast. I'm Tracy Allaway. |
| 0:45.0 | Tracy Allaway. |
| 0:47.0 | Tracy, I have a question about things in Hong Kong, which is, are people going crazy for stock trading there the way they are here? |
| 0:55.6 | That's a good question. I'm not sure if this is reflected in Hong Kong, but definitely in |
| 1:01.3 | mainland China, we've had this massive rally in Chinese shares. |
| 1:05.7 | So yeah, over there we're having like a similar retail boom to what we have seen in the U.S. |
| 1:11.6 | Yeah, I mean, it's pretty crazy. That mean that has been you know there's a lot of like |
| 1:15.2 | subplots to this crisis in fact that's sort of the theme of our podcast over the last several |
| 1:21.6 | months is just exploring all of the subplots but the the incredible boom that we've seen in retail trading activity has to be one of the more surprising ones and of course the whole you know it's the whole Robin Hood |
| 1:34.2 | phenomenon all these people are home they're not their jobs there's no sports |
| 1:39.4 | betting going on |
| 1:43.7 | and so it's like all right well I got a few bucks laying around maybe I'll bet on some |
| 1:44.9 | Tesla shares for free on Robin Hood. Yeah I think that's it isn't it it's it's not |
| 1:50.0 | it's not it's not necessarily that retail investors are jumping into the stock market. It's the way in which they're doing that because we have |
| 1:57.3 | Commission free trading now you can kind of take a punt on a bunch of stuff without necessarily losing that much money, at least up front, I guess. |
| 2:07.6 | And like the punts that we are seeing, Tesla Hurts, which to declare bankruptcy. |
| 2:14.0 | Everyone's been talking about those, and I think that really that really stands out right now. |
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