Sun, April 21, 2024

Robinhood Signs Modified Credit Agreement for $2.175 B

Broker News

For the second time, RHS – a California-based broker-dealer – has amended its credit agreement with JP Morgan Chase and their banking syndicate, granting them access to an additional revolving credit facility totaling $2.175 billion. It is in addition to the institution’s prior commitment of $2.275 billion that was signed back in April 2020.

Robinhood makes a second amendment.

On March 24, 2023, Robinhood formally initiated its second amendment agreement as outlined in the Form 8-K document presented to the US Securities and Exchange Commission (SEC).

In the filing signed off by the CFO of Robinhood Markets, Jason Warnick, it was specified that per the Credit Agreement, Robinhood Securities (RHS) must ensure a minimum consolidated tangible net worth and excess net capital to remain compliant. It also entails imposing certain restrictions on their minimum net capital about aggregate debit items.

Additionally, per the filing statement from March 24, no borrowings are currently outstanding under the amended agreement. Therefore, the $2.175 billion is still available for broker-dealers to use.

In April 2021, Robinhood Securities first introduced a 364-day senior secured revolving credit facility for $2.18 billion; this figure was then increased to $2.275 billion on April 11, 2022, and has recently been amended yet again to now amount to $2.175 billion.

Developments at Robinhood

In January 2023, Robinhood Markets reported a significant reduction in monthly active users year-over-year. This massive dip was observed from 17.3 million to 12 million customers – that’s a drop of 31%. However, on an optimistic note, the month-on-month analysis indicated an increase of 600K, with 11.4 million customers this time last month!

Last month, the US-based commission-free stock trading and investment platform ended its ambitions of reentering the United Kingdom by suspending its plan of acquiring Ziglu, a cryptocurrency portfolio investment platform.

In April last year, they originally announced they were going ahead with this acquisition at $170 million. However, just recently, due to market conditions, this was revised by 57% to only $72.5 million before eventually being terminated altogether.

Lately, the focus of the SEC has shifted to Robinhood’s crypto division. In February, Robinhood reported receiving an investigative subpoena from the US securities regulator about its cryptocurrency listings. Furthermore, investors have grown increasingly concerned over potential regulations that could be imposed on this sector.

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