Seriously though, if I were an amoral CEO trying to spin this to save my own company, I cannot possibly imagine a better spin than "We're suffering from our own success. We want to allow users to keep trading GME, but unfortunately regulation [say it with as much venom as possible] means we had to cut trading to not be in an illegal position. We're gonna come back stronger than ever once we raise the cash on hand to let retail trade like they should."
RobinHood also did not provide that explanation when their CEO was live last night, and we have multiple random billionaires in interviews (who, granted, may not know anything specific) more or less openly stating that the game should be rigged in favor of hedge funds and closing trades is good because it prevents losses (implied: for shorts).It is possible Robinhood was also cash poor, but at best that appears to be a happy justification for stopping trading.
E: Like, if Robinhood really couldn't allow trades due to regulatory requirements for cash on hand, why the hell is that coming out via a Twitter investigation rather than the CEO who had a national platform and couldn't do anything but flounder about saying "you can trade other stocks" and dodging questions?
I know its a bad look for any CEO to admit his company has no liquidity but it'd beat this PR hit.
I don't trust a single explanation Robinhood, the hedge funds, or anyone involved might offer. They are inherently untrustworthy actors.
I mean, I will grant it is plausible, but I have no particular reason to trust them implicitly. This situation demands further investigation.
This is the main thing, yeah. I think there is 100% enough plausible evidence here that this needs a serious investigation. Were yesterday's actions maybe legit? Sure, maybe RH was legally required to do that, and this wasn't something they could have planned for with only a week or whatever of time. Maybe that turns out to be OK.
But there's a lot to be suspicious of and it should be thoroughly investigated by people we trust are not just gonna side with the money.
Even if Robinhood's actions end up being completely legitimate, it really shines I light on how the tools available to the plebs aren't even close to on a level playing field with the financial class
Which we all know with shit as absurd as microsecond algorithm trading, but just gets even more ridiculous when normal people aren't even allowed to click a "Buy" button
SummaryJudgmentGrab the hottest iron you can find, stride in the Tower’s front doorRegistered Userregular
edited January 2021
like, it's not the lie that gets you, it's the cover up, right?
So Citron and Melvin lie on CNBC saying they exited their shorts
RH lies about blocking the trades for low-capital retail only
RH has no disclosure about selling order flow to Citadel, when you might say there's a conflict of interest when Citadel is holding the bag for Melvin and company currently
This is less Charlie looking for more Pepe Sylvia and more just looking at the banality of greed
SummaryJudgment on
Some days Blue wonders why anyone ever bothered making numbers so small; other days she supposes even infinity needs to start somewhere.
Then you fucking halt ALL trading on your platform, not this pick and choose shit
Devil's advocate, I guess, but given that only a subset of RH users are YOLO-gambling meme stocks, shutting down all buying on the platform actually harms normal, conservative investors...and could lead to a cascade of minor but non-negligible price drops on other stocks since now retail customers can't buy AAPL or MSFT either.
A bunch of kids playing around on GME shouldn't stop me from putting money into VIG like a normal human being, and diamond-handsing that bad boy all the way to the moon (which is to say moderate growth and a comfortable retirement years from now).
I don't trust a single explanation Robinhood, the hedge funds, or anyone involved might offer. They are inherently untrustworthy actors.
I mean, I will grant it is plausible, but I have no particular reason to trust them implicitly. This situation demands further investigation.
This is the main thing, yeah. I think there is 100% enough plausible evidence here that this needs a serious investigation. Were yesterday's actions maybe legit? Sure, maybe RH was legally required to do that, and this wasn't something they could have planned for with only a week or whatever of time. Maybe that turns out to be OK.
But there's a lot to be suspicious of and it should be thoroughly investigated by people we trust are not just gonna side with the money.
Even if it’s legit that’s not the end of this
Perhaps there needs to be tweaks to the regs so that users have more transparency and can plan their activity around it
+1
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SummaryJudgmentGrab the hottest iron you can find, stride in the Tower’s front doorRegistered Userregular
Then you fucking halt ALL trading on your platform, not this pick and choose shit
Devil's advocate, I guess, but given that only a subset of RH users are YOLO-gambling meme stocks, shutting down all buying on the platform actually harms normal, conservative investors...and could lead to a cascade of minor but non-negligible price drops on other stocks since now retail customers can't buy AAPL or MSFT either.
A bunch of kids playing around on GME shouldn't stop me from putting money into VIG like a normal human being, and diamond-handsing that bad boy all the way to the moon (which is to say moderate growth and a comfortable retirement years from now).
It shouldn't, you're right
But, conversely, RH apparently could have chosen to halt all trading but GME to divert their liquidity to the GME trades, and they shouldn't have done that either
Apparently their T&C are wide enough to drive a truck through
If you have to close the door, the door should be closed for everyone
SummaryJudgment on
Some days Blue wonders why anyone ever bothered making numbers so small; other days she supposes even infinity needs to start somewhere.
0
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Idx86Long days and pleasant nights.Registered Userregular
Guys, it’s all bullshit. That’s all there is to it
2008, 2012, 2014 D&D "Rare With No Sauce" League Fantasy Football Champion!
I don't trust a single explanation Robinhood, the hedge funds, or anyone involved might offer. They are inherently untrustworthy actors.
I mean, I will grant it is plausible, but I have no particular reason to trust them implicitly. This situation demands further investigation.
If that were the reason they would have given that reason because it’s innocent. But they did not give the innocent reason when pressed, which suggests that they did not think about it, which suggests it’s false.
Then you fucking halt ALL trading on your platform, not this pick and choose shit
Devil's advocate, I guess, but given that only a subset of RH users are YOLO-gambling meme stocks, shutting down all buying on the platform actually harms normal, conservative investors...and could lead to a cascade of minor but non-negligible price drops on other stocks since now retail customers can't buy AAPL or MSFT either.
A bunch of kids playing around on GME shouldn't stop me from putting money into VIG like a normal human being, and diamond-handsing that bad boy all the way to the moon (which is to say moderate growth and a comfortable retirement years from now).
