China’s Robinhoods are hot in Singapore

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Hi readers,

Robinhood is in the news again.

In the US, the new SEC chairman Gary Gensler has raised the possibility that the gamification aspects of mobile trading apps like Robinhood, which encourage users to trade more, may result in lower returns for the average user.

While the American app is not available here in Singapore, we have seen the rise of similar ones. Two of these, Tiger and Moomoo, have blanketed the country with colorful ads touting low trading commissions and free shares for new users.

Tiger and Moomoo are both owned by Chinese fintech companies: UP Fintech and Futu respectively. They were founded by veterans of Chinese tech giants. Their business models differ from Robinhood’s, though, since they do not yet sell order flows to market makers. Instead, their main sources of revenue are trading commissions (Robinhood famously does not charge users any trading fees) and interest from lending money for trading to users.

However, like Robinhood, they make more money when more users trade. This raises interesting questions, including what Gensler has described as the “central question”: When new technologies come along and change the face of finance, how do regulators continue to achieve their core public policy goals and ensure that markets work for everyday investors?

This query applies to every industry that technology is transforming.

— Simon Huang, journalist at Tech in Asia

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