Public, a U.S.-based brokerage startup, will be making its platform available in the U.K. as of Thursday. British users will then have the capability to trade up to 5,000 U.S.-listed stocks and ETFs.In doing so, Public will take on a number of well-known digital brokerages and emerging challengers, such as Revolut and Freetrade. That compares to currency conversion rates from Revolut of 0.5% to 0.7%.
On Thursday, American stock brokerage startup Public expanded internationally by launching its services in the U.K. Holding a celebrity-backed status, with Will Smith and Tony Hawk among its supporters, the app will provide U.K. traders access to over 5,000 U.S.-listed stocks during U.K. trading hours without any commission charge. Public intends to enlarge its U.K. product range to embody other asset classes that it offers in the U.S., including ETFs, U.S. government bonds, and cryptoassets. Subsequently, the firm plans to introduce an "investment plans" tool that allows users to create personalized recurring investments.With the presence of firms such as AJ Bell, Hargreaves Lansdown, Revolut, Freetrade, and eToro already in the market, Public faces stiff competition from multiple sources, yet is adamant its lower foreign exchange fees will be its advantage. The company insists customers will only be charged a 0.3% currency conversion rate on deposits of British pounds into U.S. dollars, unlike Revolut's 0.5%-0.7% rate.
Public, a platform which enables people to make investments in stocks and cryptocurrency, was founded in September 2019 by Jannick Malling and Abraham, who currently hold the position of co-CEOs from Denmark and Germany respectively. The platform experienced a surge in its user base of more than 1 million in 2021, partially due to the GameStop phenomenon, wherein the stock of a U.S. game retailer experienced a big jump due to the activity of a large online investor group. Owing to their worries that Payment for Order Flow (a practice where brokerages are remunerated by market makers to direct orders to them) was encouraging excessive day trading, Public eradicated PFOF from their offerings and also added 'safety labels' to certain stocks to notify people when certain companies are facing severe market instability or the danger of bankruptcy. The European Union is trying to follow in the footsteps of the UK in banning the PFOF practice. Rather than applying for their own license, Public has opted to join forces with a regulated entity in the UK, Khepri Advisers Limited, to run their services there. Dann Bibas, the firm's head of international, communicated to CNBC that "a lot of fintechs have adopted this method". Khepri Advisers Limited is authorized and regulated by the Financial Conduct Authority.
Bibas stated that Public is presently concentrating on the U.K. with its international growth plans and that, using experiences from their U.K. introduction, they aim to extend operations into other European markets. At the moment they have locations in New York, Copenhagen, London, and Amsterdam.
Recently, online brokerage platforms have struggled in light of an increasingly costly way of life. E.g. Freetrade, the U.K. brokerage startup, had to cut its valuation by 65% to £225m during a crowdfunding round due to the "different market environment". On the other hand, Public, an investment app, has amassed $300 million from investors and has not felt the need to raise cash. Its last valuation stands at $1.2 billion, awarding it the much-coveted "unicorn" status. Not only that, but the higher interest rates are benefiting Public, due to its ability to earn yields on customers' deposits and also a surge in interest in investments like U.S. Treasurys.
The public is hoping to dodge the same outcome as its American counterpart Robinhood which in 2020 decided to focus on their domestic market rather than expand into the U.K. Abraham is confident this will not be the case for Public. He explained to CNBC that their business model is applicable to other regions without having to invest significantly like other companies that must build the infrastructure for last-mile delivery. Though Robinhood plans to return to the U.K. in the near future due to their acquisition of Ziglu, a cryptocurrency trading app, Abraham is still unconcerned.
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