Programmable money, like Bitcoin, are available in the market even though the verdict is still out there as to which of the existing cryptocurrencies (if any) qualifies for a digital means of payment, or a digital store of value, or a digital unit of account. Bitcoin is clearly a living proof of an autonomous organization, with no CEO, no CFO, and no board. It went live with a fixed supply and a fixed predetermined monetary policy. The developer and user community has had several disagreements about the direction that the network should take which has resulted in forking the Bitcoin source code.

The fact remains (with its pros and cons) that the fixed supply of 21million Bitcoins cannot be tampered with. The programmed monetary policy allows for new bitcoins to be created only through mining at a fixed rate. This rate is fixed but it decreases as new bitcoins come into circulation and we approach the 21 million supply ceiling. There are proponents and critics to this kind of rigid monetary policy as it has not been tested in economic downturns, in which a flexible monetary policy can have benefits. It definitely sits on the other end of the spectrum from the Quantitative Easing (QE) that Central banks in the Western world have been engaging in after the 2008 Global financial crisis and the 2020 COVID19 induced economic crisis. Devaluation of currencies is a big thorn that is yet another reason that we have been soul searching technological solutions for better stores of value. Data from the Official Data organization and several other sources show that the purchasing power of the almighty US dollar has been dropping precipitously.

Soul searching for programmable money that is enabled by blockchain technology that can mitigate this frightful drop in purchasing power of even the №1 reserve currency is only natural. Can we create a rather autonomous store of value with a tamper-proof and effective monetary policy? The market has not yet decided whether Bitcoin which is stateless and not backed by any real asset, is our Digital Gold alternative. During the recent downturn, Bitcoin and Physical Gold, similar to several traditional financial assets, have not behaved as expected.

One example of a better potential Digital Gold alternative, is the blockchain enabled solution of a stateless Buoyant digital currency, the Ndau. The Ndau (XND) was launched in September of 2018. Its design is to act as a long term store of value and therefore rewards token holders the longer they hold it. Ndau token holders earn Economic Alignment Incentives (EAI) ranging from 4% to 15% based on the number of months of their holdings.

The total supply of Ndau tokens is fixed to 30million and there is a programmed market intervention to maintain price stability every time the price moves more than 5%. The supply of Ndau is increased only when demand increases based on a predetermined price curve.

Ndau is the intellectual child of the Ndau Collective. An anonymous group of early Bitcoin enthusiasts more than 20 leading experts from world-class institutions including MIT, Columbia University, Carnegie Mellon, New York University, University of Chicago, and Goldman Sachs and who specialize in disciplines ranging from economics and monetary policy to cryptography and computer science.

Buoyant : Dictionary definition = able to keep afloat or rise to the top of a liquid or gas.

In virtual currency terms, it means a currency whose value rises and whose downside volatility is mitigated.

Ndau: The name comes from en-dow (endowment). The proceeds from the sale of Ndau tokens are kept in an endowment and invested in other asset classes. The purpose of the endowment is to serve as a source of liquidity to support ndau’s price. The investment decisions are taken by the Blockchain Policy Council (BPC), a group of nine digital delegates continuously elected by ndau holders. The tokens are native the Ndau blockchain which uses a proof of stake consensus mechanism.

The corporate entities behind Ndau are Oneiro, which is backed by COSIMO Ventures. Oneiro received a seed round of $3mil initially and in October 2019, another $5million. At launch, Oneiro sold $15million worth of Ndau Tokens (which means a bit less than 1million tokens).

The recent economic downturn seems to have found Ndau at a fragile point on its journey of adoption and therefore was not able to live up to its design.

At issuance Oneiro placed Ndau tokens at a price of $17.26 during a private sale. The price remained stable for a long time (about one year) and then started rising. By early 2020, it had actually risen close to $22 (27% increase). By mid-February 2020, it seems that the price stabilizing mechanism of the endowment couldn’t cope with the tsunami of liquidation that hit all assets indiscriminately.

This indicates that the endowment was too small to cope with the severe changes in demand. According to their website, the total tokens in circulation had grown to 4.3million. During the worst selloff, the Ndau price dropped just below $6 and by mid-April recovered back to over $11.

Ndau is more actively traded on BitMart launched 2 yrs ago out of the Cayman Islands and with a presence in New York, China, Hong Kong, and Seoul. According to Cointelligence, they are included in the top 20 exchanges by volume.

Here’s how Singapore plans to make its services as easy as Facebook Connect.

A long-term plan to digitize the functions of governance and public life.

