Robinhood trading comes to Canada, but what does that mean for investors?

The Robinhood Markets Inc. app shown on a cell phone. Photo by Scott Olson/Getty Images files

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California-based financial services company Robinhood Markets Inc. completed its purchase of Toronto-based cryptocurrency trading platform WonderFi Technologies Inc. for $250 million this week, but that doesn’t mean Canadians will be able to trade stocks on its popular platform anytime soon.

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The deal was initially announced almost a year ago and is a relatively small one, given that Robinhood has a market cap of around US$78 billion, bigger than most Canadian companies.

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It also isn’t Robinhood’s first foray into Canada since it established an engineering division and Canadian headquarters in Toronto in 2024 and has about 240 employees there.

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WonderFI shares will be delisted from the Toronto Stock Exchange on Tuesday.

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But what does this mean for Canadian investors and competition in the country’s financial sector? Here’s what you need to know.

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What is Robinhood?

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Founded in 2013, Robinhood entered the market with the goal of allowing investors to trade without paying commissions. The company in 2014 said institutional investors can access public markets for dramatically cheaper prices than the rest of the public and that there was something inherently wrong with that dynamic.

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It launched an iPhone app in 2014 and boosted its presence on Android phones in 2015. By August 2015, the company reported transactions worth US$1 billion through its platform. In 2019, the company allowed its users to invest in fractional shares, enabling users to invest in expensive stocks.

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The company gradually introduced an array of financial products, such as retirement accounts, options trading, cryptocurrency trading and the stock market. It surged in popularity during the COVID-19 pandemic as Americans started to invest from home.

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Users downloaded the app for its simplicity and ability to start trading in a matter of seconds, CNBC said in 2020.

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What can it offer to Canadians?

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Robinhood offers plenty of financial products in the United States, but its offerings in the Canadian market will be exclusively focused on cryptocurrency, spokesperson Garret Shaw said in a statement.

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By buying WonderFi, Robinhood now owns cryptocurrency platforms Bitbuy and Coinsquare, and customers using those apps will be invited to board Robinhood in the coming weeks.

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“The Robinhood app will be generally available on app stores in the coming weeks, though the immediate priority is the onboarding of existing customers,” he said.

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Customers will be unlocking access to the Robinhood ecosystem, including lower costs with a transparent, flat 0.5 per cent fee per Canadian trade, and a best-in-class user interface, the company said in a separate statement on Monday.

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Why the acquisition matters

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Robinhood is expanding its services in Canada at a time when the Canadian government is looking to encourage more competition in the financial sector by introducing a series of measures — from cutting fees to simplifying the process of switching chequing accounts — to encourage alternative financial institutions such as fintechs to grow.

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If Robinhood does expand its services in Canada, the company that built its reputation by offering low-cost trading options through its apps could compete with alternative financial services such as Wealthsimple Inc. and the investing divisions of major banks. For now, however, the company hasn’t announced any such plans.

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