Senator Pat Toomey told CNBC on Tuesday that he welcomes stock trading apps that make investing more approachable, and dismissed complaints from some that brokers like Robinhood have led to the so-called “gamification” of the stock market.
The Pennsylvania Republican made the comments on “Squawk Box” ahead of Tuesday morning’s Senate Banking Committee hearing on retail investors and GameStop’s trading frenzy that began in January. Toomey is the ranking member of the committee.
“Gamification has been criticized a lot… The idea that you make the experience of investing enjoyable and easy is somehow a problem for some people. Not for me,” Toomey told CNBC.
Robinhood, a brokerage app that pioneered commission-free trading and was popular with young investors, had already scrutinized its operations before the Reddit-powered GameStop saga caught the attention of Wall Street earlier this year. The brokerage also saw millions of new users during the coronavirus pandemic when people started buying and selling stocks at home.
“The worst thing about what they are doing is clearly the way they gamify the idea of investing,” William Galvin, the Secretary of the Commonwealth of Massachusetts, told CNBC in December after the securities regulator filed a complaint against Robinhood.
Robinhood has consistently rejected its approach to investing and the user experience on its app. In testimony to the House Financial Services Committee in February before an earlier GameStop hearing, Robinhood co-founder and CEO Vlad Tenev said, “Even though we’ve made investing easier, we recognize it’s not a game.”
“I believe the user-friendly interface will enable customers to responsibly understand, control and manage their finances,” Tenev also said in the testimonial.
Toomey said he appreciated how trading platforms like Robinhood have created a new class of investors.
“My opinion is that the democratization of these markets has been fantastic. No commissions, extremely narrow offer [spreads] means that retail investors can buy shares in ways they never could before. For example, being able to buy a fraction of a share, ‘said Toomey.
Greater participation of Americans in the stock market, Toomey said, is “really, really good.”