Singapore has already two kinds of digital IDs

CorpPass, a digital identity to do business efficiently and safely online with the government.

MyInfo simplifies banking transactions by eliminating the need to re-produce documents for verification.

I picked the Singaporean example of GovTech led digitalization (there are other well publicized ones, like Estonia) because in these `never seen before` circumstances they were able swiftly to launch three new services

TraceTogether

A community-driven contact tracing app to help during the COVID19 spread. Own your data and use Bluetooth P2P communications to share your close contacts. Give permission to the Ministry of Health to quickly reach out to your close contacts if you are a COVID-19 patient.

TraceTogether aims to protect families and communities, and stop the spread of COVID-19.

MaskGowhere

An app to use your zip code and get info on mask distribution points

FluGowhere

An app to facilitate the following: If diagnosed with any respiratory illness (even just a cold) you get full subsidy for medical treatment

I then look at a country that has no technology to help its citizens as COVID-19 starts to spread. America has no digital ways to disperse the various stimulus packages for individuals or businesses.

Venmo, Zelle, and Square`s CashApp are offering their help in getting the government stimulus of one-time payments fast to the people. Lending Fintechs are offering their technologies to the US Small Business Association (SBA) who will handle the $350 billion guarantees for loans to small businesses (out of the $2 trillion).

Transparency of money flows (audibility) would have been a blessing in this situation. It would save the government and the citizens from all the moral hazards that were experienced during the GFC. One of the most eye-popping examples were banks that were eligible for favorable loans with subsidies which they subsequently used for share buybacks.

Digitalization of municipalities, states and governments is not only about operational savings but also about Transparency that can allocate capital and manage risks in a fair way.

Let`s hope that one of the positive outcomes from this crisis, will be large scale government digitalization initiatives so that we can deal with the next crisis in a better way. We live in an extremely complex world that is increasingly crisis-prone.

I now wish & hope that through the experience of this crisis, enough leaders will recognize the risks of centralized technology to help citizens. The biggest risk is citizens (we all) falling prey to the Stockholm Syndrome.

As hostages of the Coronavirus, we develop sympathy to all surveillance tools that allow us to eventually get rid of this captivity. Once the Coronavirus crisis is over, we stay captive to the surveillance tools because of FUD (Fear Uncertainty Doubt) and the Stockholm Syndrome. We actually `willingly` change our values and morals. We actually feel a kind of gratitude towards those that developed and offered us the surveillance tools, because they were lifesaving at the time.

We need to focus here and now on the development of decentralized surveillance technology for all. Technologies that allow ownership of data and use of it for various AI-enabled tasks again in a decentralized way.

Let`s shift our focus towards blockchain and AI use cases that serve citizens rather and can safely help us manage widespread risks, like the Coronavirus situation.

Inspired by the Decentralized AI Alliance a non-profit alliance with already 65 companies involved from the Blockchain and Artificial Intelligence space. Their first imitative is the COVIDathon launched on April 1st and bringing cross-industry people to who are in alignment with the decentralization of AI, to work towards a variety of solutions to the problems from COVID19.

Designing the future is imperative. Being aware of the risk of the Stockholm Syndrome is paramount.

For weekly updates, influencer interviews and insights, click to subscribe to my YouTube Channel.

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Undoubtedly, the growth of low cost, indexing, passive ETFs has been supported by digital innovations in wealth management. However, it is the incumbents that own the lion`s share of the low cost, passive ETF market. Similarly, it is predominantly incumbents that will be launching Active Non-Transparent ETFs.

ANTs are actively managed ETFs that offer all the advantages of the ETF wrapper – digital access, intraday liquidity, tax efficiencies, etc. – for actively managed portfolios. The reason that they have been called `Non – Transparent` is that the managers are not disclosing their holdings on a daily basis but on a quarterly basis. The ETF manager will only disclose real-time his-her positions to the Authorized Participant that is the entity who provides the in-kind redemption process.

Eaton Vance has been the only company that already has such an approved wrapper, the NextShares, which is an actively managed open-end fund trading on exchanges without regularly disclosing its holdings.

ETMFs were launched in 2016 but the growth has been negligible.

Eaton Vance Stock NextShares (EVSTC) – $6mill AUM

Eaton Vance TABS 5-to-15 Year Laddered Municipal Bond NextShares (EVLMC) – $7mil AUM

Precidian received approval in Spring 2019, for their own proprietary NonTransparent ETF structure, the `ActiveShares` which can also be licensed.

