Robinhood Markets Inc. (NASDAQ:HOOD) has launched presidential election event contracts through its subsidiary, Robinhood Derivatives, LLC (RHD), ahead of the Nov. 5 general election.
What Happened: The event contracts enable users to trade based on predictions of the 2024 presidential election outcome, with contracts available for Kamala Harris and Donald Trump. Initially, these contracts will be accessible to a select group of customers. Participants must apply and meet certain criteria, including U.S. citizenship.
Robinhood said that the importance of real-time market access for its customers inspired the introduction of 24/5 trading and plans for futures trading.
What Happened: The event contracts enable users to trade based on predictions of the 2024 presidential election outcome, with contracts available for Kamala Harris and Donald Trump. Initially, these contracts will be accessible to a select group of customers. Participants must apply and meet certain criteria, including U.S. citizenship.
Robinhood said that the importance of real-time market access for its customers inspired the introduction of 24/5 trading and plans for futures trading.
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NewsTranscript
00:00Real quick, before our special guest of the day, we did have some news in Robinhood trading
00:05higher by about 2.3%.
00:07This of course comes after Robinhood's event that they held, the Hood Summit last week.
00:14And Robinhood is now offering election contracts, so you can bet essentially on the US election
00:20on Robinhood.
00:21Kind of strange, I mean, how long, I mean, it's now, a week from tomorrow is the election.
00:26They waited until now to launch it.
00:28But Interactive Brokers had previously launched the election contract.
00:32So Robinhood, Interactive Brokers, now trying to compete with the Polymarkets, the Predictits
00:38of the world for this market of election betting, which there seems to be a decent amount of
00:44appetite out there for it.
00:45So Robinhood, which also reports this week on Wednesday after the close, is trading higher
00:51slightly this morning, again, 64 cents here, about 2.3%.
00:55Okay, so something to think about Robinhood, and there was a sneaky headline on Friday
01:00that not many people are paying attention to, but the headline, I don't know what this
01:04is coming from, Wall Street Journal or who is reporting this, but rumored yet, nothing
01:08officially announced, but the NYSE planning to expand their after-hours trading.
01:14And it's a no-brainer for the exchanges.
01:17I mean, you see what's happening here, is Robinhood and IB are doing really well with
01:22their 8 p.m. to 4 a.m. overnight trading session.
01:26There's a lot of people trading it, I'm trading it too, you know, I'm going in there even
01:30Sunday night, I'm going in there and like getting opportunities there.
01:33So it's, you know, just more opportunity to trade.
01:36You're bored, you're sitting, it's opportunity at night.
01:39So they're planning on extending NYSE ARCA, which is their main after-hours exchange,
01:45to 22 hours now daily.
01:47So they're planning on taking it from 8 p.m. close to 11.30 p.m. close, and then reopening
01:53not at 4 a.m., but reopening at 1.30 a.m.
01:57So they're trying to capture some of that, obviously, volume from Robinhood and Interactive
02:03Brokers back on the exchange.
02:05So this is, and it'll be more liquid, obviously, if it's running on ARCA and stuff.
02:09So that's actually a concern for me for Robinhood.
02:12I'm very, very surprised that, you know, because I think Robinhood is really benefiting
02:16from this.
02:17I'm very surprised, you know, that the stock wouldn't be trading down on that.
02:20Maybe it's this other headline you're talking about, but I'd be cautious trading Robinhood
02:24here because if there's some truth to this headline, which there probably is, the source
02:28was CNBC, there probably is some truth here.
02:32I think that's not good news for Robinhood because I think they get quite a bit of volume
02:35in that overnight session, they call it.
02:39What has taken the New York Stock Exchange so long?
02:43To do this?
02:44Yeah.
02:45Well, I think the main concern always, what I used to say, was to go to 24-hour trading
02:49was how do you handle the dividend stuff?
02:51Like something going ex-dividend.
02:52Like right at midnight, all of a sudden, it's boom, it has to adjust pricing because we
02:56close and then we reopen.
02:57So they're still going to do that.
02:59They're going to close at 11.30 so they can actually get a reopening.
03:02The way Robinhood has it, they actually like, and the way the market makers do, at least
03:06on IB, is they close the stocks on the regular exchange and when they reopen like a minute
03:11later at the 8 o'clock open, they're already adjusted and they're marked the next day.
03:15So that's how they're handling it.
03:17But it'll have to be a complete adjustment again because you can't have, oh, on this
03:21exchange, I'm buying at 8.30, it's ex-dividend, but on this exchange, it's good till 11 o'clock.
03:26So the NYSE is probably doing it the right way.
03:28Close at 11.30.
03:29We have an official close.
03:30So everything is for the ex-dividend dates and for corporate actions are all dated this
03:35day.
03:37They could have reopened probably at 12.30, but then maybe they've given themselves a
03:40little bit of a break to 1.30.
03:41So that's the rumor.
03:43I think it probably happens.
03:44It'd be crazy for the exchanges not to do this.
03:47And I do think that takes some volume away from Robinhood.