Senator Pat Toomey told CNBC on Tuesday that he welcomes trading applications that make investments seem more affordable, dismissing complaints by some that brokerages like Robinhood have led to so-called “gamification” of the capital market.
The Pennsylvania Republican made comments about the “Squawk Box” ahead of Tuesday’s hearing of the Senate Banking Committee on Retail Investors and the GameStop trading frenzy that began in January. Toomey is a member of the committee.
“There’s a lot of criticism about gamification. … The idea of making the investment experience enjoyable and easy is kind of a problem for some people. Not for me,” Toomey told CNBC.
Robinhood, a brokerage application that pioneered zero-commission trading and is popular with young investors, analyzed its operations just before the RedStit-powered GameStop saga caught Wall Street’s attention earlier this year. Brokerage also saw millions of new users during the coronavirus pandemic as people began buying and selling stocks while at home.
“The worst part of the actions they are clearly taking is how they gamify their idea of investing,” Massachusetts Commonwealth Secretary William Galvin told CNBC in December after the securities regulator furniture filed a complaint against Robinhood.
Robinhood has consistently rejected criticism of its approach to investing and user experience in its application. In a statement to the Financial Services Committee in February for a previous GameStop hearing, Robinhood co-founder and CEO Vlad Tenev said: “Even though we have made investments easier, we recognize that it is not a game.”
“I am confident that the easy-to-use interface allows customers to understand, control and direct their finances responsibly,” Tenev said.
Toomey said he appreciated how stock trading platforms like Robinhood have created a new class of investors.
“My opinion is that the democratization of these markets has been fantastic. Zero commissions, extremely limited offer [spreads] it means that retail investors can buy shares in a way they have not been able to do so far. For example, being able to buy a fraction of the stock, “Toomey said.
The increased participation of Americans in the stock market, Toomey said, is “very, very good.”