In a recent approval, Blue Tractor a 5 year old company also received approval to license its proprietary model, Shielded Alpha, to asset managers who are interested to launch NonTransparent ETFs.

The other players are T. Rowe Price, Fidelity Investments, and Natixis through a with the New York Stock Exchange.

Will the new ANTs planned to launch this month (March), come to market in these tough times? Will they eventually help the actively managed space?

Actively managed ETFs

Actively managed ETFs already exist but they are no more than 2% of the entire ETF sector. They have predominantly been focused on fixed income which is an asset class that the portfolio holdings are not easily replicable. Most asset managers have had difficulties beating their benchmarks and at the same time offering low-cost investment vehicles (even in funds) which has resulted in very low interest in equity actively managed ETFs.

As most opportunities in equities have been in smaller caps rather than larger caps and in international markets rather than US domestic markets, actively managed ETFs in larger-cap domestic caps seem challenging.

ANTs that have been approved maybe (just maybe) will establish themselves especially as investment ingredients that financial advisors embrace. The question is whether financial advisors will stomach the opaqueness of these ETFs. I guess they would if the alpha produced is sufficient but that of course, is a chicken and egg problem.

The only example of fully Transparent Actively managed equity ETFs is the family of ETFs launched by ARKInvest, which I have covered from their early days.

The investment thesis of ARKInvest is Innovation. It offers five actively managed thematic ETFs whose holdings are fully transparent (with a small intraday reporting delay). ARKK is the largest ETF with $1.86billion AUM (Total assets under management for all five ETFs are just over $3billion)

ARK was awarded by Fund Intelligence in 2019, the ETF Suite of the Year. Cathy Wood, the CEO, has also been disruptive in the way research is conducted at ARKInvest. They have developed an Open Research process that allows them to go beyond the traditional financial analysis by including Theme Developers and experts and holding open debates around their investment themes. More here.

Two picks of noteworthy innovations of ARKInvest ETFs.

• In the Fall of 2015 ARKW ETF, was the first ETF that invested in Bitcoin through Grayscale’s Bitcoin Investment Trust . I personally remember reading Chris Burniske`s (research lead at the time at ARKInvest) ARKInvest research at the time which was shared openly and led to their investment decision. The ARK Web x.0 ETF (ARKW) listed on NYSE Arca invests in innovative internet technologies including cloud computing, big data, digital media, e-commerce, bitcoin and blockchain technologies, and IoT.
• Currently, ARKInvest shares openly on its website and on the Github their valuation model of Tesla which is a core holding in three of their five ETFs.

Tesla’s Potential Trajectory During the Next Five Years is their latest thinking around Tesla`s potential and the actual model with its inputs is on the Github here.

I kept worrying about the liquidity issues that robo-advisors could be facing, as I kept fresh in my mind the Betterment/Brexit incident in July 2016! When the unexpected British election results hit the market, ETFs became illiquid and mispriced and Betterment suspended trading for retail on that Friday of the Brexit results for almost 3 hours.

ETFs have been the bread and butter of all robo-advisors. As of the end of 2019, based on my calculations, incumbent and standalone robos accounted for 12% of the entire ETF market (see here). Both standalone fintechs and incumbents use these efficient wrappers to create their portfolios.

Eric Balchunas, reported that history was made on Feb 28th, with the $SPY ETF becoming the first security to ever trade in one single day, over $100billion!

SPY trading volume

Several large ETFs made all-time volume records on that same day. For example, $QQQ the NASDAQ tracker reached $28billion and $HYG, the most widely used high-yield bond ETF, reached $7.8billion daily volume.

Overall, the ETF market fared very well in this market blood bath.

The record volumes are a healthy sign. ETFs are used by professionals to get in and out of the market fast and efficiently. I say that the record volumes are a healthy sign, because they were combined with tight spreads and reasonable premium-discount levels; unlike the situation that occurred in the summer of 2016.

Authorized participants (APs) that manage the liquidity and play a significant role in the bid-ask spreads in ETFs, worked wonders in this recent market turmoil. In my 2016 post, I discuss in detail the liquidity risks inherent in ETFs. The bottom line is that the business of APs for ETF, is an operationally intensive business. The Aps create and redeem ETF shares and on average each ETF has 5 active APs. These are typically large US banks but also European banks are involved in the large US ETF market as APs.

We need to celebrate the way in which these entities handled the total record volume of ETFs this past week. $1.2 trillion traded in ETFs! Bank of America, Goldman Sachs, JP Morgan, and ABN AMRO, are some of the major AP players that make it possible for robo-advisors to brag about serving smoothly end customers.

