WEBVTT - Businessweek Extra-Webull CEO Anthony Denier

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<v Speaker 1>This is Bloomberg Business Week from Bloomberg Radio. I'm Carol

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<v Speaker 1>Masser and I'm Tim Stanovik. Welcome to the Bloomberg Business

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<v Speaker 1>Week Extra. It's our weekly podcast bringing you an interesting

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<v Speaker 1>interview from the week. I got to say this was

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<v Speaker 1>one of our favorite interviews when we did it um

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<v Speaker 1>and to be fair, we did it about a week ago.

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<v Speaker 1>It's with Anthony Denier. He's the CEO of the commission

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<v Speaker 1>free online trading platform we Ball. Yeah, he also happens

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<v Speaker 1>to be an Ali Baba Alam and look, we Will

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<v Speaker 1>also got caught up in that frenzy trading around memestocks

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<v Speaker 1>like game Stop, AMC and others, just like robin Hood did,

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<v Speaker 1>right and they put restrictions on trading like after the chaos.

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<v Speaker 1>And you might recall Bloomberg Business Week we recently reported

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<v Speaker 1>on the company we Will. Apparently he has been peeling

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<v Speaker 1>off users from rival robin Hood. It's increased its roster

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<v Speaker 1>of brokerage clients. Check this out, Tim, about tenfold last

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<v Speaker 1>year to more than two million. And that was before

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<v Speaker 1>all of the craziness around game Stop, which of course

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<v Speaker 1>we talked about with the CEO. Here's our conversation with

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<v Speaker 1>Anthony Denier. We did not have a say in the matter.

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<v Speaker 1>We're an introducing firm. We do not operate our own

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<v Speaker 1>clearing house, right so we do not put any customer,

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<v Speaker 1>We do not put any collateral on behalf of customers

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<v Speaker 1>to settle all the transactions that happened on our platform.

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<v Speaker 1>We are simply a portal. So our third party clearing

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<v Speaker 1>house called me at approximately nine eight a m. And

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<v Speaker 1>informed me that they may not be able to settle

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<v Speaker 1>new by orders in three particular names of three most

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<v Speaker 1>popular ones that were seeing on Reddit. And I had

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<v Speaker 1>to make the hard decision to send out a message

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<v Speaker 1>to our users that we are not able to support

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<v Speaker 1>by orders. Why was that a decision you had to

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<v Speaker 1>make it? Why was that a decision you had to make?

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<v Speaker 1>It sounds like it wasn't even a decision like you

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<v Speaker 1>had to send that. Well, you're right, I had to

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<v Speaker 1>send it exactly. I mean I could have. I could

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<v Speaker 1>have went back to the clearing house and said no,

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<v Speaker 1>I'm going to keep the orders open, and what possibly

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<v Speaker 1>could have happened is those trades would have failed, which

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<v Speaker 1>would have cascaded into a much bigger problem. So maybe

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<v Speaker 1>you're right. I did not have that did not have

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<v Speaker 1>a decision of So were what is the issue that

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<v Speaker 1>needs to be fixed here in order to to to

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<v Speaker 1>be able to actually make trades when when when your

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<v Speaker 1>users want to make trades? What needs to be fixed? Uh? Well,

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<v Speaker 1>first off, there's a two days to business day waiting

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<v Speaker 1>period for settlement. Right. The systems that go into settling

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<v Speaker 1>transactions are very antiquated. To put it lightly, they're working

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<v Speaker 1>on technology that was built decades ago. Right, it used

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<v Speaker 1>to be T plus three, now it's T plus two.

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<v Speaker 1>There is talk that they're gonna work till T plus one.

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<v Speaker 1>That's two whole days. That massive amounts of capital need

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<v Speaker 1>to be allocated as collateral to deal with margin requirements

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<v Speaker 1>as the DTC clearinghouse. So what needs to be done.

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<v Speaker 1>We need to implement new technology i e. Blockchain, which

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<v Speaker 1>has been talked about for a long time. But when

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<v Speaker 1>you're taking an old system and trying to bring it

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<v Speaker 1>into the new world, that does take time. Um, So

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<v Speaker 1>there needs to be technology technological advances in order to

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<v Speaker 1>ensure that this does not happen again. So that's what

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<v Speaker 1>we're trying to get to. Like, what's the problem? Was it? Traders?

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<v Speaker 1>Individual retail investors, you know, doing something wrong or was

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<v Speaker 1>it just a case that the infrastructure, the logistics just

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<v Speaker 1>doesn't quite work as you say, antiquated systems. Is that

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<v Speaker 1>the problem? Now, that's a that's a loaded question a

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<v Speaker 1>little bit because on on the surface, I will say

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<v Speaker 1>that that is the problem. Now, obviously, I think what's

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<v Speaker 1>going on is a little deeper than just the market

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<v Speaker 1>mechanics of trade settlement right now. If you if you

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<v Speaker 1>want to talk about the story of why specific brokerages

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<v Speaker 1>stopped the new opening positions or i e. By orders

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<v Speaker 1>of these specific stocks, yes, it was a market mechanic.