It shouldn't, you're right
But, conversely, RH apparently could have chosen to halt all trading but GME to divert their liquidity to the GME trades, and they shouldn't have done that either
Apparently their T&C are wide enough to drive a truck through
If you have to close the door, the door should be closed for everyone
The only thing that might be shady is if they closed trading for "cash" accounts. I'm unsure if they did yesterday. But "cash" accounts are accounts that don't have instant access to funds deposited, and also don't have instant access to funds from sales; you have to wait for everything to clear, which means their liquidity shouldn't be your problem, because your account is actually working with legitimate on-hand cash. You can convert your account to a cash account anytime, but it's a one-way trip.
I'm actually unsure if their "cash" accounts support fractional share trading, too.
Keep in mind this is all shit I learned in the last two days, too, so I may be off slightly in my description above.
EDIT: Note that this is distinct from the $25K minimum that gets you out of some other restrictions, particularly day trading.
Then you fucking halt ALL trading on your platform, not this pick and choose shit
The more volatile, the more risk the broker has. So they restricted the stocks with bonkers volatility
All brokerages having the same framework does not mean they are all suffering the exact same liquidity problem, especialy when RH is newer, easier for new accounts to join, and more involved in meme stocks as a proportion of trading.
How does that not become a self reinforcing conspiracy theory then where anything that could disprove it is just part of the conspiracy?
If the feds say Robinhood's explanation is why they did it after an investigation, that is just going to result in saying the feds are clearly in on it
How does that not become a self reinforcing conspiracy theory then where anything that could disprove it is just part of the conspiracy?
If the feds say Robinhood's explanation is why they did it after an investigation, that is just going to result in saying the feds are clearly in on it
There's a huge difference between "not believing [ostensibly] third party regulators" and "not believing random people defending RH in a way their CEO wasn't willing to do."
Yeah I mean I don't know what to tell you. The conspiracy angle doesn't even make sense. Citadel made a loan to Melvin who got out of their short position on Tuesday and is a major customer of RobinHood so therefore RobinHood, and also Schwab and TD Ameritrade and WeBull all decided to restrict activity on the meme high volatile stocks? Based on .... like gut feeling? And when actual reporting says something else that must just be like a coverup even though it makes the story less interesting for the reporter?
Not going to defend WSB, but despite it being a cesspool when I started reading it a few years ago, it's the reason I taught myself options trading.
Regardless of how all this shakes out, I think it's neat that a lot of folks are being spurred to get a bit of education on finance etc.
I won't lie, after all that happened this week I'd love to try and get in on the action the next time something like this happens (if there is a next time). I don't want to go back and click Join on WallStreetBets again because it mostly looks like a lot of useless noise with any helpful information buried underneath, but I wouldn't mind getting some kind of periodic update on what they're up to just in case they're about to blow another stock's price sky high.
At least three brokerages said the trading restrictions stemmed from mandates from their clearing firm, which process the securities on the back end after a user executes a trade with their brokerage. Webull Chief Executive Anthony Denier said his platform’s clearing firm, Apex Clearing Corp., notified him Thursday morning that Webull needed to shut off the ability to open new positions in certain stocks. Otherwise, Apex wouldn’t be able to settle the trades, he said.
The clash between short sellers and individual investors, frenzied trading in shares talked up on social media platforms and trading restrictions swiftly put in place left many financial professionals stunned.
“It’s a domino effect,” Mr. Denier said, adding the industry was likely reckoning with the question of whether “customers could pay for the stocks they had to buy to cover their short positions.”
“If [they] are not able to pay to cover their short positions, someone else is going to have to pay for that purchase,” he said. “And if their clearing firm fails and there’s not enough collateral in the account to cover the purchase, that trade fails and will cascade into multiple trades with multiple customers.”
An E*Trade spokeswoman said the company had imposed restrictions to “ensure that we could continue to serve our broader client base,” and that it expected to resume normal trading operations Friday.
Mr. Denier at Webull said the restrictions originated Thursday morning when the Depository Trust & Clearing Corp. instructed his clearing firm, Apex, that it was increasing the collateral it needed to put up to help settle the trades for stocks like GameStop. In turn, Apex told Webull to restrict the ability to open new positions in order to prevent trades from failing, Mr. Denier said.
DTCC, which operates the clearinghouses for U.S. stock and bond trades, is a key part of the plumbing of financial markets. Usually drawing little notice, it facilitates the movement of stocks and bonds among buyers and sellers and provides data and analytics services.
In a statement, DTCC said the volatility in stocks like GameStop and AMC has “generated substantial risk exposures at firms that clear these trades” at its clearinghouse for stock trades. Those risks were especially pronounced for firms whose clients were ”predominantly on one side of the market,” a reference to brokers whose customers were heavily betting for stocks to rise or fall, rather than having a mix of positions.
The statement added that when volatility increases, it increases margin that DTCC collects from the banks and brokers that use its clearing services. “Margin requirements protect the entire industry against defaults and systemic risk in volatile markets,” it said.
Other brokerages including Ally Financial Inc. and Public Holdings Inc., which runs social investing network Public.com, also said Apex Clearing halted all opening transactions on GameStop, AMC and Koss.
“While we cannot speak to the specifics behind Apex’s decision, these types of restrictions are typically put in place due to increased volatility, when securities transactions introduce systemic risk to trading platforms, customers, and the market at-large,” a spokeswoman for Ally said.
All of these companies and also financial people not at those companies might be colluding with each other by saying, "yeah, we did that thing that led to it happening," and "yeah, it would lead to that," but at that point such a conspiracy is pretty much impossible to disprove.
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CambiataCommander ShepardThe likes of which even GAWD has never seenRegistered Userregular
It has been pointed out in this thread:
There is a possibility for great loss by hedge funds here, they have already lost billions on this but could lose still more and the entire stock market could come crashing down over this, something brokers and hedge funds will probably do anything to prevent.
If we agree on that, then it's foolish to then say, "Robinhood says that the only reason for blocking a stock was cashflow, sorry conspiracy theorists, ha ha!" Are you suggesting they'd do anything to stop this catastrophe from happening except lie? That's the one line they'd never cross because it's just too far?
It's a weird stance to take is all I'm saying!
Even something as "small" as "We're closed out of our short position." is pretty easy to lie about with limited consequences. Because the fines are pretty cheap in comparison to the potential billions that can still be lost on the remaining shorts. Short float on GME is still 121.98% percent so only 20% of the original float has been closed out.
