Margin lending can be lucrative. E*Trade Financial charges as much as 8.4 percent; the highest rate at TD Ameritrade Holding is 9 percent. Tenev says customers would need to complete a suitability questionnaire before being able to trade on margin and have at least $2,000 in their accounts (the minimum required by U.S. regulators). Robinhood also plans to charge for short selling, another practice that can dent the portfolios of day traders and professionals alike; it, too, may be offered later this year.

Allowing millennials to buy stock with leverage and go short, let alone trade for free from their iPhones, could get ugly, says Kate Holmes, founder of Belmore Financial, a Las Vegas-based financial planning firm that caters to the generation. Many Americans aged 18 to 34 Robinhood’s target demographic are financially illiterate, she says. “I keep hearing people who don’t know what a mutual fund is say, ‘I’d like to trade stocks,’” says Holmes, herself a millennial at 31. “Please do not encourage anyone to trade on margin!” she adds.

If Robinhood ends up attracting enough followers, the company could force commissions to zero across the industry, says Michael Guillemette, a professor of financial planning at the University of Missouri. “I think it will cause the big brokerage houses, like Charles Schwab and Fidelity, to follow suit,” he predicts. Guillemette, 30, uses Robinhood to buy just a few shares of an exchange-traded fund with every paycheck. Micro purchases like that don’t make sense if each one costs$7 or $10, he says.

If the big guys are fretting, they aren’t showing it. “Zero-commission trading is not new,” says Katrina Booker, an Ameritrade spokeswoman. “We continue to watch this, but it’s not something that we worry about.”

Tenev and Bhatt say that, so far, they are creating investors, not wild-eyed speculators.” The average customer places four or five trades a month,” Tenev says. “They aren’t becoming day traders.”

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