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<v Speaker 1>It was a lack of capital, right, and fear of

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<v Speaker 1>counterparty risk that was the reason for that. But more

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<v Speaker 1>underlying is why are these masses having a populous movement

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<v Speaker 1>going against what you know they would call, you know,

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<v Speaker 1>the institutions, right, the hierarchy, you know, um, you know

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<v Speaker 1>the suits. There's an unlevel playing field that's been going

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<v Speaker 1>on for a long time, and firs like weevil have

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<v Speaker 1>been aggressively trying. We've been trying since we started two

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<v Speaker 1>and a half years ago, open up the playing field.

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<v Speaker 1>I don't I'm not even gonna evolve using the word

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<v Speaker 1>democratization because it gets used too much. We're giving access

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<v Speaker 1>two uh, not only tools, but access to markets and

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<v Speaker 1>trading strategies that retail investors had never had access to, right,

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<v Speaker 1>or they did have access to they had to have

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<v Speaker 1>huge amounts of capital at the firm, or they had

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<v Speaker 1>to pay ridiculous fees a platform fee, subscription fees, or commissions.

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<v Speaker 1>And we removed that and that started. That started the trend,

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<v Speaker 1>and now they want the playing field level on all levels. Right,

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<v Speaker 1>Why does what is institutions get the ability to have

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<v Speaker 1>a ten x leverage capability with portfolio margin where regulation

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<v Speaker 1>stops a retail investor from two x leverage. Well, you

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<v Speaker 1>know someone would say, forgive me not my words or

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<v Speaker 1>my assessment, but smart investor versus dumb investor. Do individual

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<v Speaker 1>retail investors really understand the implications of that kind of leverage.

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<v Speaker 1>I think they're really starting to. And like I said,

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<v Speaker 1>it's been listed. Um hey, Anthony, give us some numbers

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<v Speaker 1>from from this week. I mean, what kind of increase

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<v Speaker 1>in action did you see on the platform? We saw

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<v Speaker 1>some of these trading apps moved to the top of

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<v Speaker 1>the iTunes app store, so obviously there was a lot

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<v Speaker 1>of activity. Yeah, um, a lot of activity is probably

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<v Speaker 1>putting it lightly. Um. We've we've been very fortunate to

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<v Speaker 1>have to be growing at a at a very fast

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<v Speaker 1>pace over the course of the past year and a half,

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<v Speaker 1>in particularly coinciding with the whole retail trading world going

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<v Speaker 1>to zero commission. It opened up retail investing to a

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<v Speaker 1>whole new demographic of user. Most of those users were

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<v Speaker 1>app based users, right, we are an app based platform.

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<v Speaker 1>Are demographic kinds of skew younger because we are so

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<v Speaker 1>app specific. Um, So we've been very fortunate to have

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<v Speaker 1>good growth numbers. Now that this, you know, this movement

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<v Speaker 1>has gone viral, so to speak, it's reopen that it's

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<v Speaker 1>the new reawakening of zero commission. It's people realizing that, hey,

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<v Speaker 1>I can take control, I can make changes, I can

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<v Speaker 1>improve the system. So we went from you know, I

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<v Speaker 1>we you know, I would look and scroll in the

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<v Speaker 1>finance category of app on the App Store, whether it's

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<v Speaker 1>Android or I RLS, and you know, I was getting

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<v Speaker 1>I put up a couple of posts. I was really

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<v Speaker 1>excited because we made the top ten in the finance section.

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<v Speaker 1>We were nowhere near in the top thirty for overall

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<v Speaker 1>apps compared to like TikTok and Zoom and Instagram and

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<v Speaker 1>and now if you look for the last couple of days,

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<v Speaker 1>it's been Robin Hood's number one. We will number two

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<v Speaker 1>and read it number three, which tells the story of

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<v Speaker 1>what's going on. So bottom line twenty seconds. It's just

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<v Speaker 1>made you even that much more popular. It has increased

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<v Speaker 1>our popularity. Um. It's also increased our need to make

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<v Speaker 1>sure that customers are informed, educated, We're transparent about what

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<v Speaker 1>we're doing, why we're doing it. Um. You know, these

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<v Speaker 1>are things that that make a successful product. So you've grown.

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<v Speaker 1>Can you give us a number? Just are you get

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<v Speaker 1>fishing for a number? Are number number number two in

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<v Speaker 1>the app store? That was we will CEEO Anthony Denier.

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<v Speaker 1>You've been listening to Bloomberg Business Week Extra, be sure

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