"If you divide the whole world into just enemies and friends, you'll end up destroying everything" --Nausicaa of the Valley of Wind
RobinHood also did not provide that explanation when their CEO was live last night, and we have multiple random billionaires in interviews (who, granted, may not know anything specific) more or less openly stating that the game should be rigged in favor of hedge funds and closing trades is good because it prevents losses (implied: for shorts).It is possible Robinhood was also cash poor, but at best that appears to be a happy justification for stopping trading.
E: Like, if Robinhood really couldn't allow trades due to regulatory requirements for cash on hand, why the hell is that coming out via a Twitter investigation rather than the CEO who had a national platform and couldn't do anything but flounder about saying "you can trade other stocks" and dodging questions?
I think he was actually trying to but he was just terrible at it, and was also spouting PR lines like how they were #1 on the app store in the middle of all of it
I think the difference is as Goumindong said, that was not the explanation offered when the Robinhood CEO was confronted. Contrast this with the response of the WeBull CEO where he very cogently and convincingly explained the issue that they were experiencing.
The only reasonable explanations are that Robinhood was doing something shady or their CEO is a moron*.
*Note: I deem it plausible that he is an incompetent moron.
3DS FC: 1977-1274-3558 Pokemon X ingame name: S3xy Vexy
It's wild to me how familiar a lot of these "they did it and they're lying" posts are compared to, say, the moderate level of wacky right wing conspiracy theories.
Robinhood CEO Vlad Tenev said Robinhood’s move to stop trading in certain speculative names was in the best interest of the company and its millions of users.
“In order to protect the firm and protect our customers we had to limit buying in these stocks,” Tenev told CNBC’s Andrew Ross Sorkin Thursday evening.
“Robinhood is a brokerage firm, we have lots of financial requirements. We have SEC net capital requirements and clearing house deposits. So that’s money that we have to deposit at various clearing houses. Some of these requirements fluctuate quite a bit based on volatility in the market and they can be substantial in the current environment where there’s a lot of volatility and a lot of concentrated activity in these names that have been going viral on social media,” said Tenev.
Tenev denied there was any existing liquidity issue at the firm and said Robinhood had tapped credit lines as a proactive measure.
“We want to put ourselves in a position to allow our customers to be as unrestricted as possible in accordance with the requirements and the regulations,” said Tenev. “So we pulled those credit lines so that we could maximize within reason the funds we have to deposit at the clearing houses.”
Is there an interview earlier that people are talking about because he said financial requirements are why he did it in this interview.
At least three brokerages said the trading restrictions stemmed from mandates from their clearing firm, which process the securities on the back end after a user executes a trade with their brokerage. Webull Chief Executive Anthony Denier said his platform’s clearing firm, Apex Clearing Corp., notified him Thursday morning that Webull needed to shut off the ability to open new positions in certain stocks. Otherwise, Apex wouldn’t be able to settle the trades, he said.
The clash between short sellers and individual investors, frenzied trading in shares talked up on social media platforms and trading restrictions swiftly put in place left many financial professionals stunned.
“It’s a domino effect,” Mr. Denier said, adding the industry was likely reckoning with the question of whether “customers could pay for the stocks they had to buy to cover their short positions.”
“If [they] are not able to pay to cover their short positions, someone else is going to have to pay for that purchase,” he said. “And if their clearing firm fails and there’s not enough collateral in the account to cover the purchase, that trade fails and will cascade into multiple trades with multiple customers.”
An E*Trade spokeswoman said the company had imposed restrictions to “ensure that we could continue to serve our broader client base,” and that it expected to resume normal trading operations Friday.
Mr. Denier at Webull said the restrictions originated Thursday morning when the Depository Trust & Clearing Corp. instructed his clearing firm, Apex, that it was increasing the collateral it needed to put up to help settle the trades for stocks like GameStop. In turn, Apex told Webull to restrict the ability to open new positions in order to prevent trades from failing, Mr. Denier said.
DTCC, which operates the clearinghouses for U.S. stock and bond trades, is a key part of the plumbing of financial markets. Usually drawing little notice, it facilitates the movement of stocks and bonds among buyers and sellers and provides data and analytics services.
In a statement, DTCC said the volatility in stocks like GameStop and AMC has “generated substantial risk exposures at firms that clear these trades” at its clearinghouse for stock trades. Those risks were especially pronounced for firms whose clients were ”predominantly on one side of the market,” a reference to brokers whose customers were heavily betting for stocks to rise or fall, rather than having a mix of positions.
The statement added that when volatility increases, it increases margin that DTCC collects from the banks and brokers that use its clearing services. “Margin requirements protect the entire industry against defaults and systemic risk in volatile markets,” it said.
Other brokerages including Ally Financial Inc. and Public Holdings Inc., which runs social investing network Public.com, also said Apex Clearing halted all opening transactions on GameStop, AMC and Koss.
“While we cannot speak to the specifics behind Apex’s decision, these types of restrictions are typically put in place due to increased volatility, when securities transactions introduce systemic risk to trading platforms, customers, and the market at-large,” a spokeswoman for Ally said.
All of these companies and also financial people not at those companies might be colluding with each other by saying, "yeah, we did that thing that led to it happening," and "yeah, it would lead to that," but at that point such a conspiracy is pretty much impossible to disprove.
I mean, this still comes across as "oh no, we can't let them keep trading because then our stupid choices would have consequences". Which of course leads to a couple questions:
1) Why shouldn't you face consequences when you allowed this?
2) Why is the fix to shut out only the little guys?
At least three brokerages said the trading restrictions stemmed from mandates from their clearing firm, which process the securities on the back end after a user executes a trade with their brokerage. Webull Chief Executive Anthony Denier said his platform’s clearing firm, Apex Clearing Corp., notified him Thursday morning that Webull needed to shut off the ability to open new positions in certain stocks. Otherwise, Apex wouldn’t be able to settle the trades, he said.
The clash between short sellers and individual investors, frenzied trading in shares talked up on social media platforms and trading restrictions swiftly put in place left many financial professionals stunned.
“It’s a domino effect,” Mr. Denier said, adding the industry was likely reckoning with the question of whether “customers could pay for the stocks they had to buy to cover their short positions.”
“If [they] are not able to pay to cover their short positions, someone else is going to have to pay for that purchase,” he said. “And if their clearing firm fails and there’s not enough collateral in the account to cover the purchase, that trade fails and will cascade into multiple trades with multiple customers.”
