For us, it’s a very important move. It’s the first time anyone in Asia has done it,” says Mikaal Abdulla. “But the logic is very simple: it doesn’t cost us very much to execute a trade, a few pennies, so our view is we’re going to pass the entire savings onto customers.”
His startup, 8 Securities, is this week rolling out commission-free trading with the launch of Tradeflix.
It puts Abdulla’s Hong Kong-based startup head-to-head with the very similar Robinhood, which earlier this year hit a US$1.3 billion valuation with its latest round of funding.
“We saw what they were doing in the US,” says Abdulla of Robinhood. “We kept an eye on them since the point they launched. Their growth has been pretty inspiring. So we definitely took a cue from them.”
The two apps are part of a new wave of fintech startups that are challenging banks and brokerages as well as older sites like E-Trade. Feeling the pressure, E-Trade earlier this year slashed its commission by over 35 percent – but it still retains a fee.
“Individual stock investors in Hong Kong pay an estimated US$1 billion a year in fees and commissions to their banks and brokers – this despite the fact that online stock trades cost institutions next to nothing,” says 8 Securities co-founder Mathias Helleu.
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Both Abdulla and his business partner are former executives at E-Trade. Abdulla worked there for 12 years before establishing his startup in 2010. It launched to the public in 2012 and is now focused on its two main markets, Hong Kong and Japan.
8 Securities now has 60,000 “total customers” – no figure for active users is given – across its two apps. Abdulla says the average age of customers on Tradeflix is 30.
That millennial demographic, plus a “big shift” towards mobile on its main trading service in the past two years, has persuaded the startup to ditch its stockbroking desktop website to focus on its apps for iOS and Android.
Aside from free trading with Tradeflix, the startup runs the AI financial advisor app Chloe, which launched last year. The average age of users there is just 27.
The two separate apps are designed for different levels of trading experience. Tradeflix is for people who are “self-directed and know what they want to do,” Abdulla explains, while Chloe users “are not quite comfortable doing investments for themselves” and therefore need some guidance from the robo-advisor.
Tradeflix has a little AI input as well – which is inevitable as AI creeps into more and more gadgets and web services. In a move which Abdulla describes as being “a bit like Netflix” and its recommendations, the app shows anonymous data on the kinds of trades other people are making, which could help even its experienced users make better decisions. Along with this, the service has two ratings for the “return versus risk” and the “diversification” of your stock portfolio.
“We see a 50-50 split between people investing in the US and in Hong Kong,” Abdulla tells Tech in Asia. Users can trade in US dollars, Hong Kong dollars, and Chinese yuan.
Even with no brokerage fees going into its coffers, the startup makes money from enterprise solutions for training and asset management. The boss is tight-lipped on whether it’s making a profit.
“Approximately US$3.5 billion has been traded through our platform since we launched in 2012. We forecast we will do US$2 billion within the next 12 months,” he says.
(Updated 6 hours after publishing: Added in a line about its business model.)
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