Customer Experience Manager

Robinhood restricts prediction market contracts amid insider trading concerns. Retail trading platform Robinhood has restricted access to certain prediction market contracts as it seeks to curb risks related to insider trading and market abuse, reflecting growing scrutiny of the fast-expanding sector. The company is now offering a narrower selection of event contracts than some rivals and has excluded higher-risk products such as so-called "mention markets", where users bet on whether specific phrases will appear during public speeches, earnings calls, or similar events. Prediction market offerings on Robinhood remain available only in the United States. Jordan Sinclair, president of Robinhood UK, told the Financial Times the firm is "very focused" on market abuse and insider trading. He added: "There are some [markets] we've chosen that aren't right for our customers, and that is, I think, the way you can kind of navigate that world." Prediction markets, which allow users to trade contracts tied to the outcomes of future events, have come under increasing scrutiny over the potential misuse of non-public information. Policymakers have raised concerns that such platforms could enable insider trading or manipulation, particularly in contracts linked to real-time events. Robinhood has adopted a more selective approach by favouring regulated venues such as Kalshi and ForecastEx, while avoiding higher-risk providers like Polymarket. The move comes amid broader political pressure in the United States to investigate suspicious trading activity tied to geopolitical events, including reports of unusual profits linked to conflict in Iran. Kalshi CEO Tarek Mansour has acknowledged the risks facing the sector, stating: "Prediction markets are likely to attract fraud and insider trading." He also highlighted last week the importance of robust compliance frameworks, and anticipated intensified federal scrutiny to identify and penalise bad actors in the industry. Unlike traditional financial markets, prediction markets are not yet fully subject to established insider trading laws in the United States, though lawmakers are considering reforms to close regulatory gaps. Robinhood's stance also comes as it faces a legal dispute with regulators in Massachusetts over its event-based contracts. The company argues that the products are federally regulated derivatives falling under the jurisdiction of the Commodity Futures Trading Commission, while state authorities contend they may constitute unregistered securities marketed to retail investors. Globally, regulators have taken divergent approaches. Several European countries, including France, Germany and the Netherlands, have blocked access to major platforms such as Polymarket, treating prediction markets as illegal gambling or unlicensed financial instruments. France's regulator, Autorité Nationale des Jeux, warned that such platforms "were not authorised in France and are considered illegal gambling services" and exhibit "addictive characteristics like those found in online gambling - but amplified by the absence of the protective mechanisms that exist in the legal gambling market." Some jurisdictions are exploring regulated pathways. Gibraltar has licensed a prediction market operator, while Malta is considering a dedicated framework focused on transparency and user protection. Back in March, Malta's Economy Minister Silvio Schembri said: "We recognised early on that users need to feel safe if this industry was going to grow, which means it needed to uphold the highest standards of transparency and compliance."

Pinwheel, a fintech specialising in frictionless account activation, has been selected as the direct deposit launch partner for Robinhood Banking. Robinhood chose Pinwheel Deposit Switch for its PreMatch technology, which enables near-instant direct deposit enrolment during account opening. The technology addresses a significant industry challenge, where 40% of accounts remain inactive after first funding. Pinwheel's PreMatch automatically identifies and surfaces active payroll accounts for switching after multi-factor authentication, achieving double the conversion rate of legacy solutions. Invented in 2023, PreMatch eliminates the need for users to manually search for payroll providers or enter separate credentials. Pinwheel's network covers 1,800 payroll providers and 1.5 million employers. The company has raised $77 million from investors including Notable, Coatue and First Round Capital.

Four financial technology stocks reported mixed fourth-quarter results, with revenues beating analyst consensus estimates by 2.3%, according to a sector analysis. Share prices have risen 9.3% on average since the latest earnings. Robinhood delivered the fastest revenue growth among peers, reporting $1.28 billion in revenue, up 26.5% year-on-year. However, this missed analyst expectations by 3.9%, marking a disappointing quarter with significant misses on both revenue and EBITDA estimates. The stock has fallen 9.3% since reporting and currently trades at $70.20. LendingTree emerged as the quarter's best performer, reporting revenues of $319.7 million, up 22.2% year-on-year and exceeding expectations by 11.5%. The company achieved the largest analyst beat and highest full-year guidance raise amongst its peers.