Sam Bankman-Fried, CEO of FTX US Derivatives, testifies during the House Agriculture Committee hearing titled Changing Market Roles: The FTX Proposal and Trends in New Clearinghouse Models, in Longworth Building on Thursday, May 12, 2022.
Tom Williams | CQ-Roll Call, Inc. | Getty Images
The U.S. affiliate of crypto exchange FTX said Thursday it plans to roll out zero-commission stock trading. The new service was limited to a small number of U.S. users Thursday.
FTX U.S. made the announcement a week after the company’s owner, Sam Bankman-Fried, acquired a minority stake in Robinhood and two days after Robinhood revealed plans for its own bigger push into crypto.
The news, which was first reported by the Wall Street Journal, comes as the S&P 500 teeters on the edge of a bear market. Stocks — and cryptocurrencies, by extension — have been in a brutal sell-off for most of this year. The Nasdaq Composite suffered its worst month in April since 2008.
FTX U.S. will offer no-fee brokerage accounts, commission-free trading and market and company data. Customers will have the option to fund their accounts with fiat-backed stablecoins like USDC in addition to normal dollar deposits through wire transfer, ACH or credit card. There will be no minimum required balances for customers to maintain. Users will be able to trade some securities fractionally.
“Our goal is to offer a holistic investing service for our customers across all asset classes,” FTX US President Brett Harrison said in a news release Thursday. “We have created a single integrated platform for retail investors to easily trade crypto, NFTs, and traditional stock offerings through a transparent and intuitive user interface.”
The product, called FTX Stocks, will initially route orders through Nasdaq. The company said it will not receive any payment for order flow. The back-end payments that brokerages receive for directing clients’ trades to market makers came under scrutiny as Robinhood brought more retail investors into the market.
Instead, FTX Stocks is part of a new customer acquisition strategy the company is using, a spokesperson said. While FTX U.S. may initially lose money on stock trades, it hopes to recoup those losses in other ways, likely through its crypto trading service.
“There is clear market demand for a new retail investment experience that offers full order routing transparency to customers and does not rely on payment for order flow,” Harrison said in the release. “As we grow the product offering and capabilities, we are excited to give our customers even greater choice for order execution, as well as the tools they need to make informed routing decisions.”
Other than Robinhood, FTX U.S. joins fintech brands like Square Cash App, SoFi and Public in offering trading in both stocks and crypto. Big crypto-native rivals like Coinbase and Binance do not offer stocks, with the latter ending its equities product last year.