Though broker-dealers, banks, and monetary establishments additionally function on Robinhood in buying and selling and brokerage actions, the market makers dominate, together with these in crypto.
That is what emerges from the newest quarterly report submitted by the corporate to the SEC.
Robinhood is a USA firm listed on the inventory change, so it’s legally required to submit periodic economic-financial studies to the company that oversees the bull and bear market of securities in the US.
“`html
Robinhood
“`
Robinhood Markets is a United States monetary providers firm based in 2013 and headquartered in Menlo Park, California.
It has been listed on Nasdaq since 2021 with the ticker HOOD, and lately its inventory has recorded a wonderful rally.
The corporate is principally recognized for its commission-free on-line buying and selling app, the place each conventional property and crypto will be exchanged.
It’s primarily geared toward retail traders and speculators, particularly younger individuals, and it’s most likely for that reason that crypto has gained traction on this platform.
The debut on the inventory change occurred with a worth of $38, which instantly skyrocketed to 85 the month following the itemizing. Nonetheless, that bubble burst the very subsequent month, and by the top of the yr, the worth had already fallen beneath the preliminary worth.
Throughout the bear-market of 2022/2023, the worth of the HOOD inventory plummeted to beneath $7, however ranging from December 2023, it started a climb that successfully concluded solely in February of this yr. The height of 2025 was recorded just under $67, which is considerably greater than the present worth, however decrease than the all-time excessive of 4 years in the past.
The crypto market makers on Robinhood
Within the prolonged quarterly report simply submitted to the SEC, and particularly in Notice 1 on web page 11, the information regarding the income concentrations of the primary quarter of 2025 are reported.
What emerges is that 63% of the corporate’s whole revenues from January to March of this yr got here from the only market makers. Furthermore, within the first quarter of final yr, this proportion was 52%, so the newest determine has additionally proven a robust enhance in comparison with a yr in the past.
The primary market makers that generated revenues for Robinhood within the first quarter of 2025 have been Citadel Securities and B2C2 USA, with 12% every, adopted by Wintermute Buying and selling with 11%.
The crypto market makers are entities or corporations that present liquidity to cryptocurrency markets. Their fundamental position is to make sure that there are at all times consumers and sellers obtainable for a selected crypto, facilitating transactions and making the market extra environment friendly.
Technically, they function on exchanges by repeatedly putting purchase and promote orders for varied cryptocurrencies, they usually earn from the distinction between the acquisition worth and the promoting worth with the so-called unfold. In truth, they purchase at a barely cheaper price and promote at a barely greater worth, thus making small earnings on every transaction, however with an enormous variety of automated transactions.
By persistently putting new purchase and promote orders, they successfully present liquidity to the exchanges, moreover, they cut back the hole between the very best purchase worth and the bottom promote worth.
On this method, the opposite merchants, referred to as market takers, can execute their orders extra rapidly and with much less distinction between the anticipated worth and the precise execution worth (the so-called slippage).
In truth, the market makers are important for the correct functioning of the crypto markets.
The revenues of Robinhood
Robinhood doesn’t cost commissions on transactions, so it doesn’t generate income from person commissions.
As a substitute, it makes use of the so-called Fee for Order Circulate (PFOF), which consists exactly in directing customers’ orders to market makers, reasonably than directing them on to the exchanges. Due to this fact, it’s the market makers who pay a small fee to the platform.
Because of this nearly all of the corporate’s income comes from market makers and never from customers, regardless that in actuality, in the long run, the charges utilized to market makers are nonetheless someway paid by the shoppers by means of the worth spreads.
Nonetheless, Robinhood additionally generates different forms of income, similar to curiosity on buyer money balances, or on margin and securities lending: Moreover, it gives varied paid extra providers and a debit card by means of which it earns small commissions on its use.