ETFs proved themselves in the February downturn that goes down in history as one of the most severe drops in a short time. It has been compared to the 2008 crisis, as it wiped out close to $5 trillion in value in public stock markets.

ETFs overall experienced $24billion of net outflows! This is peanuts compared to the overall drop in equity values. This shows that that retail ETF holders, HODLed; the high ETF volumes indicate that professionals used ETFs to manage their exposures.

Stay tuned for a March update, by month end.

Appendix

ETF liquidity risks are more complex than at first sight.

There are ETFs that target illiquid markets (e.g. equity exposure to the Egyptian stock market; or specific bond market).

There are ETFs that simply don’t accumulate enough volume and therefore the bid/ask spread is wide. This is because the market maker is dealing with a narrow market. There are tons of ETFs that are low volume (close to 30% are reported to trade less than 5,000 shares per day!). Exchanges are giving out incentives to the trading firms involved in market making, to keep these structures alive.

There is also the Premium/Discount spread that reflects whether the ETF itself is trading above or below the NAV of the underlying portfolio. This can happen because of behavioral trends (i.e. the crowd pilling into an investment theme or an investment theme gapping down because of an event that turned it out of favor). This is the type of risk that Betterment tried to protect its clients from when it halted trading during the aftermath of the Brexit.

The last and least understood liquidity and counterparty related risk is one related to the Creation/Redemption process of ETFs. This is actually the secret sauce of these structures, which gives them the intraday liquidity which is lacking from mutual funds and the tax efficiencies. The Creation/Redemption process of ETFs refers to how the shares are created or redeemed. The process is complex and if one wants to understand it, it is explained on ETF.com here. The hidden risk that needs light shed onto it, is related to Authorized Participants (APs) who are the entities that create and redeem ETF shares and are sometimes the same as market makers; but not always. They are the usual suspects (large broker dealers) and have signed AP agreements with the ETF issuers (see a SEC-registered AP agreement here). In summary, for each ETF, one has to think of the Issuer (e.g. Vanguard, Blackrock), the Authorized Participant AP (e.g. Bank of America) and the Market Maker and the Custodian (e.g. JP Morgan, State Street).

So, one can say that at least Four kinds of liquidity risks are inherent in ETFs. The AP related risk or the risk inherent in the “magic” Creation/Redemption process of ETFs. It is a risk that cannot escape from a Lehman moment in the financial sector. Even if one invests in an ETF that has no direct exposure to the financial sector, through the double liquidity dependence on Authorized Participants and Market Makers of ETFs, the risk is there and real. In August 2015 when the market gapped, ETF prices were not available and active investors, those needing to hedge through ETFs; were facing a void. Passive investors focused on mirroring Indices, were disappointed too. Panic and behavioral biases can turn a seemingly well-functioning market into one that is illiquid, volatile and distorted. All these factors are concentrated in the financial sector. There is no difference from the time of the mortgage structured products crisis and the out of proportion domino effect.

Customers — Investors should be extremely happy with all these developments. However, there is one major concern whose ugly head may not be noticeable. An elephant is in the room, here too. Its name is `The Big Three`. The concentration power of three US-based companies, Blackrock, Vanguard, and State Street, and its ramifications has gone largely unnoticed.

Blackrock passed the $7 trillion AUM by the end of 2019. A y-on-y increase of $1.5trillion.

Vanguard passed the $6 trillion AUM and State Street the $3trillion AUM.

These three corporates manage $16 trillion AUM. This is a 45% increase from 2017 ($11 trillion AUM)!

Through a visualization produced by Corpnet Research what becomes clear is that `The Big Three` are the largest shareholders in 40% of all publicly traded stocks in the US [1]

The growth of low-cost investing, the disruption of the brokerage business model and the digitalization of the investment process, has created this excessive concentration in the Big Three asset managers.

Blackrock, Vanguard, and State Street have corporate control over 40% of the US stock market! These giant index fund businesses have too much shareholder voting power. That is one of the reasons that it matters a lot what the Fink says about climate change and ESG. In this case, we like his commitment but let’s be aware of this Corporate Governance entity in the room

The Harvard Law school forum on Corporate Governance is also researching this theme. In their paper The Specter of the Giant Three they look closely into this issue and estimate that the Big Three could well cast as much as 40% of the votes in S&P 500 companies within two decades.

Even though, the Big Three own less shares than 40%, their impact is amplified because they exercise their voting power 100%, whereas smaller asset managers do not.

