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I asked on twitter but didn't really get a response to this but I'm curious if someone involved in the industry can answer this for me: If Robinhood is only al

by sgpl 6y ago

I asked on twitter but didn't really get a response to this but I'm curious if someone involved in the industry can answer this for me: If Robinhood is only allowing users to sell, can they choose to sell* (route the customer's sell order) to hedge funds that need to close out their short positions? Is that a thing they can do? *EDIT: I realize that robinhood is passing along these orders to their market maker of choice - so my question really is that can the market maker here preferably sell to hedge funds looking to close their short positions?

youeseh 6y ago
That is what they're hoping people will do. Exit their positions to make shares available.
ericmay 6y ago
Hedge funds don't use Robinhood, so this won't affect their ability to buy or sell. The price plummeted today because of Robinhood and other small brokerages restricting trading the day before lots of shares would have to be purchased to cover in the money options. So, many retail users of Robinhood and other brokerages couldn't buy, could only sell, while hedge funds and other institutions could continue to do what they want. The rules should be the same for everyone, all of the time. If Jane StockPicker can't buy a security, then nobody else should be able to. I'm honestly furious about this. I made a small amount of money on GME and cashed out a couple days ago - the shorts were in a bad spot, too bad - so seeing how other retail investors are being screwed over here makes me feel sick. Oh, and Melvin Capital (one of the short sellers who has been most screwed by taking a bad position) was bailed out by Citadel, and guess who one of Robinhood's investors is? I'm not exaggerating when I say that there needs to be a congressional hearing and SEC investigation. You can say what you want about retail traders exchanging ideas on WSB, a public forum, but closing down trading for retail investors cost them a lot of money early and why were hedge funds able to short a stock so heavily? Pending investigation, this is a serious problem and I think there is likely to be ongoing corruption here.
- itronitron 6y ago
  RH must think that paying any resulting 'fine' will be much less than what Citadel would have lost otherwise.

by sgpl 6y ago

youeseh 6y ago

That is what they're hoping people will do. Exit their positions to make shares available.

ericmay 6y ago

Hedge funds don't use Robinhood, so this won't affect their ability to buy or sell. The price plummeted today because of Robinhood and other small brokerages restricting trading the day before lots of shares would have to be purchased to cover in the money options. So, many retail users of Robinhood and other brokerages couldn't buy, could only sell, while hedge funds and other institutions could continue to do what they want. The rules should be the same for everyone, all of the time. If Jane StockPicker can't buy a security, then nobody else should be able to. I'm honestly furious about this. I made a small amount of money on GME and cashed out a couple days ago - the shorts were in a bad spot, too bad - so seeing how other retail investors are being screwed over here makes me feel sick. Oh, and Melvin Capital (one of the short sellers who has been most screwed by taking a bad position) was bailed out by Citadel, and guess who one of Robinhood's investors is? I'm not exaggerating when I say that there needs to be a congressional hearing and SEC investigation. You can say what you want about retail traders exchanging ideas on WSB, a public forum, but closing down trading for retail investors cost them a lot of money early and why were hedge funds able to short a stock so heavily? Pending investigation, this is a serious problem and I think there is likely to be ongoing corruption here.

itronitron 6y ago
RH must think that paying any resulting 'fine' will be much less than what Citadel would have lost otherwise.