1 00:00:02,520 --> 00:00:06,400 Speaker 1: This is Bloomberg Business Week from Bloomberg Radio. I'm Carol 2 00:00:06,440 --> 00:00:09,240 Speaker 1: Masser and I'm Tim Stanovik. Welcome to the Bloomberg Business 3 00:00:09,240 --> 00:00:12,240 Speaker 1: Week Extra. It's our weekly podcast bringing you an interesting 4 00:00:12,280 --> 00:00:14,000 Speaker 1: interview from the week. I got to say this was 5 00:00:14,040 --> 00:00:16,240 Speaker 1: one of our favorite interviews when we did it um 6 00:00:16,320 --> 00:00:18,319 Speaker 1: and to be fair, we did it about a week ago. 7 00:00:18,560 --> 00:00:21,440 Speaker 1: It's with Anthony Denier. He's the CEO of the commission 8 00:00:21,480 --> 00:00:24,360 Speaker 1: free online trading platform we Ball. Yeah, he also happens 9 00:00:24,400 --> 00:00:26,599 Speaker 1: to be an Ali Baba Alam and look, we Will 10 00:00:26,680 --> 00:00:29,680 Speaker 1: also got caught up in that frenzy trading around memestocks 11 00:00:29,720 --> 00:00:33,040 Speaker 1: like game Stop, AMC and others, just like robin Hood did, 12 00:00:33,200 --> 00:00:36,159 Speaker 1: right and they put restrictions on trading like after the chaos. 13 00:00:36,280 --> 00:00:39,199 Speaker 1: And you might recall Bloomberg Business Week we recently reported 14 00:00:39,200 --> 00:00:42,080 Speaker 1: on the company we Will. Apparently he has been peeling 15 00:00:42,080 --> 00:00:44,920 Speaker 1: off users from rival robin Hood. It's increased its roster 16 00:00:45,040 --> 00:00:48,240 Speaker 1: of brokerage clients. Check this out, Tim, about tenfold last 17 00:00:48,280 --> 00:00:50,479 Speaker 1: year to more than two million. And that was before 18 00:00:50,479 --> 00:00:52,920 Speaker 1: all of the craziness around game Stop, which of course 19 00:00:52,960 --> 00:00:55,720 Speaker 1: we talked about with the CEO. Here's our conversation with 20 00:00:55,760 --> 00:00:58,440 Speaker 1: Anthony Denier. We did not have a say in the matter. 21 00:00:59,000 --> 00:01:01,520 Speaker 1: We're an introducing firm. We do not operate our own 22 00:01:01,520 --> 00:01:03,960 Speaker 1: clearing house, right so we do not put any customer, 23 00:01:04,040 --> 00:01:06,880 Speaker 1: We do not put any collateral on behalf of customers 24 00:01:06,880 --> 00:01:10,280 Speaker 1: to settle all the transactions that happened on our platform. 25 00:01:10,319 --> 00:01:13,080 Speaker 1: We are simply a portal. So our third party clearing 26 00:01:13,120 --> 00:01:16,679 Speaker 1: house called me at approximately nine eight a m. And 27 00:01:16,760 --> 00:01:19,800 Speaker 1: informed me that they may not be able to settle 28 00:01:20,480 --> 00:01:24,000 Speaker 1: new by orders in three particular names of three most 29 00:01:24,000 --> 00:01:25,880 Speaker 1: popular ones that were seeing on Reddit. And I had 30 00:01:25,920 --> 00:01:28,240 Speaker 1: to make the hard decision to send out a message 31 00:01:28,240 --> 00:01:31,160 Speaker 1: to our users that we are not able to support 32 00:01:31,319 --> 00:01:33,240 Speaker 1: by orders. Why was that a decision you had to 33 00:01:33,240 --> 00:01:34,920 Speaker 1: make it? Why was that a decision you had to make? 34 00:01:34,959 --> 00:01:37,200 Speaker 1: It sounds like it wasn't even a decision like you 35 00:01:37,240 --> 00:01:40,720 Speaker 1: had to send that. Well, you're right, I had to 36 00:01:40,760 --> 00:01:42,800 Speaker 1: send it exactly. I mean I could have. I could 37 00:01:42,800 --> 00:01:44,480 Speaker 1: have went back to the clearing house and said no, 38 00:01:44,880 --> 00:01:47,560 Speaker 1: I'm going to keep the orders open, and what possibly 39 00:01:47,600 --> 00:01:50,160 Speaker 1: could have happened is those trades would have failed, which 40 00:01:50,160 --> 00:01:52,520 Speaker 1: would have cascaded into a much bigger problem. So maybe 41 00:01:52,520 --> 00:01:54,320 Speaker 1: you're right. I did not have that did not have 42 00:01:54,360 --> 00:01:57,200 Speaker 1: a decision of So were what is the issue that 43 00:01:57,240 --> 00:01:59,200 Speaker 1: needs to be fixed here in order to to to 44 00:01:59,240 --> 00:02:01,560 Speaker 1: be able to actually make trades when when when your 45 00:02:01,640 --> 00:02:06,440 Speaker 1: users want to make trades? What needs to be fixed? Uh? Well, 46 00:02:06,480 --> 00:02:10,280 Speaker 1: first off, there's a two days to business day waiting 47 00:02:10,320 --> 00:02:14,240 Speaker 1: period for settlement. Right. The systems that go into settling 48 00:02:15,120 --> 00:02:19,000 Speaker 1: transactions are very antiquated. To put it lightly, they're working 49 00:02:19,080 --> 00:02:22,520 Speaker 1: on technology that was built decades ago. Right, it used 50 00:02:22,520 --> 00:02:24,440 Speaker 1: to be T plus three, now it's T plus two. 51 00:02:24,480 --> 00:02:26,480 Speaker 1: There is talk that they're gonna work till T plus one. 52 00:02:26,720 --> 00:02:29,320 Speaker 1: That's two whole days. That massive amounts of capital need 53 00:02:29,360 --> 00:02:32,560 Speaker 1: to be allocated as collateral to deal with margin requirements 54 00:02:32,600 --> 00:02:35,480 Speaker 1: as the DTC clearinghouse. So what needs to be done. 55 00:02:35,520 --> 00:02:38,240 Speaker 1: We need to implement new technology i e. Blockchain, which 56 00:02:38,280 --> 00:02:40,240 Speaker 1: has been talked about for a long time. But when 57 00:02:40,240 --> 00:02:42,079 Speaker 1: you're taking an old system and trying to bring it 58 00:02:42,120 --> 00:02:45,000 Speaker 1: into the new world, that does take time. Um, So 59 00:02:45,040 --> 00:02:49,040 Speaker 1: there needs to be technology technological advances in order to 60 00:02:49,200 --> 00:02:52,840 Speaker 1: ensure that this does not happen again. So that's what 61 00:02:52,919 --> 00:02:57,160 Speaker 1: we're trying to get to. Like, what's the problem? Was it? Traders? 62 00:02:57,680 --> 00:03:00,760 Speaker 1: Individual retail investors, you know, doing something wrong or was 63 00:03:00,800 --> 00:03:04,440 Speaker 1: it just a case that the infrastructure, the logistics just 64 00:03:04,560 --> 00:03:07,560 Speaker 1: doesn't quite work as you say, antiquated systems. Is that 65 00:03:07,639 --> 00:03:12,560 Speaker 1: the problem? Now, that's a that's a loaded question a 66 00:03:12,600 --> 00:03:16,359 Speaker 1: little bit because on on the surface, I will say 67 00:03:16,400 --> 00:03:19,480 Speaker 1: that that is the problem. Now, obviously, I think what's 68 00:03:19,520 --> 00:03:23,080 Speaker 1: going on is a little deeper than just the market 69 00:03:23,200 --> 00:03:26,560 Speaker 1: mechanics of trade settlement right now. If you if you 70 00:03:26,600 --> 00:03:28,959 Speaker 1: want to talk about the story of why specific brokerages 71 00:03:29,040 --> 00:03:31,840 Speaker 1: stopped the new opening positions or i e. By orders 72 00:03:32,040 --> 00:03:35,160 Speaker 1: of these specific stocks, yes, it was a market mechanic. 