Robinhood is a popular brokerage app that allows investors to buy and sell stocks, options, cryptocurrencies, and other securities.
One of the biggest advantages of using Robinhood is that it is commission-free.
However, there are some small regulatory fees that are passed on to customers to cover the costs incurred by the government for supervising and regulating the securities markets and professionals.
One of these fees is the regulatory transaction fee, which is charged by the Financial Industry Regulatory Authority (FINRA) to help cover the costs of the Securities and Exchange Commission (SEC).
Keep in mind that option orders incur both the passthrough SEC fee and the FINRA trading activity fee (TAF) regardless of the sale order value.
The FINRA trading activity fee is charged to brokerage firms like Robinhood to cover the costs of supervising and regulating these firms.
Keep in mind that you may be charged more than the $7.27 fee because the fee limit is based on the execution of your order, which can occur with multiple trades.
Lastly, if you are trading American depositary receipts (ADRs), which are certificates that represent foreign stocks that you can trade on U.S. stock markets, the banks issuing these certificates may charge custodial fees that typically range from $0.01-$0.03 per share.
In conclusion, while Robinhood is commission-free, there are some small regulatory fees that customers need to be aware of.
As a customer of Robinhood, you can rest assured that you are not paying high commission rates, which can eat into returns.
This article was generated using automation technology, and thoroughly edited and fact-checked by an editor on our editorial staff.