After going live with its trading app for Robinhood UK customers back in March, US based neobroker Robinhood (NASDAQ:HOOD) has announced the launch of margin investing for UK clients, with what the company called some of the most competitive rates in the industry.
Margin investing allows customers to borrow money from Robinhood, leveraging their existing holdings to purchase additional securities in order to expand and diversify their portfolio. Margin investing gives customers increased buying power based on the value of assets in their investment account serving as collateral. Historically, UK retail investors have had challenges accessing features like margin investing that provide other ways to help maximise their investments. Robinhood said that traditional brokerage firms often impose high fees and reserve competitive rates for the ultra-wealthy, leaving everyday investors with limited options.
Robinhood presented the following borrowing rates for UK customers who apply and are approved to trade on margin:
- 6.25% for up to $50K
- 6.05% starting at $50K and up to $100K
- 5.75% starting at $100K and up to $1M
- 5.50% starting at $1M and up to $10M
- 5.45% starting at $10M and up to $50M
- 5.20% starting at and above $50M
Robinhood included a graphic, comparing its rates with those of some other brokers.
Jordan Sinclair, President of Robinhood UK, said,
“With the launch of margin investing, we’re giving our UK customers even more flexibility and tools to enhance their investing strategies. At Robinhood we understand that investors want access to expand and diversify their portfolios at industry leading rates, in an amazing user experience.”
Robinhood noted that since it launched its UK app in March, customers have told the company they love no commission fees and no FX fees on trades, saying “that’s what makes all the difference.” They also enjoy the additional protections they receive such as the $2.5M in FDIC insurance on their uninvested cash through the Brokerage Cash Sweep Program. Still, the company said it recognises that all investors have different wants and needs, which is why it is committed to introducing new features and services such as margin investing that resonate with local customers.
Margin can be a useful investing tool that provides flexibility if a customer sees an opportunity in the market and wants to invest more right away without needing to deposit cash from their bank. Margin investing access isn’t automatic—customers must apply and will only have access if they meet eligibility requirements. Once a customer is approved to trade with margin, their rate is automatic based on the margin loan balance of their account.
Margin Trading Availability
Robinhood is beginning to roll out margin investing for customers in the UK starting today with broader availability expected in the coming weeks. Customers can apply for access to margin investing in a few minutes in-app. Competitive rates are available for all customers who apply and are approved to trade on margin.