An E*Trade spokeswoman said the company had imposed restrictions to “ensure that we could continue to serve our broader client base,” and that it expected to resume normal trading operations Friday.
Mr. Denier at Webull said the restrictions originated Thursday morning when the Depository Trust & Clearing Corp. instructed his clearing firm, Apex, that it was increasing the collateral it needed to put up to help settle the trades for stocks like GameStop. In turn, Apex told Webull to restrict the ability to open new positions in order to prevent trades from failing, Mr. Denier said.
DTCC, which operates the clearinghouses for U.S. stock and bond trades, is a key part of the plumbing of financial markets. Usually drawing little notice, it facilitates the movement of stocks and bonds among buyers and sellers and provides data and analytics services.
In a statement, DTCC said the volatility in stocks like GameStop and AMC has “generated substantial risk exposures at firms that clear these trades” at its clearinghouse for stock trades. Those risks were especially pronounced for firms whose clients were ”predominantly on one side of the market,” a reference to brokers whose customers were heavily betting for stocks to rise or fall, rather than having a mix of positions.
The statement added that when volatility increases, it increases margin that DTCC collects from the banks and brokers that use its clearing services. “Margin requirements protect the entire industry against defaults and systemic risk in volatile markets,” it said.
Other brokerages including Ally Financial Inc. and Public Holdings Inc., which runs social investing network Public.com, also said Apex Clearing halted all opening transactions on GameStop, AMC and Koss.
“While we cannot speak to the specifics behind Apex’s decision, these types of restrictions are typically put in place due to increased volatility, when securities transactions introduce systemic risk to trading platforms, customers, and the market at-large,” a spokeswoman for Ally said.
All of these companies and also financial people not at those companies might be colluding with each other by saying, "yeah, we did that thing that led to it happening," and "yeah, it would lead to that," but at that point such a conspiracy is pretty much impossible to disprove.
Ceding the conspiracy claim for the sake of argument, I'm fine with simply saying that even if this was 100% above-board, all that means is that obvious reform is needed because brokers should not be able to divest risk like that onto their clients - especially when they're picking which clients.
SummaryJudgment on
Some days Blue wonders why anyone ever bothered making numbers so small; other days she supposes even infinity needs to start somewhere.
Not going to defend WSB, but despite it being a cesspool when I started reading it a few years ago, it's the reason I taught myself options trading.
Regardless of how all this shakes out, I think it's neat that a lot of folks are being spurred to get a bit of education on finance etc.
I won't lie, after all that happened this week I'd love to try and get in on the action the next time something like this happens (if there is a next time). I don't want to go back and click Join on WallStreetBets again because it mostly looks like a lot of useless noise with any helpful information buried underneath, but I wouldn't mind getting some kind of periodic update on what they're up to just in case they're about to blow another stock's price sky high.
Everyone wants that, that's just not really how the market works. It's like gold mining to find good nuggets you are going have to dig through shit.
At least three brokerages said the trading restrictions stemmed from mandates from their clearing firm, which process the securities on the back end after a user executes a trade with their brokerage. Webull Chief Executive Anthony Denier said his platform’s clearing firm, Apex Clearing Corp., notified him Thursday morning that Webull needed to shut off the ability to open new positions in certain stocks. Otherwise, Apex wouldn’t be able to settle the trades, he said.
The clash between short sellers and individual investors, frenzied trading in shares talked up on social media platforms and trading restrictions swiftly put in place left many financial professionals stunned.
“It’s a domino effect,” Mr. Denier said, adding the industry was likely reckoning with the question of whether “customers could pay for the stocks they had to buy to cover their short positions.”
“If [they] are not able to pay to cover their short positions, someone else is going to have to pay for that purchase,” he said. “And if their clearing firm fails and there’s not enough collateral in the account to cover the purchase, that trade fails and will cascade into multiple trades with multiple customers.”
An E*Trade spokeswoman said the company had imposed restrictions to “ensure that we could continue to serve our broader client base,” and that it expected to resume normal trading operations Friday.
Mr. Denier at Webull said the restrictions originated Thursday morning when the Depository Trust & Clearing Corp. instructed his clearing firm, Apex, that it was increasing the collateral it needed to put up to help settle the trades for stocks like GameStop. In turn, Apex told Webull to restrict the ability to open new positions in order to prevent trades from failing, Mr. Denier said.
DTCC, which operates the clearinghouses for U.S. stock and bond trades, is a key part of the plumbing of financial markets. Usually drawing little notice, it facilitates the movement of stocks and bonds among buyers and sellers and provides data and analytics services.
In a statement, DTCC said the volatility in stocks like GameStop and AMC has “generated substantial risk exposures at firms that clear these trades” at its clearinghouse for stock trades. Those risks were especially pronounced for firms whose clients were ”predominantly on one side of the market,” a reference to brokers whose customers were heavily betting for stocks to rise or fall, rather than having a mix of positions.
The statement added that when volatility increases, it increases margin that DTCC collects from the banks and brokers that use its clearing services. “Margin requirements protect the entire industry against defaults and systemic risk in volatile markets,” it said.
Other brokerages including Ally Financial Inc. and Public Holdings Inc., which runs social investing network Public.com, also said Apex Clearing halted all opening transactions on GameStop, AMC and Koss.
“While we cannot speak to the specifics behind Apex’s decision, these types of restrictions are typically put in place due to increased volatility, when securities transactions introduce systemic risk to trading platforms, customers, and the market at-large,” a spokeswoman for Ally said.
All of these companies and also financial people not at those companies might be colluding with each other by saying, "yeah, we did that thing that led to it happening," and "yeah, it would lead to that," but at that point such a conspiracy is pretty much impossible to disprove.
I mean, this still comes across as "oh no, we can't let them keep trading because then our stupid choices would have consequences". Which of course leads to a couple questions:
1) Why shouldn't you face consequences when you allowed this?
2) Why is the fix to shut out only the little guys?
Because the little guys investing in a few specific stocks are what is causing the massive volatility that is raising the requirements and limiting trading on a few stocks is the least disruptive way to deal with it in the extremely short term before other measures can be taken.
Robinhood CEO Vlad Tenev said Robinhood’s move to stop trading in certain speculative names was in the best interest of the company and its millions of users.
