How Robinhood Financial and Crypto make money? | Robinhood

How Robinhood Financial and Crypto make money?

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Overview

Our mission is to democratize finance for all. Earning revenue allows us to offer you a range of financial products and services at low cost, including commission-free trading.* Here’s how Robinhood Financial and Robinhood Crypto generate the majority of their revenue:

  • Rebates from market makers and trading venues
  • Robinhood Gold subscription
  • Margin interest
  • Stock loan
  • Income generated from cash
  • Cash Management

*No commission on trades of stocks, ETFs, crypto, or options. Other fees may apply, such as for Robinhood Connect. Check out Robinhood Financial’s Fee Schedule for details.

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Rebates from market makers and trading venues

When you buy or sell stocks, ETFs, and options through your brokerage account, your orders are sent to one or more market makers or exchanges for execution. To compete with exchanges, market makers offer rebates to brokerages. Market makers typically offer better prices than exchanges.

Robinhood Securities, our clearing broker, developed a routing system to incentivize the market makers Robinhood has relationships with to compete for order flow based on the amount of price improvement obtained. This algorithm, known as the smart order router, prioritizes sending your order to a market maker that’s likely to give you the best execution, based on historical performance. The smart order router also directs a small portion of orders in stocks or ETFs to an exchange, taking into account the quality of past executions. This preserves our ability to maintain trading in the event that one or more market makers are unable to execute orders. Under applicable exchange fee schedules, we would generally pay the exchange when we take liquidity and be paid when we provide liquidity.

Similarly, Robinhood Crypto has relationships with crypto trading venues that allow you to receive competitive prices. Robinhood Crypto receives variable volume rebates from those trading venues. As of May 13, 2022, for every $100 of notional value for executed crypto orders, Robinhood received $0.35 in rebates from its trading venues.

Check out Robinhood Connect and the Robinhood Crypto Fee Schedule for more details.

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Robinhood Connect

Robinhood Connect is an extension of Robinhood Crypto. Currently, for every $100 of notional value for executed crypto orders, Robinhood receives $0.35 in rebates from its trading venues.

There is a fee depending on how you fund your Robinhood Connect transaction:

  • Debit card as payment method: 1.5%
  • Bank account transfer as payment method: 1.5%

(The rates shown above are subject to change at any time without notice and at Robinhood’s discretion.) Check out the Robinhood Crypto Fee Schedule for more details.

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Robinhood Gold

Robinhood Gold, a suite of powerful investing tools, gives you access to Morningstar research reports, NASDAQ Level II Market Data, bigger instant deposits, and margin investing at a discounted rate, if eligible. You pay a $5 monthly fee for the service. When you invest on margin, you’re borrowing funds from Robinhood Securities. If you use more than $1,000 of margin, you’ll pay 8% yearly interest on the settled margin amount you use above $1,000.

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Securities lending

Robinhood Securities earns income from lending securities to counterparties.

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Income from cash

Robinhood Securities generates income on uninvested brokerage cash that isn't swept to the brokerage cash sweep network of program banks, primarily by depositing this cash in interest-bearing bank accounts.

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Cash Management

Sutton Bank, which issues the Robinhood debit card pursuant to license by Mastercard® International Incorporated, receives an interchange fee that is passed to Robinhood Financial, our introducing broker. Interchange fees are earned by most debit and credit card issuers and are meant to cover things like transaction processing and fraud loss. The Robinhood debit card is offered in connection with a brokerage account provided through Robinhood Financial LLC, member of SIPC and FINRA.

Robinhood Securities and Robinhood Financial also receive fees from program banks for sweeping funds to them.

Note

Cash Management is no longer accepting new customers at this time.

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Other

We make money from a range of other, smaller revenue streams, including proxy service revenue and fees listed in the Robinhood Financial's Fee Schedule.

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Disclosures

Margin investing involves the risk of greater investment losses. Before using margin, you must determine whether this type of strategy is right for you given your investment objectives and risk tolerance. For more information, review our Margin Disclosure Statement.

Robinhood Financial charges a standard margin interest rate of 12% and a margin interest rate of 8% for customers who subscribe to Gold. The margin interest rate is calculated by adding 6.5% (for non-Gold customers) or 2.5% (for Gold customers) to the upper bound of the Target Federal Funds Rate, which is set by the Federal Reserve and is subject to change without notice. The formulas used to calculate the margin interest rate are subject to change at Robinhood Financial’s discretion. The margin rates shown are as of July 27, 2023 and might change at any time without notice and at Robinhood Financial’s discretion. The standard margin interest rate will be rolled out to customers who don't subscribe to Gold in phases over a period of time, are subject to eligibility criteria, and so may not be available immediately to all customers.

