British digital bank Revolut has been authorised as a licensed broker-dealer in the US, allowing it to expand its commission-free stock trading platform overseas.
Operating under the name Revolut Securities, the $33bn fintech firm plans to offer access to stocks, cryptocurrencies and exchange-traded funds via its app with no minimum required investment.
Competition for commission-free stock trading is heating up in the US, as dominant players such as Robinhood face off against European newcomers such as Revolut and eToro. The sector is also under intense scrutiny, after retail traders caused significant market volatility when piling into popular stocks such as GameStop earlier this year.
“Launching commission-free stock trading is the next logical step in our plans for the US market,” said Nik Storonsky, Revolut chief executive and co-founder, in a 21 September statement.
It comes alongside plans to offer a credit card to US customers as soon as the end of this year, the fintech’s US boss Ron Oliveira told Financial News last month. The digital bank is targeting a goal of a million users in the US in 2021, with plans for a major marketing blitz also on the cards.
Revolut became the UK’s most valuable private technology company ever earlier this year after raising $800m in fresh capital from new investors SoftBank and Tiger Global. Oliveira said at the time that the funding would be put towards financing its growth plans in the US, and chasing banking licences in the UK, Singapore and Australia.
Revolut’s stock trading platform in Europe has racked up about a million users of the product to date, he added.
The digital bank said on 21 September that it hopes to offer fractional share trading to its US users in future. Its platform is offered in partnership with DriveWealth, which also supports its UK and European stock trading unit.
Part of Revolut’s revenue from the new feature will come from payment for order flow, a spokesperson told CNBC which first reported the announcement.
Payment for order flow is a controversial process which allows digital stock brokers to make a profit off selling trades to market makers. Gary Gensler, chair of the US Securities and Exchange Commission, has said a ban of the practice is “on the table”.
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