Robinhood introduces margin investing for UK clients after getting regulator’s approval

Robinhood, a U.S.-based brokerage firm, announced on October 21 that it would introduce margin investing to its UK-based clientele. The brokerage firm mentioned that the margin trading option would allow UK investors to use their existing holdings to accumulate more assets. However, Robinhood warned investors that margin trading was a high-risk investment that could increase losses. 

The investment company reiterated that introducing margin trading would help investors diversify their portfolios. Robinhood explained that the trading gesture would increase investor buying power depending on their holdings. 

The exchange expressed the rarity of advanced investment options in the UK market due to regulatory limitations. Financial watchdogs in the region fear the risks associated with options like margin investing, so the trading feature has been significantly limited to wealthier investors and businesses. 

However, the U.S. exchange received approval from the Financial Conduct Authority. The president of Robinhood UK, Jordan Sinclair, said the approval came after multiple discussions with the FCA to convince the financial regulator of investor safety. 

The U.S. based is now among the few investment firms offering margin trading in the UK, including CMC Markets, Interactive Brokers, and IG. The company launched in the UK in November 2023 after extended delays from the FCA since 2019. 

Robinhood to offer UK clientele flexibility

The brokerage firm highlighted the flexibility it would offer investors through the margin trading feature. According to the exchange, retail investors have limited options in the UK market due to high fees and competitive offers reserved for wealthy investors by traditional brokerage firms. The platform, therefore, promised its UK clientele more flexibility.

“With the launch of margin investing, we’re giving our UK customers even more flexibility and tools to enhance their investing strategies.”

Jordan Sinclair, President of Robinhood UK

The company also outlined the interest rates UK clients could expect if they met the requirements to engage in margin trading markets. According to Sinclair, the competitive interest rates would improve Robinhood’s overall user experience. The interest rates will range from 5.20% to 6.25% for investments below $50,000 to those above $50 million. 

The U.S.-based exchange confirmed that UK investors could access the service starting on October 21. The company further assured investors of the increased availability of the service in other regions in the coming weeks. Robinhood will require investors to apply for margin investing through the Robinhood UK app. 

UK investors to access broad tool availability

In March this year, Robinhood fully launched its stock trading application for UK clients. According to the U.S exchange, customer feedback showed increased interest in the brokerage firm’s lack of foreign exchange and commission fees. UK investors can also enjoy $2.5 million in FDIC insurance through the Robinhood Brokerage Cash Sweep Program. 

The brokerage firm highlighted the different needs UK clients have, necessitating the introduction of new features, such as margin investing. Notably, Robinhood introduced stock lending to its UK clientele in September this year, allowing investors to transfer their assets to a borrower for a certain period.