Popular cryptocurrency exchange FTX is expanding into the traditional investment space for retail clients in the United States.
In a new message, FTX US President Brett Harrison informed its 50,900 Twitter followers about the platform’s new feature that allows users in all 50 US states as well as Puerto Rico and the Virgin Islands to buy and sell stocks as well as exchange-traded funds ( AND F).
“FTX Stocks is now available for US users!
Residents of all 50 states (yes, including NY!) as well as PR and USVI can join.
Trade hundreds of stocks and ETFs both on the web and on the FTX US Pro mobile app.
Harrison then answered several questions, first specifying that the proposed actions were real and not synthetic, before also clarify that clients using the standard FTX app can expect to see the new working trading feature in “a few days”.
The entrepreneur too appeared on CNBC to explain FTX’s reasoning behind offering traditional financial products at a time when many traditional institutions are gearing up for cryptocurrencies.
Harrison says of FTX’s approach to commissions,
“The biggest difference for us is that we’re trying to use a model that doesn’t rely on order flow payment. Clearly a controversial practice that has resulted in the movement of much retail liquidity from public exchanges to private wholesalers.
We believe this ultimately results in a deterioration of market quality for all participants over time, and we try to reverse this trend as much as possible. »
Payment for Order Flow (PFOF) allows brokers to earn money while offering commission-free trades by sending retail client orders to private market makers rather than a public exchange. Fractional profits are made on price differences between a client’s initial offer and the actual sale price of the stock.
When asked how FTX intended to make money from stock trading, Harrison explains,
“Right now it’s free for all users. From one month, it will continue to be free for all purchases under one action. One thing we’ve learned from our private data is a surprising amount of stream results from fractional stock purchases, those that are [less than] a part. High-priced stocks like Tesla.
From there, we’re going to charge a commission on every trade, which kind of goes back to how things used to be. We believe this will result in much more transparent, fair and honest pricing as we continue to route these orders to public exchanges, rather than having to rely on private dealers or individual wholesalers where unregistered ETFs are filled out of the stock market.
Harrison says the base fee structure will be 5 basis points, or 5/100ths of a percent, as well as 2 basis points in “fair” transactions.
The CEO concludes by explaining how cryptocurrency buyers expect simple commission rates in their transactions and are therefore likely to adopt FTX’s model.
“Our users, especially on the crypto side, are used to this simple, honest and fair idea of charging a fixed percentage of the notional value of the transaction on each transaction rather than having to wonder if the payment flow to the order deteriorates the quality of the NBBO [National Best Bid and Offer].
People really get honest prices.
In May, it was reported that FTX had approached at least three equity trading startups regarding a possible acquisition.
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