Robinhood has called off its UK raid to double down on disrupting the US stockbroking market. Just as King John would have been delighted to see the back of his nemesis, we see the same relief from today’s establishment with HL’s share price rallying 10% on the day of the announcement.

Robinhood’s capitulation suggests it could not figure out how to operate under UK rules where kickbacks from market makers are not allowed. Blaming coronavirus is a convenient way to save face but turmoil in the markets has led to very strong trading volumes and new customers, including younger demographics, coming into the market.

Disrupting with low charges isn’t always a recipe for success in the investment space where long-term trends have been steeply downwards anyway. Only the most traditional of stockbrokers charge anywhere near the commission levels that existed before online brokers brought trading charges down around £10 many years ago. Getting people to switch to save even more is a struggle.

The highly regulated nature of the sector also makes it difficult for new brands to navigate through a maze of rules and operational challenges. Start-ups tend to have a clear understanding of consumer needs and provide elegant UX, but the established players have the advantage of knowledge and experience of managing the most challenging activities, even when they’re not the most exciting. Corporate actions come to mind.

That’s why we expect the next phase of innovation across personal investing to feature established brands more prominently.

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