This obscure part of the market is making Reddit trade harder
The backlash over trading restrictions imposed by Robinhood Markets may be driving customers to one of the brokerage’s fastest-growing rivals, Webull Financial.
“We’re part of this revolution that’s going on,” Webull Chief Executive Officer Anthony Denier said Friday in an interview with Bloomberg Television. “The times have completely changed. We find that our customers have multiple brokerage accounts across many different platforms.”
A day earlier, the Chinese-owned brokerage said new account signups were 1,548 per cent higher than the seven-day average. The firm’s trading app ranked as the second-most-popular free iPhone app in the U.S. behind only Robinhood, up from No. 60 on Wednesday, according to app-tracking firm SensorTower.
Robinhood’s restrictions on highly volatile stocks including GameStop Corp. sparked outrage from customers and drew criticism from politicians as varied as Alexandria Ocasio-Cortez and Ted Cruz.
While it was far from the only brokerage to implement trading curbs -- Webull briefly did the same before reversing course on Thursday -- Robinhood attracted the lion’s share of online scorn. The firm later said clients would be able to make limited purchases of some shares it had blocked, but didn’t provide further details.
Denier, 43, said Friday that Webull had no control over the temporary restrictions, which lasted a few hours the previous day, saying its third-party clearing firm was concerned about being able to process the trades.
“It was not our call,” he said.
Denier also said that his firm has a close relationship with regulators, and that Webull met with the Securities Exchange Commission minutes after U.S. markets closed on Thursday.
Brokerages across Wall Street faced a difficult choice on whether to impose curbs after the Depository Trust & Clearing Corp. demanded significantly more collateral to protect against soaring volatility in certain stocks. Shares of GameStop and other companies have swung wildly this week after a flood of buy orders from retail investors who frequent online forums like Reddit’s WallStreetBets.
Even before this week, Webull had positioned itself as the go-to platform for disgruntled Robinhood users. At the end of 2020, Webull was receiving an average of about 850 transfers from other U.S. brokerage accounts every day, roughly half of which it estimated came from Robinhood.