As part of a larger bet that retail investors will want to see both their crypto and stock investments in an one place, the United States-based affiliate of the cryptocurrency exchange FTX is rolling out stock trading with no commissions.
According to an announcement made by the company on Thursday, FTX U.S. would provide customers with fee-free brokerage accounts, trading without commissions, as well as market and corporate data. The newly launched service is only accessible to a select few people in the United States at this time.
According to FTX U.S. President Brett Harrison, the company is counting on users growing weary of managing various apps and accounts for their financial activity as people become more familiar with cryptocurrencies as investment assets and as investing services become more easily accessible to a growing number of retail investors. According to what he said, the company’s goal is to eventually become a one-stop shop for retail investors.
“If they want to invest in stocks, they’re not going to want to have to split their savings between two different apps, or have to move money around between two different accounts,” Harrison said on Thursday’s episode of “Crypto World” on CNBC. “Crypto World” is a programme that focuses on cryptocurrencies and blockchain technology.
“They would like to be able to invest in numerous asset classes from a single app and experience if it were possible for them to have one holistic experience where they can do so.” According to him, “that is what we are seeking to deliver for our user by mixing stock trading and cryptocurrency trading into the same application.”
The company would not get any remuneration for order flow, Harrison said, noting “a growing customer concern around transparency and fairness around order routing.” The product, which is named FTX Stocks, will first route orders to Nasdaq through its clearing partner, Embed. During the Robinhood-GameStop trading frenzy that took place in 2017, which encouraged more retail investors to participate in the market, there was more scrutiny directed toward the back-end compensation that brokers receive for steering the trades of their clients to market makers.
According to Harrison, FTX Stocks is more of a play centred on the acquisition of customers. While it is possible that FTX U.S. will incur initial losses on stock trades, the company anticipates making up for those losses in other ways, such as through the provision of its crypto-trading service and the sale of its fundamental crypto services to other brokers and providers of financial services.
Harrison stated, “Let’s get this out of the way: this is not going to be a profitable enterprise for us.” “Our objective is to be in a position to offer this additional service to our clientele so that we can contribute to the growth of our present business,”
In addition to making standard deposits in the form of dollars via wire transfer, ACH, or credit card, customers will also have the option of funding their accounts with stablecoins backed by fiat currencies, such as USDC. Users will be able to trade some securities on a fractional basis, and there will be no minimum needed amounts that consumers must keep in their accounts.
The Wall Street Journal was the first to break the story, which emerges at a time when the S&P 500 index is dangerously close to entering a bear market. The majority of this year has been marked by a severe downtrend in stock prices, as well as in the value of cryptocurrency. Since 2008, April has been the month during which the Nasdaq Composite has experienced the poorest performance.
The announcement was made by FTX U.S. one week after the owner of the company, Sam Bankman-Fried, purchased a minority stake in Robinhood. This made him the third-largest stakeholder and fueled suspicion that he is interested in acquiring the entire company. Shares of Robinhood, a company that got its start in stock trading but has witnessed considerable client demand for cryptocurrency, have been declining and hit an all-time low only last week. This puts them approximately 77 percent lower than their IPO price in July 2021.
This week, Robinhood announced its intentions to make its own more significant push into the cryptocurrency market.
FTX U.S. is the latest fintech company to provide trading in equities in addition to cryptocurrencies, joining the ranks of companies such as Block’s Cash App, SoFi, and Public. Large cryptocurrency competitors such as Coinbase and Binance do not provide stock trading; in fact, Binance discontinued its equities product just one year ago.