Canada markets closed
  • S&P/TSX

    18,729.66
    -104.50 (-0.55%)
     
  • S&P 500

    3,845.08
    +13.69 (+0.36%)
     
  • DOW

    31,037.68
    +69.86 (+0.23%)
     
  • CAD/USD

    0.7668
    -0.0007 (-0.09%)
     
  • CRUDE OIL

    98.59
    -0.91 (-0.91%)
     
  • BTC-CAD

    26,456.55
    -534.65 (-1.98%)
     
  • CMC Crypto 200

    440.15
    +4.62 (+1.06%)
     
  • GOLD FUTURES

    1,738.60
    -25.30 (-1.43%)
     
  • RUSSELL 2000

    1,727.55
    -13.78 (-0.79%)
     
  • 10-Yr Bond

    2.9130
    +0.1040 (+3.70%)
     
  • NASDAQ

    11,361.85
    +39.61 (+0.35%)
     
  • VOLATILITY

    26.75
    -0.79 (-2.87%)
     
  • FTSE

    7,107.77
    +82.30 (+1.17%)
     
  • NIKKEI 225

    26,107.65
    -315.82 (-1.20%)
     
  • CAD/EUR

    0.7531
    +0.0059 (+0.79%)
     

Robinhood launches stock lending program in revenue diversification push

  • Oops!
    Something went wrong.
    Please try again later.
·2 min read
Robinhood logo is seen on a smartphone in front of a displayed same logo in this illustration taken
In this article:
  • Oops!
    Something went wrong.
    Please try again later.

(Corrects title to Chief Financial Officer in paragraph 4)

By John McCrank

NEW YORK (Reuters) -Robinhood Markets Inc on Wednesday said it launched a fully-paid securities lending program, which lets the online broker's users lend out shares they own through the popular app to market participants and passively collect a cut of the fees.

The move is part of Robinhood's efforts to diversify its income away from transactional revenue, which made up nearly three quarters of the company's revenue in the first quarter and were down 48% from a year earlier when individual investors were piling into so-called meme stocks.

Robinhood already makes money by lending out shares that its customers buy on margin, but the new fully-paid program will include all shares held by its nearly 23 million users, so long as they opt in and meet certain qualifications.

The new program will potentially bring in 1-to-2 times the revenue that Robinhood's margin securities lending program generates, the company's Chief Financial Officer, Jason Warnick, said on a call with analysts last week.

The Menlo Park, Calif.-based company earned $137.2 million from margin securities lending in 2021.

"Transactional revenue has been the core component of the revenue but as you build out the offering those other components become a more meaningful portion," Steve Quirk, Robinhood's chief brokerage officer, said in an interview.

Demand to borrow shares for a fee often comes from institutional investors and other brokerages looking to settle trades or facilitate short sales.

"It's just another way, particularly in a challenging market, like the one we've experienced lately, to generate a little bit of additional income off of an existing portfolio," said Quirk.

To qualify for the fully-paid lending program, Robinhood users must have $5,000 in total account value, at least $25,000 in reported income or some trading experience, he said.

(Reporting by John McCrank; editing by Bernard Orr)

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting