Tag: Brokers

Twitter is Now Seated with eTORO, Which is a Breakthrough Expansion for Both

Posted on by phoffman@channelchek.com
Image Credit: Web Summit (Flickr)

Elon Musk Announces New Financial Functionality on Twitter

Starting today, Twitter will provide tweeters the ability to buy and sell stocks and crypto on its platform via eTORO. Twitter owner, Elon Musk has been indicating he intends to turn the popular micro-blogging platform into a “super app.” Today’s move shows substantial headway in allowing financial transactions to be conducted on the social media platform. Other company goals since Musk’s purchase of the company include ride hailing, and attracting video influencers that may be disenchanted with YouTube restrictions on speech.  

What Will the Twitter eTORO Partnership Provide?

Founded in 2007, eTORO has become one of the largest social investment networks and trading platforms. According to its website, it is “built on social collaboration and investor education: a community where users can connect, share, and learn.”

Twitter will partner with the platform to allow users (known as tweeters and Twitterers) to trade stocks and cryptocurrencies as part of a deal with the social investing company.

This partnership will provide access to view charts and trade stocks, cryptocurrencies, and other investment assets from eToro via its mobile platform. Together this significantly expands real-time trading data available to users who already have access on Twitter to real-time data, however this arrangement adds all the bells and whistles a modern trading app can provide.

Twitter will be expanding its use of cashtags as well. Twitter added pricing data for $Cashtags (company ticker preceded by “$”) in December 2022. Since January, there have been more than 420 million searches using Cashtags – the number of searches averages 4.7 million a day.

eToro CEO Yoni Assia told CNBC the deal will help better connect the two brands, adding that in recent years its users have increasingly turned to Twitter to “educate themselves about the markets.”

Assia said there is a great deal of “very high quality” content available in real-time and that the partnership with Twitter will help eToro expand to reach new audiences tapping this as a source of information.

Update on Elon

After Musk’s purchase of Twitter, many advertisers stepped back and watched to see how far the company would go to allow less moderated interaction. On Wednesday (April 12) Musk said that “almost all” advertisers had returned to the app. However, Stellantis and Volkswagen, two large competitors with Musk run Tesla, said they do not yet plan to resume advertising.

Musk told a Morgan Stanley conference last month he wants Twitter to become “the biggest financial institution in the world.” This begs those that follow Musk to ask, “Why stop there, why not include Mars?”

What Else

Be sure to follow Channelchek on Twitter (@channelchek) to stay up to date on market insights, news, videos, and of course, top-tier investment analyst research on small and microcap opportunities.

Paul Hoffman

Managing Editor, Channelchek

Sources

https://www.etoro.com/en-us/about/

https://www.cnbc.com/2023/04/13/twitter-to-let-users-access-stocks-crypto-via-etoro-in-finance-push.html?__source=iosappshare%7Ccom.apple.UIKit.activity.PostToTwitter

https://www.forbes.com/sites/roberthart/2023/04/13/twitter-will-let-users-buy-stocks-and-crypto-as-elon-musk-pushes-for-everything-app/?sh=332662a26882

https://www.bloomberg.com/news/live-blog/2023-03-07/elon-musk-speaks-at-morgan-stanley-conference

Zero-Commission Brokers are Not in the Clear Yet, Says SEC

Posted on by cpatches
Image Credit: Karlis Dambrans (Flickr)

Gary Gensler Backs off on Payment-For-Order-Flow, But Promises Something More Comprehensive

The Securities and Exchange Commission (SEC) chairman has softened his harsh talk against the brokerage practice of payment-for-order-flow (PFOF). While securities brokers and investors in the industry breathed a sigh of relief with the news that the practice won’t be banned, firms like Robinhood (HOOD), Etrade (ETFC), and Charles Schwab (SCHW) may have something else to worry about.

About PFOF

There are harsh critics of the practice of PFOF, and there are strong advocates. Proponents of the model say it provides investors more liquidity, while those that oppose the practice question if retail traders are getting the best price.

In a nutshell, what this compensation system does is when investors place trades for stocks, ETFs, and options, the broker uses market makers to execute the order. To compete for price and execution, market makers in the securities offer rebates back to retail brokers. The rebates add to the broker’s profit, which is in part what allows for “free trades.” Additionally, the net cost per share to the investor is often still below most other methods readily available to them.

PFOF provides a significant revenue stream for retail brokers that offer zero-commission trading. Stocks of these brokerage firms have been under downward pressure with the uncertainty of whether the practice that is banned in other countries would be banned in the U.S. The news that it won’t be banned is seen as positive by those in the online broker industry.

New Direction for PFOF

After harping on the idea of banning PFOF, SEC officials (as reported by Bloomberg) have indicated that a ban is no longer being considered. That has been followed by their promise that other changes to the execution mechanism are on the way.

While the final SEC plans for payment-for-order-flow are not known, it is expected that they will allow these brokers to conduct business, and it is not expected to be more profitable for the brokers – most expect it to make it more difficult to maintain current earnings. The Commission is, if nothing else, expected to propose changes that could affect the complicated system of the rebates designed to increase market makers’ trading volume. Additionally, the regulator is weighing a plan to force brokers to disclose more about how much trading with them costs compared with benchmarks, a metric known as price improvement. The metric would allow customers to be able to compare one firm to another.

The SEC may also better clarify requirements for brokerages on what is “best execution” of stock transactions. The scope of the overhaul by the SEC remains to be seen.

The SEC is expected to introduce its plan in the coming months, according to Bloomberg. The plan is likely to make the system more transparent and more competitive and to include regulations lowering access fees that exchanges charge the brokers to execute trades.

Paul Hoffman Managing Editor, Channelchek

Sources

https://www.bloomberg.com/news/articles/2022-09-22/sec-poised-to-let-wall-street-keep-payment-for-order-flow-deals?srnd=premium&leadSource=uverify%20wall

https://seekingalpha.com/article/4447377-how-does-robinhood-make-money?https://www.usfunds.com/resource/decision-to-switch-ethereum-to-proof-of-stake-may-have-been-based-on-misleading-energy-fud/?