July 24 (Reuters) – Robinhood Markets Inc is contemplating launching U.S. retirement accounts, CEO and co-founder Vlad Tenev mentioned on Saturday in a webcast with customers of its buying and selling app seeking to take part in its preliminary public providing, which is about to cost subsequent week.The web brokerage has about 18 million funded funding accounts on its platform, most of that are held by retail merchants.Providing particular person retirement accounts (IRAs) and Roth IRAs, which provide tax benefits to these saving for retirement, would permit Robinhood to faucet an enormous market. Individuals held $12.6 trillion in IRAs on the finish of March, up 2.8% from the tip of December, in accordance with the Funding Firm Institute.”We’re occupied with constructing extra account sorts, together with IRAs and Roth IRAs, we have been listening to that so much from our clients. We need to make first-time buyers into long-term buyers,” Tenev mentioned in response to an investor query.As a result of penalties concerned in withdrawing cash, IRAs have a tendency to draw long-term investments, quite than the fast flip in shares, choices and cryptocurrencies that some buyers flip to Robinhood for.In his webcast, nonetheless, Tenev mentioned: “We see proof that almost all of our clients are primarily purchase and maintain.”Robinhood, which is concentrating on a valuation of as much as $35 billion in its IPO, has mentioned it should allocate 20% to 35% of shares supplied to its customers, an uncommon transfer for a high-profile providing. One of many causes many IPOs get pleasure from a first-day buying and selling pop is as a result of the retail buyers that Robinhood has invited are excluded and should purchase shares within the open market.Robinhood launched its IPO Entry platform earlier this 12 months to allow customers to purchase into the IPOs of different corporations if it may well negotiate offers with the funding banks dealing with them.Some particular person buyers are calling for a boycott of Robinhood’s IPO on Reddit and different social media over its dealing with of the ‘meme’ stock-trading frenzy in January. Robinhood positioned restrictions on shopping for GameStop Corp (GME.N) and different shares that hedge funds had guess towards, on grounds it was wanted for the monetary and operational stability of its platform.Tenev mentioned in Saturday’s webcast that Robinhood had invested within the stability of its platform to keep away from one other such incident.PAYMENT FOR ORDER FLOWRobinhood’s recognition has soared over the previous 18 months of coronavirus-induced social restrictions which have stored many retail buyers at dwelling. It has mentioned its mission is to “democratize finance for all” by permitting customers to make limitless commission-free trades in shares, exchange-traded funds, choices and cryptocurrencies.The brokerage has been criticized for counting on “fee for order circulate” for many of its income, underneath which it receives charges from market makers for routing trades to them and doesn’t cost customers for particular person trades, nonetheless.Critics argue the apply, which is utilized by many different brokers, creates a battle of curiosity, on the grounds that it incentivizes brokers to ship orders to whoever pays the upper charges. Robinhood contends that it routes trades primarily based on what’s most cost-effective for its customers, and that charging a fee could be costlier.Robinhood chief monetary officer Jason Warnick left the door open for the corporate to alter the apply if mandatory.”If a ban or different limitations on it have been to be imposed, we consider Robinhood and the trade would adapt and discover different income sources,” Warnick mentioned.Robinhood was based in 2013 by Stanford College roommates Tenev and Baiju Bhatt, who will maintain practically two-thirds of the voting energy after the providing, a submitting with the inventory change confirmed.Robinhood buyer Minjie Xu, who works as a software program engineer in Missouri, remained unimpressed after the presentation on considerations the providing was overpriced.”This isn’t distinctive to them, as I believe most IPOs are overpriced,” Xu instructed Reuters.Reporting by Echo Wang and Krystal Hu in New York
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