“In order to protect the firm and protect our customers we had to limit buying in these stocks,” Tenev told CNBC’s Andrew Ross Sorkin Thursday evening.
“Robinhood is a brokerage firm, we have lots of financial requirements. We have SEC net capital requirements and clearing house deposits. So that’s money that we have to deposit at various clearing houses. Some of these requirements fluctuate quite a bit based on volatility in the market and they can be substantial in the current environment where there’s a lot of volatility and a lot of concentrated activity in these names that have been going viral on social media,” said Tenev.
Tenev denied there was any existing liquidity issue at the firm and said Robinhood had tapped credit lines as a proactive measure.
“We want to put ourselves in a position to allow our customers to be as unrestricted as possible in accordance with the requirements and the regulations,” said Tenev. “So we pulled those credit lines so that we could maximize within reason the funds we have to deposit at the clearing houses.”
Is there an interview earlier that people are talking about because he said financial requirements are why he did it in this interview.
No. He said financial requirements are why he tapped the extra credit
Lines. He said he had to halt buying to protect the firm and it’s customers.
+1
Options
CambiataCommander ShepardThe likes of which even GAWD has never seenRegistered Userregular
It's wild to me how familiar a lot of these "they did it and they're lying" posts are compared to, say, the moderate level of wacky right wing conspiracy theories.
I'm acutely aware of the parallels, so I am trying to be cautious in what I'm saying. It's entirely possible this all turns out to just be the stock market sucks and is bad but no one did anything on purpose or blatantly illegal to manipulate it. I'll ultimately accept the SEC's ruling on their investigation, even if it pisses me off.
"If you divide the whole world into just enemies and friends, you'll end up destroying everything" --Nausicaa of the Valley of Wind
At least three brokerages said the trading restrictions stemmed from mandates from their clearing firm, which process the securities on the back end after a user executes a trade with their brokerage. Webull Chief Executive Anthony Denier said his platform’s clearing firm, Apex Clearing Corp., notified him Thursday morning that Webull needed to shut off the ability to open new positions in certain stocks. Otherwise, Apex wouldn’t be able to settle the trades, he said.
The clash between short sellers and individual investors, frenzied trading in shares talked up on social media platforms and trading restrictions swiftly put in place left many financial professionals stunned.
“It’s a domino effect,” Mr. Denier said, adding the industry was likely reckoning with the question of whether “customers could pay for the stocks they had to buy to cover their short positions.”
“If [they] are not able to pay to cover their short positions, someone else is going to have to pay for that purchase,” he said. “And if their clearing firm fails and there’s not enough collateral in the account to cover the purchase, that trade fails and will cascade into multiple trades with multiple customers.”
An E*Trade spokeswoman said the company had imposed restrictions to “ensure that we could continue to serve our broader client base,” and that it expected to resume normal trading operations Friday.
Mr. Denier at Webull said the restrictions originated Thursday morning when the Depository Trust & Clearing Corp. instructed his clearing firm, Apex, that it was increasing the collateral it needed to put up to help settle the trades for stocks like GameStop. In turn, Apex told Webull to restrict the ability to open new positions in order to prevent trades from failing, Mr. Denier said.
DTCC, which operates the clearinghouses for U.S. stock and bond trades, is a key part of the plumbing of financial markets. Usually drawing little notice, it facilitates the movement of stocks and bonds among buyers and sellers and provides data and analytics services.
In a statement, DTCC said the volatility in stocks like GameStop and AMC has “generated substantial risk exposures at firms that clear these trades” at its clearinghouse for stock trades. Those risks were especially pronounced for firms whose clients were ”predominantly on one side of the market,” a reference to brokers whose customers were heavily betting for stocks to rise or fall, rather than having a mix of positions.
The statement added that when volatility increases, it increases margin that DTCC collects from the banks and brokers that use its clearing services. “Margin requirements protect the entire industry against defaults and systemic risk in volatile markets,” it said.
Other brokerages including Ally Financial Inc. and Public Holdings Inc., which runs social investing network Public.com, also said Apex Clearing halted all opening transactions on GameStop, AMC and Koss.
“While we cannot speak to the specifics behind Apex’s decision, these types of restrictions are typically put in place due to increased volatility, when securities transactions introduce systemic risk to trading platforms, customers, and the market at-large,” a spokeswoman for Ally said.
All of these companies and also financial people not at those companies might be colluding with each other by saying, "yeah, we did that thing that led to it happening," and "yeah, it would lead to that," but at that point such a conspiracy is pretty much impossible to disprove.
I mean, this still comes across as "oh no, we can't let them keep trading because then our stupid choices would have consequences". Which of course leads to a couple questions:
1) Why shouldn't you face consequences when you allowed this?
2) Why is the fix to shut out only the little guys?
Because the little guys investing in a few specific stocks are what is causing the massive volatility that is raising the requirements and limiting trading on a few stocks is the least disruptive way to deal with it in the extremely short term before other measures can be taken.
How do the retail investors buying shares differ from the large firms who were also jumping in on this?
Seriously though, if I were an amoral CEO trying to spin this to save my own company, I cannot possibly imagine a better spin than "We're suffering from our own success. We want to allow users to keep trading GME, but unfortunately regulation [say it with as much venom as possible] means we had to cut trading to not be in an illegal position. We're gonna come back stronger than ever once we raise the cash on hand to let retail trade like they should."
but why does robin hood need liquidity if they get the money from users
That's a defense for margin calls, sure, but not people who just want to buy shares with their own dollarinos.
not a doctor, not a lawyer, examples I use may not be fully researched so don't take out of context plz, don't @ me
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It’s fair to say that the apps impacted by this need to be regulated so that they can’t limit stock trades that are disadvantageous to big funds. IE, if volume is breaking your bank, all trading stops.
At least three brokerages said the trading restrictions stemmed from mandates from their clearing firm, which process the securities on the back end after a user executes a trade with their brokerage. Webull Chief Executive Anthony Denier said his platform’s clearing firm, Apex Clearing Corp., notified him Thursday morning that Webull needed to shut off the ability to open new positions in certain stocks. Otherwise, Apex wouldn’t be able to settle the trades, he said.
The clash between short sellers and individual investors, frenzied trading in shares talked up on social media platforms and trading restrictions swiftly put in place left many financial professionals stunned.
