Speaker 1: This is Bloomberg Business Week from Bloomberg Radio. I'm Carol
Speaker 1: Masser and I'm Tim Stanovik. Welcome to the Bloomberg Business
Speaker 1: Week Extra. It's our weekly podcast bringing you an interesting
Speaker 1: interview from the week. I got to say this was
Speaker 1: one of our favorite interviews when we did it um
Speaker 1: and to be fair, we did it about a week ago.
Speaker 1: It's with Anthony Denier. He's the CEO of the commission
Speaker 1: free online trading platform we Ball. Yeah, he also happens
Speaker 1: to be an Ali Baba Alam and look, we Will
Speaker 1: also got caught up in that frenzy trading around memestocks
Speaker 1: like game Stop, AMC and others, just like robin Hood did,
Speaker 1: right and they put restrictions on trading like after the chaos.
Speaker 1: And you might recall Bloomberg Business Week we recently reported
Speaker 1: on the company we Will. Apparently he has been peeling
Speaker 1: off users from rival robin Hood. It's increased its roster
Speaker 1: of brokerage clients. Check this out, Tim, about tenfold last
Speaker 1: year to more than two million. And that was before
Speaker 1: all of the craziness around game Stop, which of course
Speaker 1: we talked about with the CEO. Here's our conversation with
Speaker 1: Anthony Denier. We did not have a say in the matter.
Speaker 1: We're an introducing firm. We do not operate our own
Speaker 1: clearing house, right so we do not put any customer,
Speaker 1: We do not put any collateral on behalf of customers
Speaker 1: to settle all the transactions that happened on our platform.
Speaker 1: We are simply a portal. So our third party clearing
Speaker 1: house called me at approximately nine eight a m. And
Speaker 1: informed me that they may not be able to settle
Speaker 1: new by orders in three particular names of three most
Speaker 1: popular ones that were seeing on Reddit. And I had
Speaker 1: to make the hard decision to send out a message
Speaker 1: to our users that we are not able to support
Speaker 1: by orders. Why was that a decision you had to
Speaker 1: make it? Why was that a decision you had to make?
Speaker 1: It sounds like it wasn't even a decision like you
Speaker 1: had to send that. Well, you're right, I had to
Speaker 1: send it exactly. I mean I could have. I could
Speaker 1: have went back to the clearing house and said no,
Speaker 1: I'm going to keep the orders open, and what possibly
Speaker 1: could have happened is those trades would have failed, which
Speaker 1: would have cascaded into a much bigger problem. So maybe
Speaker 1: you're right. I did not have that did not have
Speaker 1: a decision of So were what is the issue that
Speaker 1: needs to be fixed here in order to to to
Speaker 1: be able to actually make trades when when when your
Speaker 1: users want to make trades? What needs to be fixed? Uh? Well,
Speaker 1: first off, there's a two days to business day waiting
Speaker 1: period for settlement. Right. The systems that go into settling
Speaker 1: transactions are very antiquated. To put it lightly, they're working
Speaker 1: on technology that was built decades ago. Right, it used
Speaker 1: to be T plus three, now it's T plus two.
Speaker 1: There is talk that they're gonna work till T plus one.
Speaker 1: That's two whole days. That massive amounts of capital need
Speaker 1: to be allocated as collateral to deal with margin requirements
Speaker 1: as the DTC clearinghouse. So what needs to be done.
Speaker 1: We need to implement new technology i e. Blockchain, which
Speaker 1: has been talked about for a long time. But when
Speaker 1: you're taking an old system and trying to bring it
Speaker 1: into the new world, that does take time. Um, So
Speaker 1: there needs to be technology technological advances in order to
Speaker 1: ensure that this does not happen again. So that's what
Speaker 1: we're trying to get to. Like, what's the problem? Was it? Traders?
Speaker 1: Individual retail investors, you know, doing something wrong or was
Speaker 1: it just a case that the infrastructure, the logistics just
Speaker 1: doesn't quite work as you say, antiquated systems. Is that
Speaker 1: the problem? Now, that's a that's a loaded question a
Speaker 1: little bit because on on the surface, I will say
Speaker 1: that that is the problem. Now, obviously, I think what's
Speaker 1: going on is a little deeper than just the market
Speaker 1: mechanics of trade settlement right now. If you if you
Speaker 1: want to talk about the story of why specific brokerages
Speaker 1: stopped the new opening positions or i e. By orders
Speaker 1: of these specific stocks, yes, it was a market mechanic.
