FTX, a cryptocurrency exchange, has announced that regular stock trading would soon be available alongside its crypto products (via The Wall Street Journal). The feature is presently available to a small number of customers in the United States, but it will be expanded to more traders in the coming months.
FTX claims to offer commission-free trading on “hundreds of US exchange-listed assets,” including ordinary stocks and exchange-traded funds (ETFs). Customers will be able to deposit money into their accounts via credit cards, ACH transfers, and wire transfers. FTX also claims to be the first exchange to allow customers to deposit fiat-backed stablecoins like USDC into their accounts. Stablecoins’ prices aren’t intended to vary as much as other cryptocurrencies since they’re tied to a currency or commodity, but a recent drop in the wider crypto market has put some stablecoins in trouble.
Instead of adopting the payment for order flow (PFOF) technique used by Robinhood and other exchanges, FTX intends to route orders directly via the Nasdaq exchange. Brokerages are compensated for sending orders to market makers under PFOF, a practice that opponents believe might create a conflict of interest since brokers may wish to route orders to institutions that would boost their earnings. Following last year’s GameStop stock jump, the practice was called into question.
“With the introduction of FTX Stocks, we have built a single integrated platform for retail investors to trade crypto, NFTs, and traditional stock offerings through a clear and straightforward user interface,” said Brett Harrison, FTX’s US president.
Users may trade stocks and crypto on Robinhood, the Block-owned Cash App, and Public.com; adding FTX to the mix will allow it to compete directly with each platform. Sam Bankman-Fried, the founder of FTX, said earlier this month that he had purchased a 7.6% interest in Robinhood, making him the company’s third-largest stakeholder. Bankman-Fried stated in his 13D filing that he had no plans to buy the firm at this time, but as the Wall Street Journal points out, this sort of document is often submitted by an investor wanting to buy more stock or conduct a takeover.