The Big Three currently collectively hold an average stake of more than 20% of S&P 500 companies and each one of them (BlackRock and Vanguard) now hold positions of 5% or more of the shares of almost all of the companies in the S&P 500.

Even more interesting is that this corporate governance problem was identified initially as the

“Problem of Twelve” — the likelihood that in the near future roughly twelve individuals will have practical power over the majority of U.S. public companies.

In just these last two years, the problem has become more acute.

If we continue to focus on democratization (access, low cost) of financial products and services with no innovation in corporate governance, we will end up pretty much in the same corner as we have with the Big Tech companies.

We need more fintechs innovating in the shareholder voting process. We need to increase the shareholder voting participation and make it 100% transparent for shareholder that are already required to publicly disclose their holdings.

The Big Three references

BlackRock, Vanguard and State Street Own Corporate America

Original article appeared on Daily Fintech

[1] Hidden power of the Big Three? Passive index funds, re-concentration of corporate ownership, and new financial risk

AntForest is a 3yr old Corporate Social Responsibility – CSR – initiative of Alipay that took a life of its own. It won the 2019 UN Global Climate Action Award.

A great example of gamification and network effects on an ecosystem like Alibaba. At launch it was one of the many charity projects that were planning to collaborate with Chinese NGOs to plant trees and contribute towards creating the Great Green Wall to block the advancement of the Gobi desert. 

China has been facing a huge problem from the northeast, as the desert has been growing and as China has very little land that is arable [1] (only 12%). Sandstorms in Beijing have become more frequent. 

In 2016 Ant Financial launched a charity app, AntForest, for Alipay users. People could choose from a list of low-carbon activities like, using public transportation and bikes, recycling, reducing plastic usage, and more; and earn `green energy points`. These points could be used to buy virtual seeds to plant trees, and once these virtual seeds had grown a bit, through virtual caring (watering etc), then an actual tree would be planted in some desert.

AntForest users, could watch their actual trees grow through satellite images. 

One salix mongolica in Kubuqi desert, a sea-buckthorn in Tongliao,  two alxa in Inner Mongolia etc. have been planted by Jessie-Chee. She watches them and is very proud of them. She competes with other friends who have more trees than she has. 

AntForest gaming features and visuals, have created a virtual social network that Alipay did not have before (unlike WEchat). In September, it was reported that AntForest and the Chinese NGOs that support the actual planting of the trees, have planted 122 million trees and the social network has grown to 500million users! The trees cover an area of 112,000 hectares, making the AntForest initiative  the largest private-sector tree-planting initiative.

AntForest users living close to the borders with the desert have also been involved in planting the trees, changing lifestyles dramatically to earn energy points and feeling part of a virtual communities with strong purposeful ties. 

Alibaba is now using its ecosystem to extend the appeal of AntForest. 

Its new retail concept store, Hema Fresh, offers customers 21 green energy points when they shop without any plastic bags. Hema fresh, [2] not only has high quality food and online ordering and delivery but also a next level integreated smartphone experience. This includes complete product information by scanning QR codes of product labels, automated check out via RFID and payment via Alipay. 

Alibaba`s second hand second-hand trading platform, Idle Fish, rewards users recycling their old items with green energy points.

Alibaba`s Dingtalk, a chat and collaboration app for video conferencing also awards green energy points, for users that avoid commuting for in-person meetings.

AntForest has inspired and provided knowledge to GCash in the Phillipines to launch GCash Forest this past summer with the goal to 365 thousand trees in 365 days. 

Gcash [3] is the top mobile banking app in the Phillipines with 5million downloads and 20million users. 

EU 2018 issuance = € 269 billion

EU 2008 issuance = € 819 billion

Both regions created new regulations after the crisis. The EU continues to develop new standards that the market awaits to adjust to. The STS — Simple Transparent Standardized — framework is the latest one under development. [1] Can we blame the regulators in the EU for the anemic growth in the EU securitization market?

This past June, Younited Credit, a French fintech marketplace for consumer loans, placed €156million in a public securitization listed on Euronext (Youni 2019–1). They are the first to get the highest rating on its “senior” tranche, rated AAA/Aaa by Standard & Poor’s and by Moody’s.

Funding Circle has also engaged this year in securitizing loans but through private debt placement deals. By July, Funding Circle had reached the total amount of loans securitised to £755m. Its latest transaction was rated AA / Aa3 ratings by S&P and Moody’s, respectively. [2]

So, where are the Fintechs to disrupt the complicated securitization process? Since the 1970s that securitization was designed and proved its product market fit, the pros for loan issuers are clear and pretty much unchanged.

