The Secret Broker: When men in tights ain’t a bad thing
The Secret Broker
The Secret Broker
After 35 years of stockbroking for some of the biggest houses and investors in both Australia and the UK, the Secret Broker is giving Stockhead the wisdom of all his experience and war stories from the trading floor to the dealer’s desk. This week he turns his attention to the upcoming broking revolution coming to Australia.
The town of Nottingham in the UK is the famous stomping ground of Robin Hood.
He would steal from the rich and give to the poor. Sort of the opposite to the Taxman.
Hollywood immortalised their Robin Hood in the 1991 movie: Robin Hood-Prince of Thieves, starring Kevin Costner and Morgan Freeman with music by Bryan Adams.
To best sum up this movie, Morgan went on to become God and Bryan’s song ‘Everything I do, I do it for you’ was a #1 hit in 16 countries, whereas Kevin went straight to the Rotten Tomatoes Hall of Fame. His American accent and green tights were just too much for the tomato throwing critics.
My insider news to you all, is that Robin Hood is soon coming to Australia.
Not for the tinsel town sequel, ‘Robin Hood Downunder’ starring Paul Hogan, but as an App.
The Robinhood App was launched in 2012, with the mission to ‘Democratise Finance for All’ and boy has it done well.
From small beginnings, it now has more than 6 million users and in July they raised $US323m at a valuation of $US7.6bn.
The App helps steal from the rich brokers and give to the poor non-house-owning millennials by charging ZERO commission on all their share, EFT and Crypto trades.
That’s right, ZERO commission.
Their 7 years of being around has finally started to hurt the opposition, as this week in America, online trading company shares fell between 26 per cent and 9.7 per cent, wiping a total of $US13bn off their combined market value, as they all finally gave in and moved to the same ZERO commission model.
So, how does a broker make money if it does not charge any commission?
Well, Robinhood does not pay interest on any funds on deposit, charges 5 per cent on mini margin lending funding, lends out stock to shorters and option traders for a fee, adds a small charge for option trading plus they get a kickback from the market-makers they push all their trades through. They also pass on any regulatory fees.
I only know they are coming to Australia because, after seeing the carnage in their rivals share prices, I paid a visit to their site and they picked up on my Blackberry’s IP address and up popped their coming-to-Australia message together with a sign-up email alert form. I’m signed up!
I will gladly don the green tights and put on an American accent on trading days, if it means I can trade my shares and crypto for ZERO commission.
My broking buddies can throw all the tomatoes they like at me but I reckon they will be green ones not red ones and the Sheriff of Nottingham Commsec needs to start archery lessons sooner than later, as $19.95 a trade is a bulls eye of a target.
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