Robinhood Financial LLC (member SIPC) is a registered broker dealer. Robinhood Securities, LLC (member SIPC) is a registered broker dealer and provides brokerage clearing services.

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Brokerage services are offered through Robinhood Financial LLC, (RHF) a registered broker dealer (member SIPC) and clearing services through Robinhood Securities, LLC, (RHS) a registered broker dealer (member SIPC). Cryptocurrency services are offered through Robinhood Crypto, LLC (RHC) (NMLS ID: 1702840). Robinhood Crypto is licensed to engage in virtual currency business activity by the New York State Department of Financial Services. The Robinhood spending account is offered through Robinhood Money, LLC (RHY) (NMLS ID: 1990968), a licensed money transmitter. A list of our licenses has more information. The Robinhood Cash Card is a prepaid card issued by Sutton Bank, Member FDIC, pursuant to a license from Mastercard®. Mastercard and the circles design are registered trademarks of Mastercard International Incorporated. RHF, RHY, RHC and RHS are affiliated entities and wholly owned subsidiaries of Robinhood Markets, Inc. RHF, RHY, RHC and RHS are not banks. Products offered by RHF are not FDIC insured and involve risk, including possible loss of principal. RHC is not a member of FINRA and accounts are not FDIC insured or protected by SIPC. RHY is not a member of FINRA, and products are not subject to SIPC protection, but funds held in the Robinhood spending account and Robinhood Cash Card account may be eligible for FDIC pass-through insurance (review the Robinhood Cash Card Agreement and the Robinhood Spending Account Agreement).

Options trading entails significant risk and is not appropriate for all customers. Customers must read and understand the Characteristics and Risks of Standardized Options before engaging in any options trading strategies. Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period of time. Certain complex options strategies carry additional risk, including the potential for losses that may exceed the original investment amount.

Commission-free trading of stocks, ETFs and options refers to $0 commissions for Robinhood Financial self-directed individual cash or margin brokerage accounts that trade U.S. listed securities and certain OTC securities electronically. Keep in mind, other fees such as trading (non-commission) fees, Gold subscription fees, wire transfer fees, and paper statement fees may apply to your brokerage account. Check out Robinhood Financial’s Fee Schedule for details.

© 2023 Robinhood. All rights reserved.
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Brokerage services are offered through Robinhood Financial LLC, (RHF) a registered broker dealer (member SIPC) and clearing services through Robinhood Securities, LLC, (RHS) a registered broker dealer (member SIPC). Cryptocurrency services are offered through Robinhood Crypto, LLC (RHC) (NMLS ID: 1702840). Robinhood Crypto is licensed to engage in virtual currency business activity by the New York State Department of Financial Services. The Robinhood spending account is offered through Robinhood Money, LLC (RHY) (NMLS ID: 1990968), a licensed money transmitter. A list of our licenses has more information. The Robinhood Cash Card is a prepaid card issued by Sutton Bank, Member FDIC, pursuant to a license from Mastercard®. Mastercard and the circles design are registered trademarks of Mastercard International Incorporated. RHF, RHY, RHC and RHS are affiliated entities and wholly owned subsidiaries of Robinhood Markets, Inc. RHF, RHY, RHC and RHS are not banks. Products offered by RHF are not FDIC insured and involve risk, including possible loss of principal. RHC is not a member of FINRA and accounts are not FDIC insured or protected by SIPC. RHY is not a member of FINRA, and products are not subject to SIPC protection, but funds held in the Robinhood spending account and Robinhood Cash Card account may be eligible for FDIC pass-through insurance (review the Robinhood Cash Card Agreement and the Robinhood Spending Account Agreement).

Options trading entails significant risk and is not appropriate for all customers. Customers must read and understand the Characteristics and Risks of Standardized Options before engaging in any options trading strategies. Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period of time. Certain complex options strategies carry additional risk, including the potential for losses that may exceed the original investment amount.

Commission-free trading of stocks, ETFs and options refers to $0 commissions for Robinhood Financial self-directed individual cash or margin brokerage accounts that trade U.S. listed securities and certain OTC securities electronically. Keep in mind, other fees such as trading (non-commission) fees, Gold subscription fees, wire transfer fees, and paper statement fees may apply to your brokerage account. Check out Robinhood Financial’s Fee Schedule for details.

© 2023 Robinhood. All rights reserved.