Securitization for issuers, means off-balance-sheet treatment. It is a way to unlock capital as loans move off the originator`s balance sheet.

This can reduce capital at risk requirements for banks and replenish capital (potential to borrow at lower rates through higher credit ratings).

The reality is that the process is complicated and expensive. As a rule of thumb it starts making economic sense when pooling hundreds of million of assets. This is in itself is tough because there needs to be some homogeneity in the underlying pool (common sense but also regulatory standards). In addition, a new company needs to be setup, the SPV that will hold the pool, and legal and tax issues need to be addressed.

Crosslend a German fintech is taking a stab at this tough but highly scalable problem. A new of them from their early days, through one of their early investors, Lakestar. They aimed to be a Cross-border online lending platform for institutional investors and borrowers.

They have actually pivoted since and developed a solution to automate the securitization process of loans in siuch a way that it becomes worthwhile to securitize smaller pools of loans — between 20 and 100 million euros.

Their automation includes a with a high-quality data warehouse which maximizes transparency of the newly issued securities and keeps transaction costs low.

Their total funding is now €49million and includes strategic investors like Santander InnoVentures and ABN AMRO ventures.

The combination of Crosslend and Solaris Bank, the successful German Baas provider, can become one of the growth stacks that propel the CMU (Capital Markets Union) to the next level.

The CEOs of Crosslend and Solaris Bank (already in partnership since last year) are aiming to fully automate loan securitization with no cross-border frictions and create securitized pools for as little as 20million loans.

Using the Solaris Bank balance sheet to originate loans and the transparent automated technology of Cross lend, they aim to create a new model, `Digital Securitization as a Service`.

The partnership allows Solaris Bank to establish what they call ‘The Balance Sheet Light’ model. Loans are originated using Solaris Bank`s license. These can be passed on to investors with a small delay and without putting a long-term strain on the bank’s balance sheet.

“The Balance Sheet Light model is revolutionary. As a platform, we match supply and demand in the credit sector. At the same time, we maintain the flexibility to hold loans thanks to our banking license and can actively manage our balance sheet. With this approach, we can maximize the efficiency of our equity and make the securities market much more efficient and transparent.”

— Alexander Engel, CFO solarisBank

The Crosslend SolarisBank combo could become the technology that makes the STS — Simple Transparent Standardized- vision of the CMU reality.

AMAZON, WALMART, & THE SECRET BATTLE FOR FINTECH SUPREMACY: PART II

Cowen`s research calls for a $35billion Curbside market, pretty soon.

“Curbside is a manifestation of Bricks-Meet-Clicks”

The opportunity seems to wide open still and Walmart is a leader. According to Offers.com’s Grocery Survey 2019, only 20% of Americans have used a grocery pickup service, and they are primarily located in the south (Texas, Florida, Arkansas…). Among those using grocery pickup, 39% opted for Walmart’s free service.

Walmart is also innovating in Voice-meets-Bricks market too.

Three years ago, in September 2016, Walmart bought Jet, an online retailer, for $3.3billion. Jet has been running independently but at the same time cocreating with Walmart innovative services.

For example in large cities with few or no Walmart stores, Jet has is positioned to serving these urban customers. In NY city, Jet offers a “city grocery experience”. Customer can choose 3h scheduled same-day or next-day delivery for groceries, daily essentials and other items. Shoppers can add customized delivery instructions.

Walmart has also partnered with Google and offers voice-activated shopping.

Just say ”Hey Google, talk to Walmart” and the Google Assistant adds the items directly to their Walmart Grocery cart.

Last October Bloomberg reported, that Robinhood earned more than 40% of its revenue in early 2018 from selling its customers’ orders to high-frequency trading firms, or market makers.

This heating up of Robinhood`s order flow revenues seems to be the case for the entire sector but at 1/5th the size. Alphacution looks at the main players and calculates a 40+% increase in the sector order flow revenues in 2018.

The only company that is not participating in this business is Fidelity. As Kathleen Murphy told CNBC, they are the only ones that do not take payments for stock or ETF trade flow. At least with Fidelity, there is no inherent conflict of interest with regards to best execution.

Digitization has grown clearly benefited customers in terms of better user experience and lower fees. Robinhood has pushed the sector to offer zero stock commissions. This happened in late 2019, while 2018 seems to be the year of substantial growth in another business:

This market is not mainly Citadel and Virtu Financial. Alphacution shows that they handled only 15% of the flows and the sector has grown since 2013 over 70%.