Speaker 1: It was a lack of capital, right, and fear of
Speaker 1: counterparty risk that was the reason for that. But more
Speaker 1: underlying is why are these masses having a populous movement
Speaker 1: going against what you know they would call, you know,
Speaker 1: the institutions, right, the hierarchy, you know, um, you know
Speaker 1: the suits. There's an unlevel playing field that's been going
Speaker 1: on for a long time, and firs like weevil have
Speaker 1: been aggressively trying. We've been trying since we started two
Speaker 1: and a half years ago, open up the playing field.
Speaker 1: I don't I'm not even gonna evolve using the word
Speaker 1: democratization because it gets used too much. We're giving access
Speaker 1: two uh, not only tools, but access to markets and
Speaker 1: trading strategies that retail investors had never had access to, right,
Speaker 1: or they did have access to they had to have
Speaker 1: huge amounts of capital at the firm, or they had
Speaker 1: to pay ridiculous fees a platform fee, subscription fees, or commissions.
Speaker 1: And we removed that and that started. That started the trend,
Speaker 1: and now they want the playing field level on all levels. Right,
Speaker 1: Why does what is institutions get the ability to have
Speaker 1: a ten x leverage capability with portfolio margin where regulation
Speaker 1: stops a retail investor from two x leverage. Well, you
Speaker 1: know someone would say, forgive me not my words or
Speaker 1: my assessment, but smart investor versus dumb investor. Do individual
Speaker 1: retail investors really understand the implications of that kind of leverage.
Speaker 1: I think they're really starting to. And like I said,
Speaker 1: it's been listed. Um hey, Anthony, give us some numbers
Speaker 1: from from this week. I mean, what kind of increase
Speaker 1: in action did you see on the platform? We saw
Speaker 1: some of these trading apps moved to the top of
Speaker 1: the iTunes app store, so obviously there was a lot
Speaker 1: of activity. Yeah, um, a lot of activity is probably
Speaker 1: putting it lightly. Um. We've we've been very fortunate to
Speaker 1: have to be growing at a at a very fast
Speaker 1: pace over the course of the past year and a half,
Speaker 1: in particularly coinciding with the whole retail trading world going
Speaker 1: to zero commission. It opened up retail investing to a
Speaker 1: whole new demographic of user. Most of those users were
Speaker 1: app based users, right, we are an app based platform.
Speaker 1: Are demographic kinds of skew younger because we are so
Speaker 1: app specific. Um, So we've been very fortunate to have
Speaker 1: good growth numbers. Now that this, you know, this movement
Speaker 1: has gone viral, so to speak, it's reopen that it's
Speaker 1: the new reawakening of zero commission. It's people realizing that, hey,
Speaker 1: I can take control, I can make changes, I can
Speaker 1: improve the system. So we went from you know, I
Speaker 1: we you know, I would look and scroll in the
Speaker 1: finance category of app on the App Store, whether it's
Speaker 1: Android or I RLS, and you know, I was getting
Speaker 1: I put up a couple of posts. I was really
Speaker 1: excited because we made the top ten in the finance section.
Speaker 1: We were nowhere near in the top thirty for overall
Speaker 1: apps compared to like TikTok and Zoom and Instagram and
Speaker 1: and now if you look for the last couple of days,
Speaker 1: it's been Robin Hood's number one. We will number two
Speaker 1: and read it number three, which tells the story of
Speaker 1: what's going on. So bottom line twenty seconds. It's just
Speaker 1: made you even that much more popular. It has increased
Speaker 1: our popularity. Um. It's also increased our need to make
Speaker 1: sure that customers are informed, educated, We're transparent about what
Speaker 1: we're doing, why we're doing it. Um. You know, these
Speaker 1: are things that that make a successful product. So you've grown.
Speaker 1: Can you give us a number? Just are you get
Speaker 1: fishing for a number? Are number number number two in
Speaker 1: the app store? That was we will CEEO Anthony Denier.
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Speaker 1: dot com, slash qt and streaming platforms like Roku, Apple TV,
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Speaker 1: nine am and noon every day on Criecktake. I'm Carol Matzer.
Speaker 1: This is Bloomberg.