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> Or is it normal for brokers to independently halt trades on stocks they deem too risky? Absolutely not, and I almost typed "LOL" in front of that because you

> Or is it normal for brokers to independently halt trades on stocks they deem too risky? Absolutely not, and I almost typed "LOL" in front of that because your question - while genuine and sincere - is so ridiculous in the context of the stock market that it actually made me laugh out loud. Brokers are more than happy to allow unsophisticated investors to buy or sell any stock. They won't let you use sophisticated products like options, etc., but simple buying and selling? Absolutely. What's happening here is simple. The wrong people are getting rich. The wrong people are losing money. That cannot be allowed. There is something called the "pattern day trading rule" wherein someone buys and sells the same security several times and their ability to buy and sell gets restricted, but that's not what's happening here. People wanting to buy $GME are wanting to buy and hold. Not sell.

NathanKP 6y ago
On the pattern day trading rule its also worth noting that you are exempt from that above $25k on Robinhood. As I watched the subreddit over the past few weeks I saw a lot of folks happy that their account was now no longer subject to the pattern day trading rule. They started out below $25k but growth in GME value pushed them over $25k
BoorishBears 6y ago
Edit: A lot of people fixating on the fact broker-dealers aren't investment advisors... https://www.sec.gov/rules/other/2013/34-69013.pdf https://www.sec.gov/rules/other/2013/34-69013.pdf SEC has already started providing guidance on that loophole. They're not a fiduciary, but there's a want from the SEC to have their operation start to be more in line with if they were one ("harmonization") After all RH does advertise popular stocks, they put out news branded digests of the market, it does show users gamified views of things like options, they have an entire "learning platform" meant to guide you through the market. It's not an investment advisor, it doesn't have a fiduciary duty but the SEC wants broker-dealer behavior to better reflect the fact that retail investors assume that the platforms they use to trade are aligned with their financial goals ---- So disclaimer: I was holding large amounts of GME and AMC and sold this morning as a direct result of this news. But I really don't get why people are so shocked. People who started this wanted to buy and hold until shorts are kill. Then people who heard about this plan after it started working joined, they still wanted to hold but their reasoning was starting to get a little removed from the original goal. This group is slightly bigger than the first Fast forward a few days and suddenly this stock that just keeps going up by hundreds of dollars a day is in the news, people don't quite get what's happening, but it looks like a magical money fountain. And as a bonus this magic fountain is a big FU to the man? Sign me up! This group is exponentially bigger than the first, and exponentially less understanding of why this is happening. - At this point retail money is flooding into this stock left and right, and people are starting invest money they cannot afford to lose. The problem for these brokers is when this musical chairs dance stops, retail investors will be holding the bag. Full stop. But more importantly, those clueless people just buying GME because they have some vague idea of "it goes up" and "we're rebelling" are going to lose their shirts. The people in the first group who were doing this for the principle of it and as a YOLO don't really care, it's "fuck Melvin" all the way... But the people in the last group are going to feel blindsided. - This feels like damned if you do, damned if you don't. The action of trying to insulate these people from losing their money will actively make people lose money. The dip to the low $130 was directly caused by the actions they're taking. But on the flipside, imagine what would have happened during the rally to $400 this morning. We likely would have seen another breakout that puts all options ITM... The fact is, the dance will end. The idea is buy and hold... but for the newest cohort there's an implied "until the money fountain stops". And the higher the share price is when that happens, the more it will hurt. (and make no mistake, some hedge fund might be hurting, but the big guy can navigate this. If it takes making Congress halt these stocks they'll do it) This has been a fun ride, and thrust the insane inequality of our financial systems for normal individuals and cash flushed "institutions" into the spotlight... but I can't pretend I don't understand why it's happening.
- slivanes 6y ago
  From what you describe, brokers are protecting the retail investor? Awesome, I can feel free to make any speculative decision and they will protect me from myself if it goes south. Where can I sign up to one of these brokers that guarantee I am safe? I disagree with your assessment, these brokers are preventing purchases of these stock, there is no risk for the broker in this regard.
  - slg 6y ago
    These companies are still businesses. They won't care if you, a single retail investor, screw up and lose a lot of money. However it is dangerous for the future health of their business if a sizable portion of their retail investors take a bath on this, get turned off by that experience, and end up stop using the service.
    - HappySweeney 6y ago
      How will those investors feel when they are paternalistically told the trade they want to make is too risky, and then end up losing out on 3x gains as a result?
      - llampx 6y ago
        Let's not beat around the bush, RH doesn't care about it's users, it cares about it's clients. Including Citadel, who has a LOT to lose if all the options are ITM tomorrow.
    - imtringued 6y ago
