Robinhood rolls out fractional trading, allowing clients to trade stocks with as little as $1


Robinhood, the California-based broker, is set to roll out fractional stock-trading in what appears like a bid to distinguish it from its incumbent rivals. 

The announcement took place against the backdrop of increasingly fierce competition among financial service providers. Robinhood pioneered zero-trading in the broker space. However, a number of companies including Charles Schwab, Fidelity Investment, JPMorgan Chase's You Invest, and Ally Investors have also taken their fees to zero. Robinhood's platform lost its competitive edge.

In October, bitcoin-friendly payments app Cash App added support for fractional trading and brokerage giant Charles Schwab announced its plan to do the same in the near future. Last month, JPMorgan Chase also released a similar feature allowing clients with less than $5,000 in ETFs and cash balances to trade fractional shares.

Robinhood is following their lead. Starting Dec. 16, the fractional trading feature will become available to a portion of Robinhood's 10 million approved users while the rest will gain access to it by the end of this year or in early 2020, Business Insider reported.

"I think the user that we're particularly excited about is the first-time investor that wants to get started and maybe has a couple of dollars," Robinhood product manager Abhishek Fatehpuria told Business Insider. "They can build a diversified portfolio with a majority of the stocks they want to own."

In the past few months, Robinhood has been actively growing and diversifying its services. In November, the company expanded its cryptocurrency trading service to 8 more states, bringing the total number of states it operates in to 47. Moreover, it recently announced its plan to launch a cash management account after its 2018 checking and savings product with a 3% interest rate failed amid the regulatory outcry. Earlier this year, Robinhood also tried to go into traditional bank services with a bank charter application, although the attempt turned out to be unsuccessful and the company decided to withdraw the application in late November.

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May 5, 2022, 3:17PM UTC