Zero Commission Brokerages – How Do They Make Money?

As I travel around the country speaking to users, trading clubs, partners and peers, without fail, the first question I get after I explain our trading platform is simply: “How do you make money?”.  I am writing this letter to answer this question once and for all with the hopes that people will instead start asking: “Why Webull?” This, after all, is much more fun to answer. Without further ado, let’s finally lift the veil of secrecy that has shrouded the zero commission trading brokerages for so long, and show you why we are disrupting the traditional online brokerage model.

If you haven’t yet heard of us, Webull Financial is a zero commission, zero fee, no minimums, self-directed US broker dealer. Like many of our peers, our platform is app-based and utilizes the latest tech in the retail trading space, creating a seamless and easy-to-navigate user experience. 

I want to be very clear with my ‘unveiling’ that I do not speak for all zero commission brokerages, as some may incorporate monthly fees to supplement their revenue models. Trade clearing, regulatory compliance, and system maintenance costs are extremely taxing on any brokerage, but Webull believes in the Internet model. We believe that our superior platform will attract so many users that the tiny amounts of revenue we do generate per account will add up to make our business model profitable. Webull’s founders revolutionized mass scale retail during their time with Alibaba, the largest online retailer in the world, and strive to emulate this mass approach with the investing and trading world. 

Now, onto the unveiling… 

Get ready for the big secret…. 

We make money the same way every other broker makes money, but with one less revenue line item: commissions. Trade commissions account for the vast majority of a traditional broker’s revenue stream. In some cases, commissions can make up 75% of the total revenue stream of a broker.  Webull’s commission revenue is zero! In order to keep the lights on, we optimize the back-end revenue streams that every other broker (traditional or non) utilize to generate revenue. Simply put, these are payment for order flow, stock loan, interest on free credit balances, and margin interest. Traditional brokers can easily fall into the trap of finding ways to get their customers to trade more to boost trading commissions. Webull does not have this conflict of customer interests.

Again, I want to be extremely clear and transparent. Every single broker in the United States generates revenue using these non-commission-based methods. Our stock price executions are the exact same as any traditional brokerage. How do I know? All US brokerages must follow the best execution principles mandated by regulators. If your order is filled at a price that is outside the NBBO, it is flagged and we make a best effort for price improvement.

I have made it our mission to help demystify Wall Street. This is why on our Webull Financial homepage we will list all the ways we try to make money on your trading activity that is executed on our platform. Of course, without commissions!

I hope this letter helps shed some light on how zero commission brokerages operate, and I can now begin the conversation with: Why have you not yet tried Webull?

Webull strives to give every user on our platform the most current technology for security, speed, and smart decision-making tools, all for free. Zero Commission. Zero Compromise.

*References made possible by Investopedia

About Webull Financial:
Webull Financial LLC is a broker dealer registered with the Securities and Exchange Commission (SEC), is a member of the Financial Industry Regulatory Authority (FINRA), and the Securities Investor Protection Corporation (SIPC). 

The headquarters of Webull Financial LLC is located at 44 Wall Street, New York, NY, USA. 

System response and account access times may vary due to a variety of factors, including trading volumes, market conditions, system performance, and other factors. 

Risk Disclosure: Trading of stocks and all other investment products involves substantial risk of loss and it is not suitable for every investor. The value of stocks may fluctuate and as a result, clients may lose more than their original investment.
Free trading of stocks refers to $0 commissions for Webull Financial LLC self-directed individual cash or margin brokerage accounts that trade U.S. listed securities via mobile devices or Web. Relevant SEC & FINRA fees may apply.

Download the Webull App in the Apple App Store or Google Android Store, completely free. For more information visit Webull Financial.