Is Moomoo a Scam?
Have you heard of moomoo lately? This is a new outfit with a variety of trading services. But is it safe? We have an answer.
Is Moomoo Legitimate?
Moomoo is a division of Futu Holdings Limited, which is headquartered in Hong Kong. The company focuses on the trading of American, Chinese, and other securities. Futu is a public company that trades on the Nasdaq with ticker symbol FUTU.
The American version of moomoo is incorporated in the United States with headquarters in Palo Alto, California. Because it is based in the U.S., it is subject to American securities regulators. These include the SEC first and foremost. The SEC oversees brokerage firms in all 50 states and territories, such as the District of Columbia and Puerto Rico. Moomoo must follow SEC regulations. If it doesn’t, it could face civil and criminal penalties. Moomoo’s SEC registration ID is 8-69739.
Moomoo is also subject to the rules and guidelines of FINRA. This group creates a second cluster of rules and regulations that are binding on moomoo. There are frequently stiff fines and penalties from FINRA, but amazingly moomoo has zero disclosures on its FINRA profile right now. Moomoo has only been registered since 2018. Its FINRA ID is 283078.
Other versions of moomoo are based in Australia, Hong Kong, and Singapore. These entities are regulated by the securities watchdogs in those jurisdictions.
Moomooo Better Business Bureau
Although the Better Business Bureau isn’t a securities regulator, it does nevertheless keep track of
companies doing business in the United States. Unfortunately, BBB doesn’t yet have a profile for
moomoo or its parent company Futu. When it does have one, we will update. The most likely reason for
the absence is that moomoo and Futu are both new business entrants in the United States (starting in
2019).
Is Moomoo SIPC/FDIC Insured?
Moomoo is a member of SIPC, which is America’s major insurance company for brokerage accounts. Because moomoo doesn’t offer any banking products, it’s not a member of the FDIC. However, idle cash can be swept to some partner banks, where the cash will be FDIC insured.
Every moomoo brokerage customer in the United States is
eligible for $500,000 of insurance on positions of securities. The policy is with SIPC and guarantees the number of shares the client holds. It does not protect against market decline. For example, if the account holder has 300 shares of Ford Motor Company, and the stock price of Ford declined to a few cents, the position would be worth almost nothing, although the 300 shares would be there no matter what.
Moomoo does not have an auxiliary insurance policy at this time, so SIPC coverage is the maximum available for securities. Half of the insurance can be used to cover uninvested cash that’s not swept to partner banks.
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Is Moomoo a Safe Judgment
Although moomoo is a new broker-dealer in the United States, it is definitely not a scam. Moomoo is a
legitimate operation with several safeguards in place.
Nevertheless, investing in securities always carries risks that will be present with any brokerage firm. Moomoo is no different in this regard. As always, traders are advised to conduct due diligence before making any financial decision and be aware of what guarantees are in place—and what guarantees are not available.
Moomoo Review
Having seen that moomoo is a real and trustworthy brokerage firm, it’s now time to take a look at the trading services it offers—and does not.
Investments Choices
Self-directed accounts (only) are available at moomoo. The broker-dealer unfortunately doesn’t have a long list of account types, such as joint or custodial accounts. Only individual taxable accounts can currently be opened.
In its self-directed accounts, moomoo offers these asset classes:
Options
Closed-end funds
Exchange-traded funds
Stocks
The last category includes not only equities on the big U.S. exchanges, but also stocks on the Hong Kong and mainland Chinese markets.
Some OTC stocks are also in the last category. During our research, we did not find any foreign ordinary shares (stocks with ticker symbols ending with the letter ‘F’), but we did find other securities, including ADRs and shares of American companies.
Moomoo does not offer trading in bonds, cryptocurrencies, mutual funds, forex, or futures contracts.
Moomoo Pricing Review
The cost of trading on the U.S exchanges at moomoo is very reasonable. There are
no commissions at all on trades of U.S.-listed stocks and ETFs (this include OTC stocks). Option contracts have no base charge but carry a per-contract fee of 65 cents.
Trades of Chinese securities do carry a commission of 0.03% of trade value, with a minimum commission of HK$3 (or ￥3 for mainland securities). There is also a platform fee that is assessed per trade. It is HK$15 (or ￥15).
Moomoo imposes no accounts fee or minimums. Furthermore, Level II quotes are free of charge.
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Customer Support
Moomoo publishes a list of FAQs on its website that can really help learn more about this brokerage firm and its policies. The website has a few other tools, like an account document download widget, but there’s not much more on it.
Moomoo’s website and desktop platform (both of which we will examine up ahead) offer a robo/human chat service that we found pretty helpful. To find it on the desktop platform, click on the three horizontal lines in the lower-left corner of the screen, hover over the Help section, and then click on Online Inquiry. Doing so will produce a pop-up window that starts in robo chat. Type “agent” to bring on a human rep. The same chat widget will be found on the website by clicking on the dialogue cloud icon in the lower-right corner.
Then there is phone service. The number isn’t toll-free, but at least moomoo now publishes its number (650-798-5700). It’s also possible to reach an associate through email at cs@us.moomoo.com.
Moomoo does not have any branch locations at the moment, so there’s nothing else to report on.
Website
The moomoo website is pretty bare bones. There are no trading tools at all. In recent months, the brokerage firm has added Moo (a community forum for social networking), market and security information, and news articles. These resources will be found under the Insights tab.