      You aren't thinking straight. Millions of people bought GME for a single reason and Robinhood denied them that reason. If anything this is going to piss them off even more. I don't even have a Robinhood account and it is now guaranteed that I will never use Robinhood in my entire life because they are total scumbags.
      - 6y ago
sharkweek 6y ago
"This is Wall Street, Dr. Burry, if you offer us free money, we are going to take it." https://www.youtube.com/watch?v=Cxjdj5_5yNM https://www.youtube.com/watch?v=Cxjdj5_5yNM
- amrrs 6y ago
  Everything that's happening is just reminding of the Big Short, Flash Boys and generally what Michael Lewis has been saying
  - StavrosK 6y ago
    "I'm sorry, are you for real? You want to pay against the housing market and you're worried we won't pay you?"
  - dwater 6y ago
    It reminds me of Reminisces of a Stock Operator (1923) https://en.wikipedia.org/wiki/Reminiscences_of_a_Stock_Operator https://en.wikipedia.org/wiki/Reminiscences_of_a_Stock_Opera... Wall Street does not exist so that an individual can invest $100 and make a profit. It exists so that financial institutions can invest $100M and make a profit. It benefits from the illusion of the former though so the public is encouraged to believe that.
chipotle_coyote 6y ago
This may be another genuine but ridiculous question, but... I think "the wrong people are losing money" is right on point, and to be clear, I don't think Robinhood has any business stopping people from buying stocks if they want to. But I am really wondering about how many people are getting rich from this stock pop. When the dust from all this settles, aren't a lot of the folks buying the stock over the last week or so going to end up underwater? My assumption has been that they saw that as an acceptable price for a jolly time Sticking It To The Man. And, back in the long ago (e.g., last week) when the stock price was $20 or $30 a share, that makes sense if you have the money to burn. But at $200+ a share, what's the rationale for holding on?
- JumpCrisscross 6y ago
  > how many people are getting rich from this stock pop The people getting rich are the market makers. This is the hole in the Wall Street vs. the Rebels argument the media seems to be trying to pigeonhole this into. The first-order losers are the hedge funds who, for some stupid reason, expressed their short view through actual shorting versus through puts and the retail investors who bought at inflated prices. The second-order losers will be the brokers, who will likely face margin losses, options-settlement losses, investor lawsuits, regulatory fines and Congressional attention for enabling the pump and dump and then ham-fistedly trying to stop it.
  - TuringNYC 6y ago
    The other first-order losers are RH retail investors who just made a huge unrealized gain and are not allowed to realize the profits by selling in time. I'm on TD and they arent allowing in-the-money call option sell-to-closes to execute.
    - chipotle_coyote 6y ago
      That's what I'm mostly concerned about, yes. If my understanding about the initial involvement of the Reddit crowd is correct -- that it was really about "let's pump this stock up to screw hedge funds that are shorting it" -- that group is presumably okay with losing their investment. But I can't help suspect that over the last few days, that group has become outnumbered by investors who figured they could take advantage of this weird pop by buying and selling within a very short time frame, which it sounds like you're in, and possibly even by investors who want to hold the stock, not understanding that -- even without Robinhood's interference -- it's likely set up for a fall just as quick as its rise.
beezle 6y ago
Brokers can and do change margin requirements in times of high volatility. For instance, IB raised margin reqs going into the election on many products. Also, I am fairly certain that no broker is under obligation to provide you trading access to any specific stock or futures contract. There are many futures I would like to have access to trade but are unavailable at retail. If you have an existing position, they are likely obligated to allow you to close out.
- bingojess 6y ago
  https://www.finra.org/rules-guidance/rulebooks/finra-rules/5310 https://www.finra.org/rules-guidance/rulebooks/finra-rules/5... Without such regulation what would stop any bad actor from colluding with brokers to halt trading a moments that benefit themselves? Pretty hard to enforce or prove in practise but the idea that brokerages can prevent groups of users from accessing markets willy nilly is absurd. This is for cash products no any futures/options, even for those once they grant access it should not be taken away
  - beezle 6y ago
    Nothing in that regulation stipulates that a broker must provide access to a market in any (and therefore every) security. Specifically, it refers to any transaction Clearly, a transaction can't occur unless the broker agrees they will provide that security for trade. As to your second point, it would not be in a broker's best interest to change access to certain securities 'willy nilly' as they will lose business and clients. Whap happened today was not an arbitrary decision. Would you be arguing if these brokers raised the margin requirement on Gamestop, etc to 99%? That is within their rights to do so, the SEC only sets a regulatory minimum margin req, not (to the best of my knowledge) a maximum. People seem to forget that many people "trading" Gamestop and the like are doing so on margin. As such, the broker dealer has financial risk that you will not be able to pay your loan back, ie by a close out of positions. Is it reasonable or unreasonable to expect that the eventual decline in these stocks will be rapid with sizable gaps? How many of the Robinhood traders are going to cry bloody murder when they are automatically closed out 10s, perhaps a hundred points lower from when the call was triggered?

