Assertion Supported
Tenev: All market makers pay Robinhood the exact same order flow rate
“Well, I mean, I would first say they all pay the same rate. We work with the largest firms and you know, the stuff is all highly regulated.”
Assertion Supported
Tenev: Robinhood's March 2020 outage was caused by open-source DNS failure
“It was a DNS system failure, which was a failure by a system that we didn't even write ourselves, right? Open source software for some of that.”
Disclosure
Tenev: Robinhood tightened options criteria and added phone support after user tragedy
“Right after that happened, Beju and I sent a letter outlining the changes that we were committing to make in the wake of the tragedy. So changes to the user interface More criteria for how you access options in the product. More education. So we hired an optio…”
Assertion Supported
Tenev: Robinhood faced 4x NSCC collateral hike on $700 million deposit
“Yeah, at the time we had seven hundred million on deposit at NSCC, so the request was a four X increase in our deposit requirement.”
Insight
Tenev: Market systems were not built for viral retail coordination
“In this case, you know, you could argue this is concentrated on a small number of stocks, but the system wasn't built for People on the internet banding together, millions of people to buy the same stock or small group of stocks, and I think it kind of broke t…”
Assertion Not publicly verifiable
Tenev: Customers had over $35 billion in gains by congressional hearing
“You know, the fact that Robinhood customers had At the time of the congressional hearing, 35 plus billion more in unrealized and realized gains, equities in crypto on top of money that they deposited.”
Assertion Not checkable as stated
Tenev: Early high-frequency trading algorithms were remarkably simple
“And I would say the algorithms aren't necessarily very sophisticated, and some of the first ones were incredibly simple.”
Assertion Supported
Tenev: Robinhood bans short selling and naked call options trades
“You can't short sell on Robinhood. Short selling is one of the main ways that someone could lose more money than they put in. We don't offer undefined risk options trades either. So you can't sell naked calls.”
Insight
Tenev: Faster trade settlement reduces systemic risk and collateral needs
“I think certainly, you know, we're pushing for faster settlement, because that's in service of the financial system, and making sure that the system operates smoothly, and there's less need for money to be put up as collateral, because the risk would correspon…”
Insight
Tenev: Quantitative trading benefited from 2008 volatility due to wider spreads
“Quantitative trading actually benefited from the volatility in 2008, because the more volatility in the markets, the wider bid ask spreads are.”
Insight
Tenev: Consolidating HFT software onto single Linux box cuts latency to 1ms
“If everything was on one box, you could maybe shave that latency down from 10 milliseconds down to one millisecond or so, and, you know, you could have a competitive system.”
Disclosure
Tenev: Kronos Research Charged Tens of Thousands Monthly for Enterprise Software
“We worked with some big ones probably should leave specific names out of it, but it was an enterprise product, so let's say licensing fees were, you know, in the tens of thousands per month.”
Assertion Supported
Tenev: Robinhood required one year of operating capital for brokerage approval
“Part of that process to kind of get approval was to show that we had enough capital to operate for a year after becoming a brokerage.”
Assertion Supported
Tenev: Every major brokerage competitor went to zero commissions in 2019
“The incumbents replicated our business model in 2019. You know, every major competitor went to zero commissions, which was crazy.”
Assertion Supported
Tenev: Robinhood hit a one-million-person pre-launch waitlist
“So we had obviously a wait list before we went live and that wait list got up to about a million people before we started rolling out, which I believe was the largest pre-launch demand of its kind for any financial product.”
Vlad Tenev