I saw this on social media and sharing it here. There's a lot of crazy conspiracies out there (and some batshit crazy ones here) so its worth to at least explain what happened today with the stock restrictions for the few sane ones on Blind. #robinhood #gme #bb #stock First, we need to define two terms: Social Media: A place where village idiots come together to create their own village. Clearing house: a financial institution formed to facilitate the exchange of payments, securities, or derivates transactions. The clearing house stands between two clearing firms. Its purpose is to reduce the risk of a member firm failing to honor its trade settlement obligation. (Imagine an escrow, or your old-school weed dealer, but for stocks). Before the market opened today, clearing firms (see above) told these brokerages (RH, WB, TD, etc.) to stop allowing opening positions for three companies as they're high volume with extremely high volatility, AMC, GME, BB and KOSS. This matters to them because if you buy the stock today, there is a two day settlement period - those brokerage firms that you bought stock on have to fund that trade with the clearing central house called DTC for two whole days (48 hrs). Because of the volatility of those stocks, DTC has made the cost of the collateral of the two-day holding period extremely expensive. Smaller brokerages, like WeBull or RobinHood, use clearing firms that cannot afford the cost to settle those trades (due to the high collateral + cost). They also cannot use customer funds to front that cost due to regulation. So the clearance firms have to go into their own pockets to do it, but they simply cannot afford the cost of those trading clearances (due to the collateral, think of it as an insurance policy cost for a drunk 18 year old vs your mom). This is why the stocks are being put on hold on the smaller brokerages. Now, large traditional brokerage accounts use clearing firms that can afford it and they have the cash to cover the risk, hence why they still allow for trading of high collateral volatile stocks, BUT they still restrict the amount that you can trade. This is just the settlement mechanics of the market. There is no evil boogie man, and blaming it on small brokerages is just idiotic (see definition for Social Media above). If you don't like it, then ask your representatives to remove the collateral rate-hikes for high-volatility assets for clearing houses - which they can't do as these are private companies. Welcome to real life! Also, the reason why you are able to trade commission free is because of RobinHood in the first place. Deleting it will just help centralize financial power to the large institutions and clearance houses in the first place (the WallStreet firms that you hated back in 08).
The whole market was extremely volatile in March 2020 and they didn't do sh*t. Why? It's because everage people lost money. Now rich guys lose and they come up with this crap. Are you that naive?
This. Also, let's try to be serious: Do you think that trades ON A SINGLE STOCK by a bunch of idiots needs too much cash to settle ??? Do you have any idea of how many trillions of dollars are being moved in a trading platform across all stocks???
@Uber(OP) won't answer the real questions but will endlessly parrot an excuse he read online.
There is foul play going on to protect the shorters. Maybe RH isn't the true villain, but they could have handed this better given their claimed mission.
This is on RH. They can't claim to be the broker of the people and then have no obligation to handle these issues in a way that it benefits the people. They should have found a way around it. Maybe by banning both buy/sell
They are not allowed by law to stop selling, and they couldn't get funding for executing buy orders, which is why they were on a spree looking for a credit line. Unfortunately most here don't understand the supply chain of trading. RH and other brokers wanted to allow people to trade, but the clearing houses wouldn't fund the transactions. So they had to skip a day.
RH CEO got asked point blank why they halted selling and he didn't have an answer. It's not illegal to stop selling
That's true, however, WeBull and others are allowing GME trades again after getting the greenlight from Apex. RH is not due to its financial backers: https://cointelegraph.com/news/financial-ties-between-robinhood-and-funds-shorting-gme-falls-under-scrutiny
It will start allowing again tomorrow
Limited trades meaning just enough to keep the stock down? RH knew the timer on short sellers are expiring tomorrow and had to step in the day before to save them. The timing is not coincidence... The past week has been high volume volatile trades, but only today it mattered?
RH under pressure from finance giants ... should change their name from robinhood to puppets
RH no commission - Citadel Securities paying for order flows.
OP - Did you recently moved to Robinhood or have you accepted the offer?
No, but this is not something out of the ordinary. Its actually well understood, it just get buried under the crazy conspiracies.
Citadel and RH people being awful quiet today here on blind.
I am going to guess that you had no idea that the short interest on GME was 130% roughly. If you cannot connect the dots of why they had to take this action then I don't think you wish to see the reality.
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