Robinhood Securities Accesses $2.175B Credit Facility

Robinhood Securities, a broker-dealer headquartered in California, has recently amended its credit agreement for the second time with a bank syndicate led by JP Morgan Chase. As a result of this amendment, Robinhood Securities now has access to a revolving credit facility with a total commitment of $2.175 billion.

The amendment was made following changes to the facility that the securities trading business signed in April of last year, which was worth $2.275 billion. According to the company’s Form 8-K, filed before the US Securities and Exchange Commission (SEC) on March 24, 2023, there were no outstanding borrowings under the amended agreement as of March 24.

This means that Robinhood Securities has access to the entire $2.175 billion that was committed under the credit agreement.

“The Credit Agreement requires RHS to maintain a minimum consolidated tangible net worth and a minimum excess net capital, and subjects RHS to a specified limit on minimum net capital to aggregate debit items,” the company official explained.

Robinhood Securities initially entered into the 364-day senior secured revolving credit facility for $2.18 billion in April 2021. However, the facility was amended on April 11, 2022, to increase the commitment to $2.275 billion.

This latest amendment has lowered the commitment amount back to $2.175 billion. This revolving credit facility allows Robinhood Securities to borrow funds as needed to meet its financing needs, subject to certain conditions and limitations set out in the agreement. The recent amendment will likely provide the broker-dealer with the additional financial flexibility to support its operations and growth initiatives.

Robinhood Financial Whirl

Robinhood Markets reported a 31% YoY decline in the number of monthly active users in its January 2023 operating data. The figure dropped from 17.3 million to 12 million. However, the total number of users increased by 600,000 from the previous month, reaching 11.4 million.

Robinhood recently abandoned its plans to re-enter the UK market through the acquisition of Ziglu, a cryptocurrency portfolio investment platform. The company had initially announced the acquisition plan in April 2021 and attempted to reduce the acquisition price by 57% from $170 million to $72.5 million due to market conditions. However, it ultimately canceled the deal last month.

Additionally, Robinhood’s crypto division has come under scrutiny by the US Securities and Exchange Commission (SEC). The company revealed that it received an investigative subpoena from the regulator regarding its cryptocurrency listings.