“It’s a domino effect,” Mr. Denier said, adding the industry was likely reckoning with the question of whether “customers could pay for the stocks they had to buy to cover their short positions.”
“If [they] are not able to pay to cover their short positions, someone else is going to have to pay for that purchase,” he said. “And if their clearing firm fails and there’s not enough collateral in the account to cover the purchase, that trade fails and will cascade into multiple trades with multiple customers.”
An E*Trade spokeswoman said the company had imposed restrictions to “ensure that we could continue to serve our broader client base,” and that it expected to resume normal trading operations Friday.
Mr. Denier at Webull said the restrictions originated Thursday morning when the Depository Trust & Clearing Corp. instructed his clearing firm, Apex, that it was increasing the collateral it needed to put up to help settle the trades for stocks like GameStop. In turn, Apex told Webull to restrict the ability to open new positions in order to prevent trades from failing, Mr. Denier said.
DTCC, which operates the clearinghouses for U.S. stock and bond trades, is a key part of the plumbing of financial markets. Usually drawing little notice, it facilitates the movement of stocks and bonds among buyers and sellers and provides data and analytics services.
In a statement, DTCC said the volatility in stocks like GameStop and AMC has “generated substantial risk exposures at firms that clear these trades” at its clearinghouse for stock trades. Those risks were especially pronounced for firms whose clients were ”predominantly on one side of the market,” a reference to brokers whose customers were heavily betting for stocks to rise or fall, rather than having a mix of positions.
The statement added that when volatility increases, it increases margin that DTCC collects from the banks and brokers that use its clearing services. “Margin requirements protect the entire industry against defaults and systemic risk in volatile markets,” it said.
Other brokerages including Ally Financial Inc. and Public Holdings Inc., which runs social investing network Public.com, also said Apex Clearing halted all opening transactions on GameStop, AMC and Koss.
“While we cannot speak to the specifics behind Apex’s decision, these types of restrictions are typically put in place due to increased volatility, when securities transactions introduce systemic risk to trading platforms, customers, and the market at-large,” a spokeswoman for Ally said.
All of these companies and also financial people not at those companies might be colluding with each other by saying, "yeah, we did that thing that led to it happening," and "yeah, it would lead to that," but at that point such a conspiracy is pretty much impossible to disprove.
I mean, this still comes across as "oh no, we can't let them keep trading because then our stupid choices would have consequences". Which of course leads to a couple questions:
1) Why shouldn't you face consequences when you allowed this?
2) Why is the fix to shut out only the little guys?
Because the little guys investing in a few specific stocks are what is causing the massive volatility that is raising the requirements and limiting trading on a few stocks is the least disruptive way to deal with it in the extremely short term before other measures can be taken.
How do the retail investors buying shares differ from the large firms who were also jumping in on this?
If you don't know this, perhaps don't be so positive in the face of everyone who does know the difference that it must be a conspiracy?
Because there's a big difference and whether or not you have sufficient credit and collateral is directly and obviously linked to the central issue
Robinhood CEO Vlad Tenev said Robinhood’s move to stop trading in certain speculative names was in the best interest of the company and its millions of users.
“In order to protect the firm and protect our customers we had to limit buying in these stocks,” Tenev told CNBC’s Andrew Ross Sorkin Thursday evening.
“Robinhood is a brokerage firm, we have lots of financial requirements. We have SEC net capital requirements and clearing house deposits. So that’s money that we have to deposit at various clearing houses. Some of these requirements fluctuate quite a bit based on volatility in the market and they can be substantial in the current environment where there’s a lot of volatility and a lot of concentrated activity in these names that have been going viral on social media,” said Tenev.
Tenev denied there was any existing liquidity issue at the firm and said Robinhood had tapped credit lines as a proactive measure.
“We want to put ourselves in a position to allow our customers to be as unrestricted as possible in accordance with the requirements and the regulations,” said Tenev. “So we pulled those credit lines so that we could maximize within reason the funds we have to deposit at the clearing houses.”
Is there an interview earlier that people are talking about because he said financial requirements are why he did it in this interview.
No. He said financial requirements are why he tapped the extra credit
Lines. He said he had to halt buying to protect the firm and it’s customers.
...so they could have time to tap credit to make sure issues wouldn't screw over the firm and customers
Am I missing something because it very much sounds like that is what he means by "protect the firm and it's customers"
Not going to defend WSB, but despite it being a cesspool when I started reading it a few years ago, it's the reason I taught myself options trading.
Regardless of how all this shakes out, I think it's neat that a lot of folks are being spurred to get a bit of education on finance etc.
I won't lie, after all that happened this week I'd love to try and get in on the action the next time something like this happens (if there is a next time). I don't want to go back and click Join on WallStreetBets again because it mostly looks like a lot of useless noise with any helpful information buried underneath, but I wouldn't mind getting some kind of periodic update on what they're up to just in case they're about to blow another stock's price sky high.
You don't want that. I know you think you do. But you don't.
What you're basically saying is that you'd like to be on a pump n' dump scheme's quarterly newsletter. This is one of the few times r/WSB has "worked out," and that path has been paved in emptied bank accounts. This is like saying you wish you could go back in time one minute and bet on the number that's about to hit on the roulette wheel. That's just not how anything works.
2021 me would love to tell 2006 me to mine the shit out of bitcoin on my free dorm electricity. I could buy a villa in coastal Spain with what I could have made on that. But, alas.
It really sucks that a bunch of reddit assholes are buying yachts now, and we missed out. But even assuming there's a "next time," you'll have to walk through a minefield of bad bets to get to it, without losing what money you have.
Yeah I mean I don't know what to tell you. The conspiracy angle doesn't even make sense. Citadel made a loan to Melvin who got out of their short position on Tuesday and is a major customer of RobinHood so therefore RobinHood, and also Schwab and TD Ameritrade and WeBull all decided to restrict activity on the meme high volatile stocks? Based on .... like gut feeling? And when actual reporting says something else that must just be like a coverup even though it makes the story less interesting for the reporter?
i do not know why it is confounding to see a lot of Actors suddenly take action that protects the establishment and staunches losses while then also taking an across the board whitewashing defense of it, and seeing people say "i don't trust you"
do you know why i don't trust them? because they lie! a lot! and crater economies while doing it and face zero consequences! I don't really give a shit why they are saying they closed ranks and ejected retail from the conversation. Treating these actors like they're coming in good faith is idiotic. That's not a fucking conspiracy, they were literally saying it publicly all week and have done so for decades. The idea that this is some right wing conspiracy equivalent is asinine. They do it literally every day.
