FinTech Platform Specialist Who Built Systems For Global Banks Offers Perspective On Crypto Trading App Robinhood

Last week, the financial world was shaken up by the amazing rise of Gamestop on the backs of smalltime investors, thanks to the use of free crypto trading platform Robinhood. Ahmad Alokush, the founder of technology boutique Ahmadeus, who has built similar platforms throughout the FinTech world, notes the dangers of the free service platform for users.

“It may be a cliché that when users use a system for free, they are the product, but it is one for good reason: It’s generally true. Robinhood’s model of execution assumed a kickback to companies that Robinhood uses to execute trades. This has some serious negative repercussions for users,” said Alokush.

“Zero fee trading generally means the prices delivered by Robinhood for its customers would be inferior to other brokers’ prices and cannot usually match or beat prices other brokers (who work for a fee) provide to their clients,” said Alokush. “Investors may think they are getting a free deal, but they are really paying a hefty price.”

Alokush notes that the model used by Robinhood, called ‘payment for order flow.’ may now face increased regulatory scrutiny. “The payment for order flow is used widely but it can be an issue. We will see if regulators now take a much harder look at this type of system.” He noted that Robinhood paid a civil penalty as a settlement with the SEC just last year.

Alokush has worked for many of the top global banks in setting up FinTech systems’ banking rails and infrastructure used by platforms and hedge funds, as well as mobile apps and SEC / Finra compliant solutions.