Also found under the Insights tab are security profiles. Once again, the information is limited, but there are charts with price histories that stretch back more than 15 years in some cases. These charts have no tools, but that will change on the next platforms.
Mobile App
Things improve drastically on moomoo’s mobile app. Now, we have trading power. The order ticket will be generated by tapping on the orange Trade button that appears in the bottom-left corner of an asset’s profile. We found 8 trade types, including some esoteric ones like market-if-touched and trailing stop limit.
A drop-down menu sits inconspicuously in the top-right corner of the trade ticket. It can be used to switch between Pro and Lite modes. Pro mode has Level II data.
A security’s price history can be found on the app by tapping on the Quotes tab on the security’s profile. Rotating the mobile device produces a horizontal chart with a decent amount of indicators, drawing tools, and plot styles.
Multiple watchlists can be created on the app, and option chains are available. At the bottom of the app is a Discover icon. Tap on this to pull up Papertrade, which is the software’s demo mode.
Desktop Platform
Trading software gets even better on moomoo’s desktop platform. This very robust program delivers lots of great features in a full-screen environment that we really enjoyed using during our investigation. Here are some of the highlights:
(1) Advanced charting with many tools. These include indicators, multiple plot styles, drawing tools, and color customization. There is a right-click menu, although the one weakness is the absence of a trade selection.
(2) Moo, a social networking widget. Users can comment on posts and connect with each other.
(3) Simulated trading for extra practice.
(4) Trade ticket with 12 order types, 4 more than the mobile app has. The additional trade types include limit buy and market sell. As with the mobile app, a PIN must be entered before entering a trade.
Resources absent on the platform that we would like to see include streaming video news and integrated option spreads.
Margin
Moomoo’s individual taxable accounts are available only in margin mode. Cash accounts are not offered.
Every security profile has small icons that reveal the asset’s margin details, such as maintenance
margin and short rate.
As for cost, moomoo has ditched the traditional, flat schedule. Instead, it charges
6.8% across all debit levels for U.S. and Hong Kong stocks (for long positions). China A-shares are charged an additional 2%.
Margin rates for short positions vary by stock and even by day.
Options Trading
Moomoo continues to provide trading in calls and puts only. Both the mobile app and desktop platform have chains for calls and puts. Despite the lack of strategies, we did find Greek values, open interest, volume, and IV (implied volatility). The mobile app also has unusual activity and option ranking by characteristics like open interest increase and turnover.
Another tool missing at moomoo for derivative traders is profit-loss graphing. We would also like to see an options screener and a strategy builder.
Security Research
Moomoo’s website begins this section with minimal information on securities. No login is required to access asset profiles or the broker’s security screener. Unfortunately, it is for stocks only. There is no screener for ETFs. Profiles are available for funds, although there’s not much on them.
News articles are available with thumbnails, which makes sorting through them a little easier. Dow Jones and CNBC are some of the providers. Moomoo publishes some of its own news, too.
There is a financial calendar on the site that displays upcoming company events and market holidays. The information can be sorted by country and level of importance.
The stock screener has the same interface as the economic calendar. There are quite a few search variables, including technical events, gross margin, and market cap. Clicking on an entry generates the asset’s profile. There are financial statements, key indicators, and more.
Some data must be accessed through the app or desktop platform. These two programs present the best research experience (especially the desktop system because it has a larger interface).
An analysis tab on the desktop platform presents detailed valuations of a stock. For example, for ConocoPhillips, we found daily short volume, current P/B, and short interest updated semi-monthly. These numbers are shown in graphical format for an easier interpretation.
The one weakness in this category is a lack of stock reports from independent analysts.
Miscellaneous Services
Extended Hours Trading: Pre-market and after-hours trading are both available at moomoo.
Cash Management Features: Banking tools are not available.
DRIP Availability: Dividend reinvesting is not available, either.
Initial Public Offerings: IPO investing is available, and this is one of moomoo’s strengths. Moomoo’s software displays upcoming stock launches on both American and Chinese exchanges. Recent IPOs are also displayed.
Fractional Shares: Only whole-share trading is available right now.
Individual Retirement Accounts: There are no tax-deferred accounts at moomoo.
Recommendations
Small Accounts: Without fees or minimums, moomoo is a good place for small investors.
Mutual Funds: Although moomoo has no mutual funds,
Charles Schwab has thousands of them with a pretty good fund screener.
Beginning Investors: Moomoo would be a decent pick by new investors, mostly due to its demo mode
on its software. Complete newbies should choose a brokerage firm with investment-advisory accounts.
Webull would be a good pick.
ETF and Stock Trading: We do really like moomoo’s trading software. Plus, plenty of information is available on stocks and ETFs.
Retirement Savers and Long-Term Investors: Without tax-advantaged accounts or investment advice,
moomoo just isn’t a good choice for retirement planning. We suggest
Charles Schwab, who has these and much more.
Moomoo Review Judgement
Moomoo is a legitimate brokerage house with some powerful trading tools. Nevertheless, it fails to
offer anything at all in several important areas.
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Updated on 6/28/2024.
Chad Morris is a financial writer with more than 20 years experience
as both an English teacher and an avid trader. When he isn’t writing
expert content for Brokerage-Review.com, Chad can usually be found
managing his portfolio or building a new home computer.
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