At least three brokerages said the trading restrictions stemmed from mandates from their clearing firm, which process the securities on the back end after a user executes a trade with their brokerage. Webull Chief Executive Anthony Denier said his platform’s clearing firm, Apex Clearing Corp., notified him Thursday morning that Webull needed to shut off the ability to open new positions in certain stocks. Otherwise, Apex wouldn’t be able to settle the trades, he said.
The clash between short sellers and individual investors, frenzied trading in shares talked up on social media platforms and trading restrictions swiftly put in place left many financial professionals stunned.
“It’s a domino effect,” Mr. Denier said, adding the industry was likely reckoning with the question of whether “customers could pay for the stocks they had to buy to cover their short positions.”
“If [they] are not able to pay to cover their short positions, someone else is going to have to pay for that purchase,” he said. “And if their clearing firm fails and there’s not enough collateral in the account to cover the purchase, that trade fails and will cascade into multiple trades with multiple customers.”
An E*Trade spokeswoman said the company had imposed restrictions to “ensure that we could continue to serve our broader client base,” and that it expected to resume normal trading operations Friday.
Mr. Denier at Webull said the restrictions originated Thursday morning when the Depository Trust & Clearing Corp. instructed his clearing firm, Apex, that it was increasing the collateral it needed to put up to help settle the trades for stocks like GameStop. In turn, Apex told Webull to restrict the ability to open new positions in order to prevent trades from failing, Mr. Denier said.
DTCC, which operates the clearinghouses for U.S. stock and bond trades, is a key part of the plumbing of financial markets. Usually drawing little notice, it facilitates the movement of stocks and bonds among buyers and sellers and provides data and analytics services.
In a statement, DTCC said the volatility in stocks like GameStop and AMC has “generated substantial risk exposures at firms that clear these trades” at its clearinghouse for stock trades. Those risks were especially pronounced for firms whose clients were ”predominantly on one side of the market,” a reference to brokers whose customers were heavily betting for stocks to rise or fall, rather than having a mix of positions.
The statement added that when volatility increases, it increases margin that DTCC collects from the banks and brokers that use its clearing services. “Margin requirements protect the entire industry against defaults and systemic risk in volatile markets,” it said.
Other brokerages including Ally Financial Inc. and Public Holdings Inc., which runs social investing network Public.com, also said Apex Clearing halted all opening transactions on GameStop, AMC and Koss.
“While we cannot speak to the specifics behind Apex’s decision, these types of restrictions are typically put in place due to increased volatility, when securities transactions introduce systemic risk to trading platforms, customers, and the market at-large,” a spokeswoman for Ally said.
All of these companies and also financial people not at those companies might be colluding with each other by saying, "yeah, we did that thing that led to it happening," and "yeah, it would lead to that," but at that point such a conspiracy is pretty much impossible to disprove.
I mean, this still comes across as "oh no, we can't let them keep trading because then our stupid choices would have consequences". Which of course leads to a couple questions:
1) Why shouldn't you face consequences when you allowed this?
2) Why is the fix to shut out only the little guys?
Because the little guys investing in a few specific stocks are what is causing the massive volatility that is raising the requirements and limiting trading on a few stocks is the least disruptive way to deal with it in the extremely short term before other measures can be taken.
How do the retail investors buying shares differ from the large firms who were also jumping in on this?
The large firms aren't going through some app that nearly anybody can use and there are not a huge number of them so why would you think they would cause the same problem for whatever company they use for trading?
The thing with conspuracy theory as a pejorative term is it loses a lot of its bite when its describing actual things that have happened before in the past. Leftists arent being conspiratorial in their thinking when they worry about the state sabotaging their activism. Thats absolutely a thing it gets up to. So this wink wink nudge nudge adrenochrome thing or whatever is kind of silly. No one in the US has class awareness like the financial sector.
So yeah maybe its all just totally above board nothing to see here, but we know the financial sector is actively hostile and exploitative towards lower classes. We know they'll engage in collective behavior of various degrees of coordination and legality in service of their class interests.
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I know its a bad look for any CEO to admit his company has no liquidity but it'd beat this PR hit.
This is the main thing, yeah. I think there is 100% enough plausible evidence here that this needs a serious investigation. Were yesterday's actions maybe legit? Sure, maybe RH was legally required to do that, and this wasn't something they could have planned for with only a week or whatever of time. Maybe that turns out to be OK.
But there's a lot to be suspicious of and it should be thoroughly investigated by people we trust are not just gonna side with the money.
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Which we all know with shit as absurd as microsecond algorithm trading, but just gets even more ridiculous when normal people aren't even allowed to click a "Buy" button
PSN: Robo_Wizard1
So Citron and Melvin lie on CNBC saying they exited their shorts
RH lies about blocking the trades for low-capital retail only
RH has no disclosure about selling order flow to Citadel, when you might say there's a conflict of interest when Citadel is holding the bag for Melvin and company currently
This is less Charlie looking for more Pepe Sylvia and more just looking at the banality of greed
Devil's advocate, I guess, but given that only a subset of RH users are YOLO-gambling meme stocks, shutting down all buying on the platform actually harms normal, conservative investors...and could lead to a cascade of minor but non-negligible price drops on other stocks since now retail customers can't buy AAPL or MSFT either.
A bunch of kids playing around on GME shouldn't stop me from putting money into VIG like a normal human being, and diamond-handsing that bad boy all the way to the moon (which is to say moderate growth and a comfortable retirement years from now).
Even if it’s legit that’s not the end of this
Perhaps there needs to be tweaks to the regs so that users have more transparency and can plan their activity around it
It shouldn't, you're right
But, conversely, RH apparently could have chosen to halt all trading but GME to divert their liquidity to the GME trades, and they shouldn't have done that either
Apparently their T&C are wide enough to drive a truck through
If you have to close the door, the door should be closed for everyone
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If that were the reason they would have given that reason because it’s innocent. But they did not give the innocent reason when pressed, which suggests that they did not think about it, which suggests it’s false.
