Is Robinhood Securities Solvent and Safe?
Posted on 01/29/2021
Robinhood Securities, LLC is a wholly owned subsidiary of Robinhood Markets, Inc. The stock trading app caught fire from Twitter and other social media after restricting stocks associated with the reddit page Wallstreetbets.
In a CNBC interview on January 28, 2021, Robinhood CEO Vlad Tenev claims that in order to protect the firm and its customers, he had to limit buying in the selected stocks. Tenev claims they did it because of volatility in markets could require more money needed for SEC net capital requirements and clearing house deposits. Tenev claimed they acted proactively in this regard and there was no liquidity issue.
Video link: https://twitter.com/i/status/1354943941330743299
Robinhood’s mission statement from its website: “Robinhood’s mission is to democratize finance for all. We believe that everyone should have access to the financial markets, so we’ve built Robinhood from the ground up to make investing friendly, approachable, and understandable for newcomers and experts alike.”
December 31, 2019 Financials
Robinhood Securities, LLC had assets of US$ 3,313,964,858 at December 31, 2019. US$ 122,226,502 was held in deposits with clearing organizations. US$ 2,398,607,353 was payable to users, while member’s equity was US$ 216,406,188.
June 30, 2020 Financials
Robinhood Securities, LLC had assets of US$ 6,701,029,329 at December 31, 2019. US$ 235,338,823 was held in deposits with clearing organizations. US$ 5,295,449,565 was payable to users, while member’s equity was US$ 493,587,857. Margin loans totaled US$ 1,422,924,555.
At June 30, 2020, Robinhood Securities has $550 million in a committed and secured line of credit with a non-affiliated bank with a maturity date of June 5, 2021.
At June 30, 2020, Robinhood Securities’ net capital was US$ 385,413,939 which was US$ 357,416,221 in excess of the minimum required net capital US$ 27,997,718.
Robinhood Securities is a member of the Depository Trust and Clearing Corporation (“DTCC”) and The Option Clearing Corporation (“OCC”). As part of the membership agreement, Robinhood Securities and other members may be required to pay a proportionate share of the financial obligation of another member who may default on its obligation to these agencies.
On March 2-3, 2020, the Robinhood platform experienced an outage across various services, which prevented customers from using the app, website, and help center and on March 9, 2020, the Robinhood platform experienced an outage across its trading products, which prevented customers from placing trades.
Keywords: Robinhood Markets Inc., Robinhood fees.