NathanKP 6y ago

On the pattern day trading rule its also worth noting that you are exempt from that above $25k on Robinhood. As I watched the subreddit over the past few weeks I saw a lot of folks happy that their account was now no longer subject to the pattern day trading rule. They started out below $25k but growth in GME value pushed them over $25k

BoorishBears 6y ago

Edit: A lot of people fixating on the fact broker-dealers aren't investment advisors... https://www.sec.gov/rules/other/2013/34-69013.pdf https://www.sec.gov/rules/other/2013/34-69013.pdf SEC has already started providing guidance on that loophole. They're not a fiduciary, but there's a want from the SEC to have their operation start to be more in line with if they were one ("harmonization") After all RH does advertise popular stocks, they put out news branded digests of the market, it does show users gamified views of things like options, they have an entire "learning platform" meant to guide you through the market. It's not an investment advisor, it doesn't have a fiduciary duty but the SEC wants broker-dealer behavior to better reflect the fact that retail investors assume that the platforms they use to trade are aligned with their financial goals ---- So disclaimer: I was holding large amounts of GME and AMC and sold this morning as a direct result of this news. But I really don't get why people are so shocked. People who started this wanted to buy and hold until shorts are kill. Then people who heard about this plan after it started working joined, they still wanted to hold but their reasoning was starting to get a little removed from the original goal. This group is slightly bigger than the first Fast forward a few days and suddenly this stock that just keeps going up by hundreds of dollars a day is in the news, people don't quite get what's happening, but it looks like a magical money fountain. And as a bonus this magic fountain is a big FU to the man? Sign me up! This group is exponentially bigger than the first, and exponentially less understanding of why this is happening. - At this point retail money is flooding into this stock left and right, and people are starting invest money they cannot afford to lose. The problem for these brokers is when this musical chairs dance stops, retail investors will be holding the bag. Full stop. But more importantly, those clueless people just buying GME because they have some vague idea of "it goes up" and "we're rebelling" are going to lose their shirts. The people in the first group who were doing this for the principle of it and as a YOLO don't really care, it's "fuck Melvin" all the way... But the people in the last group are going to feel blindsided. - This feels like damned if you do, damned if you don't. The action of trying to insulate these people from losing their money will actively make people lose money. The dip to the low $130 was directly caused by the actions they're taking. But on the flipside, imagine what would have happened during the rally to $400 this morning. We likely would have seen another breakout that puts all options ITM... The fact is, the dance will end. The idea is buy and hold... but for the newest cohort there's an implied "until the money fountain stops". And the higher the share price is when that happens, the more it will hurt. (and make no mistake, some hedge fund might be hurting, but the big guy can navigate this. If it takes making Congress halt these stocks they'll do it) This has been a fun ride, and thrust the insane inequality of our financial systems for normal individuals and cash flushed "institutions" into the spotlight... but I can't pretend I don't understand why it's happening.