The only thing that might be shady is if they closed trading for "cash" accounts. I'm unsure if they did yesterday. But "cash" accounts are accounts that don't have instant access to funds deposited, and also don't have instant access to funds from sales; you have to wait for everything to clear, which means their liquidity shouldn't be your problem, because your account is actually working with legitimate on-hand cash. You can convert your account to a cash account anytime, but it's a one-way trip.
I'm actually unsure if their "cash" accounts support fractional share trading, too.
Keep in mind this is all shit I learned in the last two days, too, so I may be off slightly in my description above.
EDIT: Note that this is distinct from the $25K minimum that gets you out of some other restrictions, particularly day trading.
edit
The more volatile, the more risk the broker has. So they restricted the stocks with bonkers volatility
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All brokerages having the same framework does not mean they are all suffering the exact same liquidity problem, especialy when RH is newer, easier for new accounts to join, and more involved in meme stocks as a proportion of trading.
If the feds say Robinhood's explanation is why they did it after an investigation, that is just going to result in saying the feds are clearly in on it
There's a huge difference between "not believing [ostensibly] third party regulators" and "not believing random people defending RH in a way their CEO wasn't willing to do."
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I won't lie, after all that happened this week I'd love to try and get in on the action the next time something like this happens (if there is a next time). I don't want to go back and click Join on WallStreetBets again because it mostly looks like a lot of useless noise with any helpful information buried underneath, but I wouldn't mind getting some kind of periodic update on what they're up to just in case they're about to blow another stock's price sky high.
https://www.wsj.com/articles/online-brokerages-restrict-trading-on-gamestop-amc-amid-frenetic-trading-11611849934 All of these companies and also financial people not at those companies might be colluding with each other by saying, "yeah, we did that thing that led to it happening," and "yeah, it would lead to that," but at that point such a conspiracy is pretty much impossible to disprove.
There is a possibility for great loss by hedge funds here, they have already lost billions on this but could lose still more and the entire stock market could come crashing down over this, something brokers and hedge funds will probably do anything to prevent.
If we agree on that, then it's foolish to then say, "Robinhood says that the only reason for blocking a stock was cashflow, sorry conspiracy theorists, ha ha!" Are you suggesting they'd do anything to stop this catastrophe from happening except lie? That's the one line they'd never cross because it's just too far?
It's a weird stance to take is all I'm saying!
Even something as "small" as "We're closed out of our short position." is pretty easy to lie about with limited consequences. Because the fines are pretty cheap in comparison to the potential billions that can still be lost on the remaining shorts. Short float on GME is still 121.98% percent so only 20% of the original float has been closed out.
I think he was actually trying to but he was just terrible at it, and was also spouting PR lines like how they were #1 on the app store in the middle of all of it
The only reasonable explanations are that Robinhood was doing something shady or their CEO is a moron*.
*Note: I deem it plausible that he is an incompetent moron.
This was last night:
https://www.cnbc.com/2021/01/28/robinhood-ceo-says-it-limited-buying-in-gamestop-to-protect-the-firm-and-protect-our-customers.html Is there an interview earlier that people are talking about because he said financial requirements are why he did it in this interview.
I mean, this still comes across as "oh no, we can't let them keep trading because then our stupid choices would have consequences". Which of course leads to a couple questions:
1) Why shouldn't you face consequences when you allowed this?
2) Why is the fix to shut out only the little guys?
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Ceding the conspiracy claim for the sake of argument, I'm fine with simply saying that even if this was 100% above-board, all that means is that obvious reform is needed because brokers should not be able to divest risk like that onto their clients - especially when they're picking which clients.
Everyone wants that, that's just not really how the market works. It's like gold mining to find good nuggets you are going have to dig through shit.
Because the little guys investing in a few specific stocks are what is causing the massive volatility that is raising the requirements and limiting trading on a few stocks is the least disruptive way to deal with it in the extremely short term before other measures can be taken.
No. He said financial requirements are why he tapped the extra credit
Lines. He said he had to halt buying to protect the firm and it’s customers.
I'm acutely aware of the parallels, so I am trying to be cautious in what I'm saying. It's entirely possible this all turns out to just be the stock market sucks and is bad but no one did anything on purpose or blatantly illegal to manipulate it. I'll ultimately accept the SEC's ruling on their investigation, even if it pisses me off.
How do the retail investors buying shares differ from the large firms who were also jumping in on this?
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but why does robin hood need liquidity if they get the money from users
That's a defense for margin calls, sure, but not people who just want to buy shares with their own dollarinos.
If you don't know this, perhaps don't be so positive in the face of everyone who does know the difference that it must be a conspiracy?
Because there's a big difference and whether or not you have sufficient credit and collateral is directly and obviously linked to the central issue
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Am I missing something because it very much sounds like that is what he means by "protect the firm and it's customers"
You don't want that. I know you think you do. But you don't.
What you're basically saying is that you'd like to be on a pump n' dump scheme's quarterly newsletter. This is one of the few times r/WSB has "worked out," and that path has been paved in emptied bank accounts. This is like saying you wish you could go back in time one minute and bet on the number that's about to hit on the roulette wheel. That's just not how anything works.
2021 me would love to tell 2006 me to mine the shit out of bitcoin on my free dorm electricity. I could buy a villa in coastal Spain with what I could have made on that. But, alas.
It really sucks that a bunch of reddit assholes are buying yachts now, and we missed out. But even assuming there's a "next time," you'll have to walk through a minefield of bad bets to get to it, without losing what money you have.
i do not know why it is confounding to see a lot of Actors suddenly take action that protects the establishment and staunches losses while then also taking an across the board whitewashing defense of it, and seeing people say "i don't trust you"
do you know why i don't trust them? because they lie! a lot! and crater economies while doing it and face zero consequences! I don't really give a shit why they are saying they closed ranks and ejected retail from the conversation. Treating these actors like they're coming in good faith is idiotic. That's not a fucking conspiracy, they were literally saying it publicly all week and have done so for decades. The idea that this is some right wing conspiracy equivalent is asinine. They do it literally every day.
The large firms aren't going through some app that nearly anybody can use and there are not a huge number of them so why would you think they would cause the same problem for whatever company they use for trading?
So yeah maybe its all just totally above board nothing to see here, but we know the financial sector is actively hostile and exploitative towards lower classes. We know they'll engage in collective behavior of various degrees of coordination and legality in service of their class interests.
So IDK, trust is for suckers.