73 00:03:35,240 --> 00:03:38,360 Speaker 1: It was a lack of capital, right, and fear of 74 00:03:38,560 --> 00:03:41,760 Speaker 1: counterparty risk that was the reason for that. But more 75 00:03:41,880 --> 00:03:47,160 Speaker 1: underlying is why are these masses having a populous movement 76 00:03:47,240 --> 00:03:50,520 Speaker 1: going against what you know they would call, you know, 77 00:03:50,640 --> 00:03:54,320 Speaker 1: the institutions, right, the hierarchy, you know, um, you know 78 00:03:54,360 --> 00:03:58,280 Speaker 1: the suits. There's an unlevel playing field that's been going 79 00:03:58,320 --> 00:04:01,120 Speaker 1: on for a long time, and firs like weevil have 80 00:04:01,280 --> 00:04:03,880 Speaker 1: been aggressively trying. We've been trying since we started two 81 00:04:03,920 --> 00:04:06,760 Speaker 1: and a half years ago, open up the playing field. 82 00:04:06,760 --> 00:04:08,280 Speaker 1: I don't I'm not even gonna evolve using the word 83 00:04:08,280 --> 00:04:11,600 Speaker 1: democratization because it gets used too much. We're giving access 84 00:04:12,240 --> 00:04:16,440 Speaker 1: two uh, not only tools, but access to markets and 85 00:04:16,640 --> 00:04:20,720 Speaker 1: trading strategies that retail investors had never had access to, right, 86 00:04:20,880 --> 00:04:22,520 Speaker 1: or they did have access to they had to have 87 00:04:22,600 --> 00:04:24,440 Speaker 1: huge amounts of capital at the firm, or they had 88 00:04:24,480 --> 00:04:29,200 Speaker 1: to pay ridiculous fees a platform fee, subscription fees, or commissions. 89 00:04:29,279 --> 00:04:31,919 Speaker 1: And we removed that and that started. That started the trend, 90 00:04:31,960 --> 00:04:34,640 Speaker 1: and now they want the playing field level on all levels. Right, 91 00:04:34,680 --> 00:04:36,800 Speaker 1: Why does what is institutions get the ability to have 92 00:04:36,839 --> 00:04:40,680 Speaker 1: a ten x leverage capability with portfolio margin where regulation 93 00:04:41,600 --> 00:04:43,960 Speaker 1: stops a retail investor from two x leverage. Well, you 94 00:04:44,000 --> 00:04:47,400 Speaker 1: know someone would say, forgive me not my words or 95 00:04:47,440 --> 00:04:51,640 Speaker 1: my assessment, but smart investor versus dumb investor. Do individual 96 00:04:51,680 --> 00:04:54,880 Speaker 1: retail investors really understand the implications of that kind of leverage. 97 00:04:56,600 --> 00:04:59,279 Speaker 1: I think they're really starting to. And like I said, 98 00:05:00,000 --> 00:05:04,240 Speaker 1: it's been listed. Um hey, Anthony, give us some numbers 99 00:05:04,520 --> 00:05:07,280 Speaker 1: from from this week. I mean, what kind of increase 100 00:05:07,480 --> 00:05:10,080 Speaker 1: in action did you see on the platform? We saw 101 00:05:10,200 --> 00:05:12,760 Speaker 1: some of these trading apps moved to the top of 102 00:05:12,839 --> 00:05:15,960 Speaker 1: the iTunes app store, so obviously there was a lot 103 00:05:15,960 --> 00:05:20,200 Speaker 1: of activity. Yeah, um, a lot of activity is probably 104 00:05:20,240 --> 00:05:24,800 Speaker 1: putting it lightly. Um. We've we've been very fortunate to 105 00:05:24,880 --> 00:05:27,239 Speaker 1: have to be growing at a at a very fast 106 00:05:27,279 --> 00:05:29,400 Speaker 1: pace over the course of the past year and a half, 107 00:05:29,440 --> 00:05:34,440 Speaker 1: in particularly coinciding with the whole retail trading world going 108 00:05:34,480 --> 00:05:38,560 Speaker 1: to zero commission. It opened up retail investing to a 109 00:05:38,560 --> 00:05:41,520 Speaker 1: whole new demographic of user. Most of those users were 110 00:05:41,600 --> 00:05:43,960 Speaker 1: app based users, right, we are an app based platform. 