Finance Monthly - November 2021 Edition

The OpEd continues Tenev’s long tradition of using obfuscation and deflection to avoid discussing any difficult questions posed by Robinhood’s “free” brokerage model. Indeed, the very title of the piece “Robinhood’s Users Come Under Attack” tells you right out of the gate that Mr Tenev isn’t here to dialogue with critics but rather to belittle them and deflect their criticisms. This should come as no surprise to those who have followed Robinhood for any length of time. They have been hiding behind their users for years now, including recently paying a $65 million fine to settle charges with the SEC for “Misleading Customers About Revenue Sources and Failing to Satisfy Duty of Best Execution.” Robinhood is the Facebook of eBrokers today. Like Facebook, they have built a user-as-product revenue model where they provide “free” services to their users while leveraging user data to get paid by their actual customers. In the case of Facebook, the real customers of Facebook are the advertisers. In the case of Robinhood, the real customers are the wholesale market makers that pay Robinhood for the privilege of executing user trades. This practice is known as payment-for- Finance Monthly. F i nanc i a l Innov a t i on & F i nTech 19