[lxgr]

Approximately everybody in the US is able to get a brokerage account for trading public shares (with actual SIPC insurance, very limited liability for fraud etc). At the same time, the publicly investable stock market constitutes less and less to the total universe of US companies.

Unless tokenized securities will somehow make private investments accessible to non-accredited investors, this initiative seems to be entirely missing the elephant in the room, at least in the US.

[csdreamer7]

If you can shift these tokens around like Bitcoin my first thought was tax or sanctions evasion. Buy some VOO tokens from a 3rd party since you know your corrupt government (and you made money from that corruption) will seize your bank account for any reason. You hold these tokens in a private wallet stored somewhere for a few decades as your escape plan.

There was an article on how cut-throat (pun intended) low the margins are for money laundering in the competition between businesses to get drug trafficked US dollars from Mexico to China.

[lxgr]

If you don't trust your own government, but the US government and financial institutions, couldn't you just open a US brokerage account?

And conversely, if the US government doesn't want you as a shareholder (and by extension US financial institutions can't serve you), good luck to anyone trying to (knowingly or negligently) redeem any VOO that you've touched.

[rtkwe]

Governments are more practiced at blocking money from moving around with traditional services like banks with crypto they have a tougher time locking down the avenues because anyone offering $LOCAL_CURRENCY to crypto is a place money can leak out of the country around traditional money controls.

There's a reason real estate is one of the more popular ways for chinese nationals to move large amounts of money abroad, it's one of the less restricted ways to move large sums of money out of the country. So there's a lot of interest in expensive real estate not for occupation but just to buy to get cash out of the country into a stable asset that can be sold or borrowed against.

[lxgr]

Yes, it'll definitely take them some time to catch up, and currently the pendulum is swinging in the other direction, but as soon as a critical mass of retail investors get burned, I predict that they'll quickly figure it out.

[rtkwe]

I would have thought the massive proliferation of scam coin rug pulls would have done it but then the US elected a president who did his own crypto pump and dump rug pull right before his own inauguration so I doubt we'll see any real action against them for the next 3.5+ years.

[NickNaraghi]

The main value proposition is faster settlement.

The big institutions can measure their profits in terms of settlement time, going from 2 days to 1 day (previous infrastructure upgrades) to instantaneous (this) makes them more money.

[lxgr]

I see how it can make sense on the settlement layer, but that's of absolutely no relevance to individual investors, which is who Robinhood are targeting.

In the EU, as far as I remember most modern brokers let you buy shares with unsettled proceeds of others without restrictions; in the US, getting a margin account takes no effort at all and bypasses the freeriding rules too.

[NickNaraghi]

Unfortunately, Robinhood makes money by selling individual investor orderbook data to the big guys so they can front-run them

[lxgr]

Payment for order flow is not front running. The PFOF trader only gets right of first refusal on every trade; whether they take it or not, the broker is still obliged to execute the trade at NBBO or better.

It actually gets retail investors better prices than institutional or professional ones, since the counterparty can safely assume that there's "dumb money" on the other side of the trade.

That's not to say it's not controversial in some aspects, but it's not as simple a situation as you make it out to be.

Also, somewhat ironically, the front running risk on many decentralized exchanges is much higher due to MEV being a hard problem to solve trustlessly.

[chollida1]

Can you explain how shorter settlement time is a benefit to retail clients who buy these tokenized stocks?

Or how you see big institutions making more money by reducing settlement time?