Coinspeaker
US Brokerage Startup Public Makes Foray in UK
American stock brokerage firm Public has officially launched its services in the United Kingdom, marking its first international expansion since its inception in 2017.
As reported by CNBC, the app backed by notable celebrities including Will Smith and Tony Hawk, aims to provide commission-free trading to UK users, granting them access to over 5,000 US-listed stocks during regular trading hours. In addition, the company aims to introduce other asset classes that are already available in the US, including Exchange-Traded Funds (ETFs), US government bonds, and crypto assets.
Also, the company has stated that it intends to introduce an “investment plans” tool in the future. This tool would allow users to set up customized recurring investments based on their individual financial goals and preferences.
Remarkably, this feature provides convenience and automation, empowering users to develop disciplined investment habits and potentially benefit from the compounding effect over time.
Public in the UK: The Competitive Advantage
Public’s debut into the UK market puts it against many well-known digital brokerage businesses, including AJ Bell and Hargreaves Lansdown. These conventional players make money through commissions and management fees, which have been the industry standard for many years.
In addition to these established firms, Public will also face competition from emerging players such as Revolut, Freetrade, and eToro. These startups have gained traction by offering innovative business models where revenue is derived primarily from subscriptions and other fees rather than traditional commission or charges.
This approach has appealed to a new generation of investors who seek transparency and lower costs. However, Leif Abraham, Public’s co-CEO, highlighted one key differentiating factor for the company. Abraham emphasized that while many of their competitors in the UK charge currency conversion fees on every trade, Public only applies these fees to the initial deposit, resulting in significantly lower costs for investors.
Notably, Public’s foreign exchange fee structure involves charging 30 basis points, or 0.3%, on each deposit made to convert British pounds into US dollars. By focusing the fee on the initial deposit rather than applying it to every trade, Public aims to reduce the overall costs for investors, making its platform more appealing to UK users.
Impacts of Tough Market Conditions on Public
The online brokerage industry has faced challenges recently, with the rising cost of living impacting consumer spending and investment habits. Consequently, consumers may be less eager to devote big sums to brokerage platforms than they were during the Covid-19 pandemic’s peak.
However, unlike several retail brokerage apps that have had funding challenges as interest rates have risen, Public has not faced comparable issues. Abraham noted that the company has a good cash balance, allowing it to expand into new countries such as the United Kingdom.
Furthermore, Abraham emphasized that Public has no intentions to raise additional capital at this time, as the firm has already received $300 million in funding from major investors such as Accel, Greycroft, and Tiger Global. With a $1.2 billion valuation, Public has attained the coveted “unicorn” status in the startup world.
