FTX US Crypto Exchange Launches Stock Trading
U.S. affiliate of crypto exchange FTX is rolling out commission-free stock trading as part of a bigger bet that retail investors will want to see their crypto and stock investments in one place.
FTX US will offer no-fee brokerage accounts, commission-free trading, and market and company data, the company announced Thursday. For now, the new service is limited to a small number of US users.
As people become more familiar with cryptocurrencies as investment assets and investment services become more readily available to a growing number of retail investors, FTX relies on users who grow weary of managing various applications and accounts for their financial activity, according to the American president of FTX. Bret Harrison. The company hopes to become a one-stop shop for retail investors, he said.
“If they want to invest in stocks, they won’t want to have to split their savings between two different apps, or move money between two different accounts,” Harrison told CNBC’s “Crypto World” on Thursday.
“They would like to be able to have a holistic experience where they can invest in multiple asset classes from a single app and experience. This is what we hope to provide by combining stocks and crypto in the same app for our user “, he said.
The product, called FTX Stocks, will initially route orders to the Nasdaq through its clearing house, Embed, Harrison said, adding that the company will not receive payment for order flow, citing “a growing concern among retailers about transparency and fairness around order routing”. The back-end payments brokers receive for directing customer trades to market makers came under scrutiny last year during the Robinhood-GameStop trading frenzy, which drew more retail investors in the market.
Instead, FTX Stocks is more of a customer acquisition game, Harrison said. Although FTX US may initially lose money on stock trades, it hopes to recover those losses in other ways, including through its crypto-trading service and by selling its basic crypto services to other brokers and financial service providers.
“To begin with, it’s not going to be a profitable business for us,” Harrison said. “Our goal is to be able to add this additional service for our customers to strengthen our existing business.”
Customers will have the option to fund their accounts with fiat-backed stablecoins like USDC in addition to normal dollar deposits via wire transfer, ACH or credit card. There will be no minimum balance required for clients and users will be able to trade certain securities on a split basis.
The news, which was first reported by The Wall Street Journal, comes as the S&P 500 teeters on the edge of a bear market. Stocks – and cryptocurrencies – have suffered a sharp sell-off for most of this year. The Nasdaq Composite had its worst April since 2008.
FTX US made the announcement a week after company owner Sam Bankman-Fried bought a minority stake in Robinhood, making him the third largest shareholder and fueling speculation that he would be interested in acquiring any the society. Shares of Robinhood, which got its start in stock trading and saw strong client demand for the crypto, fell and last week hit an all-time low, around 77% below its IPO price. on the July 2021 stock market.
This week, Robinhood revealed plans for its own bigger push into crypto.
FTX US also joins fintech brands such as Block’s Cash App, SoFi, and Public to offer stock and crypto exchanges. Big crypto rivals like Coinbase and Binance do not offer stock trading, with the latter ending its stock product last year.