Robinhood customers traded almost 1bn event contracts in the second quarter of this year, the company said in a live event on Wednesday.
The US broker made the announcement during its first live earnings presentation for a financial quarter, with CEO Vlad Tenev and the company’s Chief Financial Officer, Jason Warnick, overseeing the event.
As noted, one of the more striking pieces of information that the two executives revealed was related to event contracts.
Warnick said that the firm has now seen cumulative trading in the products, since they were launched at the end of last year, of over 2bn contracts.
For the second quarter of this year, Robinhood customers traded “nearly” 1bn contracts. Warnick also provided some colour on what traders are actually using the products for.
“Since we launched [event contracts], customers have engaged in over 100m economic contracts, so really nice,” said Warnick. “A large percentage of the transactions in prediction markets are in sports and we love to see our customers engaged in that way as well. I think over time what you’ll see is we’ll continue to add [contracts] across all elements of culture, whether it’s things that would be on the front page, to the business section, to the sports page. I think we can tell by the engagement by customers that it’s a product that is resonating.”
Tenev added that Robinhood is building technology in house that will enable the firm to broaden the set of contracts it can offer to customers.
Robinhood charges a $0.01 commission per contract, per side. The result is that from commissions alone, the broker must have made approximately $10m in revenue from the business line. That figure is likely as higher as many traders will exit positions before contract expiry, which would incur an additional $0.01 fee per contract.
The company also takes interest on the cash used to fund event contract purchases. For example, if you bought $1,000-worth of event contracts on an event one month in the future, and held the contracts to expiry, Robinhood would collect the interest for that one month period on the $1,000.
Global expansion plans
Although it was not touched on in the event itself, another interesting piece of information put out in the company’s accompanying report relates to global expansion.
Robinhood says it is planning on acquiring three more global financial licenses. The firm did not say where these would be.
On top of that, the broker said it will expand in the Asia-Pacific region. This is likely to be from Singapore, where the company has already set up an entity.