111 00:05:44,160 --> 00:05:46,760 Speaker 1: Are demographic kinds of skew younger because we are so 112 00:05:46,920 --> 00:05:51,040 Speaker 1: app specific. Um, So we've been very fortunate to have 113 00:05:51,120 --> 00:05:55,960 Speaker 1: good growth numbers. Now that this, you know, this movement 114 00:05:55,960 --> 00:05:59,680 Speaker 1: has gone viral, so to speak, it's reopen that it's 115 00:05:59,680 --> 00:06:02,960 Speaker 1: the new reawakening of zero commission. It's people realizing that, hey, 116 00:06:03,040 --> 00:06:06,040 Speaker 1: I can take control, I can make changes, I can 117 00:06:06,120 --> 00:06:09,240 Speaker 1: improve the system. So we went from you know, I 118 00:06:09,279 --> 00:06:11,720 Speaker 1: we you know, I would look and scroll in the 119 00:06:11,839 --> 00:06:15,720 Speaker 1: finance category of app on the App Store, whether it's 120 00:06:15,720 --> 00:06:17,800 Speaker 1: Android or I RLS, and you know, I was getting 121 00:06:17,880 --> 00:06:19,280 Speaker 1: I put up a couple of posts. I was really 122 00:06:19,279 --> 00:06:21,760 Speaker 1: excited because we made the top ten in the finance section. 123 00:06:22,360 --> 00:06:25,200 Speaker 1: We were nowhere near in the top thirty for overall 124 00:06:25,240 --> 00:06:28,320 Speaker 1: apps compared to like TikTok and Zoom and Instagram and 125 00:06:28,320 --> 00:06:30,320 Speaker 1: and now if you look for the last couple of days, 126 00:06:30,320 --> 00:06:32,880 Speaker 1: it's been Robin Hood's number one. We will number two 127 00:06:33,080 --> 00:06:35,719 Speaker 1: and read it number three, which tells the story of 128 00:06:35,760 --> 00:06:38,080 Speaker 1: what's going on. So bottom line twenty seconds. It's just 129 00:06:38,120 --> 00:06:42,000 Speaker 1: made you even that much more popular. It has increased 130 00:06:42,000 --> 00:06:46,479 Speaker 1: our popularity. Um. It's also increased our need to make 131 00:06:46,520 --> 00:06:49,800 Speaker 1: sure that customers are informed, educated, We're transparent about what 132 00:06:49,839 --> 00:06:52,640 Speaker 1: we're doing, why we're doing it. Um. You know, these 133 00:06:52,640 --> 00:06:56,680 Speaker 1: are things that that make a successful product. So you've grown. 134 00:06:58,800 --> 00:07:01,360 Speaker 1: Can you give us a number? Just are you get 135 00:07:01,400 --> 00:07:04,880 Speaker 1: fishing for a number? Are number number number two in 136 00:07:04,880 --> 00:07:07,560 Speaker 1: the app store? That was we will CEEO Anthony Denier. 137 00:07:07,600 --> 00:07:09,840 Speaker 1: You've been listening to Bloomberg Business Week Extra, be sure 138 00:07:09,880 --> 00:07:12,640 Speaker 1: to listen to our Bloomberg Business Week Daily radio show, 139 00:07:12,680 --> 00:07:14,920 Speaker 1: airing live Monday through Friday at two pm MOS Street 140 00:07:14,960 --> 00:07:17,280 Speaker 1: Time on Bloomberg Radio. Watch US two on our daily 141 00:07:17,320 --> 00:07:20,240 Speaker 1: broadcast on YouTube just search Bloomberg Global News, and you 142 00:07:20,280 --> 00:07:23,280 Speaker 1: can also see me on Bloomberg Quicktake available on Bloomberg 143 00:07:23,360 --> 00:07:26,640 Speaker 1: dot com, slash qt and streaming platforms like Roku, Apple TV, 144 00:07:26,760 --> 00:07:29,840 Speaker 1: Samsung TV, and more. I'm Tim Standerbeck. I'm Tim at 145 00:07:29,920 --> 00:07:33,400 Speaker 1: nine am and noon every day on Criecktake. I'm Carol Matzer. 146 00:07:33,560 --> 00:07:34,320 Speaker 1: This is Bloomberg.