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Robinhood says it temporarily curbed buying of some securities as deposit requirement increased ten-fold

Published 01/30/2021, 01:17 AM
Updated 01/30/2021, 01:20 AM
© Reuters. The Robinhood App is displayed on a screen

(Reuters) - Online broker Robinhood, one of the hottest venues in this week's retail-trading frenzy, said it put temporary buying restrictions on a small number of securities as clearing house-mandated deposit requirements for equities increased ten-fold.

"....the required amount we had to deposit with the clearing house was so large - with individual volatile securities accounting for hundreds of millions of dollars in deposit requirements - that we had to take steps to limit buying in those volatile securities to ensure we could comfortably meet our requirements," it said in a blog post late on Friday.

Robinhood's fee-free and simple-to-use app has made it popular with a new generation of small-time traders and its restrictions on Thursday drew a heavy backlash from high-profile politicians and celebrities.

Retail investors using Robinhood and other apps drove the so-called "Reddit rally" that pushed up shares of GameStop Corp (NYSE:GME) and other companies championed on social media platforms including Reddit, resulting in heavy losses for big hedge funds that had shorted the shares.

Latest comments

The endRobinhood will now get support from other fund managers, however it will only last for a short term....and the retail investers will seek an honest platform
robinhood is finished - soon as the current fire has passed the customers are going to vanish - they killed their business with this move not to mention lawsuits and sec fines to come!
People will go where? They need a number of string rivals for people to leave. Nobody is going bacn to a fee paying provider
 well being able to buy 100, 1000, 10,000 shares and sell them again for  - 10 $ doesn't seem so bad - bmo investorline didn't block or throttle so peeps might re evaluate the no fee model in light of RH business practices
Every day investors, government, and the rich on youtube flash words like billions and trillions. Yet a major populous of people work their rear off for 12k... if they are lucky. Some wackjob on bloomberg and cnbc mentions how they are investing in china when people know its with the profit from their taxes and subsidies doing it. They see these foreign countries being handed money from american investors to do jobs they want and can do (manufacturing, tech jobs, creative jobs). They watch as wallstreet funds citizens other countries to learn valuable skills over decades cementing their positions even more and thise citizens using that to pay taxes that improve those countries that hate americans. Wallstreet is quite literally leaving the populous behind. My question is: who will buy those trucks, peleton bikes, apple phones, and go on trips if this continuous?
kk
hope that robinhood Should stick on to his principle of setting this platform and not give in to those unreasonable request..Do not let millions of people down....
Don't understand why US 1st world country, always talking about freedom. why they dun allow people to trade freely........
It's pretty simple. Users were buying on margin and creating huge volume for the clearing houses. As a broker, Robinhood became liable to the clearing house and had to protect their own liquidity. They had to reduce their own risk and liability. It wasn't about just protecting their own retail clients from themselves like people claimed. However, they certainly could have done it in a better way, and been more transparent from the start.
"Freedom" is about the government not controlling you, not about a private company whose money (margin) and services you voluntarily choose to use.
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So are we going to block Reddit now like we did Trump?
The story didn’t talk about reddit or trump. Try to stay on topic.
My bad it talks sbout reddit but not trump
Reddit is a platform. Trump is a person. Not the same thing. The platform can block the user(s) but you're asking if "we" are going to block the platform and then imply that "we" blocked Trump. The platform blocked Trump for breaking their rules. I don't think Reddit users broke any of their rules so no reason to be blocked.
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