Robinhood releases an official statement, says they do not sell customer information

Robinhood, a zero-trading fee cryptocurrency platform, which took the space by storm earlier this year, is back in the limelight. This time, however, unlike the usual good announcements made by the platform, Robinhood is alleged of selling user data to high-frequency trading [HFT] firms.

The news hit the space right after Robinhood disclosed their financial report for the second quarter of 2018 in order to abide by the Securities and Exchanges Commission [SEC] Rule 606. The report spread like wildfire with many claiming that the platform is selling their customers orders and earning millions by doing so.

However, regarding the matter, the Head of Communications of Robinhood, Jack Randall issued an official statement on behalf of Robinhood on Twitter.

The statement claims that Robinhood, alongside other licensed brokerages, is required to execute customer orders at the best available price across every regional and national stock exchange as it is required by the Federal Law.

They said:

“Robinhood, like rest of the industry, participates in rebate programs which help customers get additional price improvement for their orders by creating competition amongst the exchanges and liquidity provides who fill the orders, often resulting in superior execution quality. Any rebate Robinhood received do not adversely impact this best execution obligation.”

Robinhood further claims that the platform is committed towards eliminating conflicts of interest when it comes to executing customer orders. This, according to them, is the reason behind the platform having the same payment rate with its leading execution venues. They also stated that this “eliminates any incentive” to direct orders to a certain execution venue.

The statement continued to say:

“Rohinhood algorithmically routes orders to a variety to of different execution venues based on which is most likely to provide the greatest execution quantity and price improvement on that order in addition to the NBBO. No other facts impact where customers orders are routed.”

The platform said that they earn less revenue with the rebate program around the value of transactions in comparison to it being structured around shares.

Statement released by Robinhood | Twitter

Statement released by Robinhood | Twitter

Furthermore, the platform claimed that they do not sell their customers data, personally identifiable data of any kind to execution venues. Robinhood claims to take the privacy and security of their customers “extremely seriously” and that they have not sold their customer information in the past and neither will they in the future.

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