$ 33 billion fintech Revolut launches commission-free equity trading in the United States

$ 33 billion fintech Revolut launches commission-free equity trading in the United States

Revolut CEO Nikolay Storonsky speaks on stage at the TechCrunch Disrupt conference in San Francisco, California.

Kimberly White | Getty Images

CNBC has learned that Revolut, a $ 33 billion global fintech player, will soon be offering commission-free equity trading to U.S. clients.

The startup is expected to announce Tuesday that it has obtained a broker’s license in the United States, allowing it to compete with Robinhood and Square in the hot world of retail, CEO and founder Nick Storonsky said. According to.

Revolut has grown into one of Europe’s leading consumer fintech companies since its inception in 2015, constantly accumulating new features. The app started out as a way for people to avoid currency trading fees on the go, but quickly added banking, trading, and crypto functionality among dozens of products. It now has more than 16 million subscribers.

The approach helped him secure a massive $ 33 billion valuation in July from investors like SoftBank and Tiger Global, who see London-based Revolt as a candidate to create the first super-app. global financial. But to get there, it must break into the American market, where competitors from Robinhood to Chime have already cornered the fintech ecosystem.

“We are building a single app where people can manage all aspects of their finances, from banking and forex to cryptocurrency and stock trading,” Storonsky said. “We look forward to breaking down the usual barriers to entry around account minimums and complex interfaces such as stock trading.”

Revolut was launched in the United States last year at the start of the pandemic and has since added high-interest savings, small business banking, US-Mexico remittances, and commerce from cryptocurrency.

Revolut’s trading feature allows users to buy or sell popular US stocks, including Apple, Tesla, and Beyond Meat.

Reverse

Perhaps its biggest appeal, however, is retail equity trading: According to JMP Securities, more than 20 million new investors have joined the fray since last year. CNBC reported last month that amid the trade boom that has benefited disruptors and incumbents, others are looking to get started: PayPal is working on its own stock trading platform.

Revolut is currently testing its stock trading service, which will allow users to buy ETFs and stocks of companies listed on the NYSE and NASDAQ, according to Ron Oliveira, head of Revolut’s US operations. It will be available in a few months and will eventually make it possible to invest additional sums from purchases of fractional shares and card transactions.

Oliveira said it took 16 months to get a broker’s license through the Financial Industry Regulatory Authority. Notably, he said, Revolut has been approved to be an “offer broker” and will rely on New Jersey fintech DriveWealth to clear transactions, as is the case with European business operations in New Jersey. Revolut. , They said.

“FINRA did a deep dive, they asked a lot of questions because they wanted to see what the consumer experience was like,” Oliveira said. “It took them a while to get comfortable, but we’re so happy they got there. “

payment for order flow

While a Revolut executive said in 2019 that its European operations would not be based on payment for order flows, an industry practice where market makers pay brokerage fees for customer orders, US companies are about to take a different approach. East.

According to a spokesperson, Revolut will collect payments for the revenue from the order flow in the United States. Robinhood is one of the primary means of generating income, and it is a practice closely scrutinized by the Chairman of the Securities and Exchange Commission, Gary Gensler.

Oliveira said Revolut is also working with California regulators on its request for a US banking charter, which was first reported by CNBC last year. He said the process is unlikely to be completed this year.

Storonsky said the company will eventually aim for a public listing in the UK, US or perhaps dual listing. After raising $ 800 million in July, the reversal is expected to be done to raise funds from private investors, he said.

“That would be my hope, because the reality is that we are generating free cash flow,” said the founder. “We don’t need additional capital from outside investors.

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