According to the report of Bloomberg, famous U.S. commission-free trading app Robinhood, makes more than 40% of its revenue by selling its user order data to high-frequency trading firms.
The practice of selling customer data is called payment for order flow and is considered as a defamatory activity for finance firms. Bloomberg also noted that it’s questioning of Robinhood around the practice had prompted the company to amend its terms of service and publish a letter outlining their relationship with major market makers.
Robinhood, is a U.S.-based financial services company headquartered in California. The company offers the Robinhood smartphone mobile app, which allows individuals to invest in publicly traded companies and exchange-traded funds listed on U.S. stock exchanges without paying a commission. The trading app also provides opportunities to trade cryptocurrencies.
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