Robinhood Introduces Margin Trading in the UK After Regulatory Approval

Why Trust Techopedia
Key Takeaways

  • American trading platform Robinhood has launched margin trading in the UK, allowing investors to borrow funds for expanded trades.
  • UK users can trade US stocks on margin, but local stocks remain unavailable for now.
  • Margin rates range from 5.2% to 6.25%, with a $2,000 minimum account balance requirement.

Robinhood has launched margin trading in the UK, allowing investors to borrow funds against their existing assets to expand their trades. 

The move, which comes four days after Robinhood’s introduction of its desktop platform for futures trading, was made possible after securing approval from the Financial Conduct Authority (FCA).

Margin trading is a high-risk strategy that allows traders to leverage borrowed funds, potentially increasing returns or amplifying losses.

Currently, UK users can trade US stocks using margin while local stocks remain unavailable, according to the company’s press statement. 

The company did not clarify why UK equities are excluded but mentioned that more options would be available soon. 

Robinhood’s margin rates for UK clients start at 5.2% for larger balances and go up to 6.25% for amounts up to $50,000. A minimum account balance of $2,000 is required to qualify for the service.

Competitive Landscape and Additional Features

Robinhood’s UK launch, which began in March 2024, has attracted a substantial user base with its commission-free trading model. However, it faces stiff competition from established platforms like Interactive Brokers, IG and Plus500, which also offer margin trading.

In addition to the new margin trading service, Robinhood has rolled out 24/5 trading capabilities, enabling UK investors to trade continuously with their U.S. counterparts. This aims to increase accessibility for retail traders who previously faced challenges entering leveraged markets.

Robinhood has also implemented protective measures, such as requiring users to opt in for margin accounts and maintaining a $2,000 minimum deposit. 

This foray into margin trading comes after Robinhood launched a securities lending product in the UK in September, allowing users to earn passive income on their stocks.