slivanes 6y ago
From what you describe, brokers are protecting the retail investor? Awesome, I can feel free to make any speculative decision and they will protect me from myself if it goes south. Where can I sign up to one of these brokers that guarantee I am safe? I disagree with your assessment, these brokers are preventing purchases of these stock, there is no risk for the broker in this regard.
- slg 6y ago
  These companies are still businesses. They won't care if you, a single retail investor, screw up and lose a lot of money. However it is dangerous for the future health of their business if a sizable portion of their retail investors take a bath on this, get turned off by that experience, and end up stop using the service.
  - HappySweeney 6y ago
    How will those investors feel when they are paternalistically told the trade they want to make is too risky, and then end up losing out on 3x gains as a result?
    - llampx 6y ago
      Let's not beat around the bush, RH doesn't care about it's users, it cares about it's clients. Including Citadel, who has a LOT to lose if all the options are ITM tomorrow.
  - imtringued 6y ago
    You aren't thinking straight. Millions of people bought GME for a single reason and Robinhood denied them that reason. If anything this is going to piss them off even more. I don't even have a Robinhood account and it is now guaranteed that I will never use Robinhood in my entire life because they are total scumbags.
    - 6y ago

sharkweek 6y ago

"This is Wall Street, Dr. Burry, if you offer us free money, we are going to take it." https://www.youtube.com/watch?v=Cxjdj5_5yNM https://www.youtube.com/watch?v=Cxjdj5_5yNM

amrrs 6y ago
Everything that's happening is just reminding of the Big Short, Flash Boys and generally what Michael Lewis has been saying
- StavrosK 6y ago
  "I'm sorry, are you for real? You want to pay against the housing market and you're worried we won't pay you?"
- dwater 6y ago
  It reminds me of Reminisces of a Stock Operator (1923) https://en.wikipedia.org/wiki/Reminiscences_of_a_Stock_Operator https://en.wikipedia.org/wiki/Reminiscences_of_a_Stock_Opera... Wall Street does not exist so that an individual can invest $100 and make a profit. It exists so that financial institutions can invest $100M and make a profit. It benefits from the illusion of the former though so the public is encouraged to believe that.

chipotle_coyote 6y ago

This may be another genuine but ridiculous question, but... I think "the wrong people are losing money" is right on point, and to be clear, I don't think Robinhood has any business stopping people from buying stocks if they want to. But I am really wondering about how many people are getting rich from this stock pop. When the dust from all this settles, aren't a lot of the folks buying the stock over the last week or so going to end up underwater? My assumption has been that they saw that as an acceptable price for a jolly time Sticking It To The Man. And, back in the long ago (e.g., last week) when the stock price was $20 or $30 a share, that makes sense if you have the money to burn. But at $200+ a share, what's the rationale for holding on?

JumpCrisscross 6y ago
> how many people are getting rich from this stock pop The people getting rich are the market makers. This is the hole in the Wall Street vs. the Rebels argument the media seems to be trying to pigeonhole this into. The first-order losers are the hedge funds who, for some stupid reason, expressed their short view through actual shorting versus through puts and the retail investors who bought at inflated prices. The second-order losers will be the brokers, who will likely face margin losses, options-settlement losses, investor lawsuits, regulatory fines and Congressional attention for enabling the pump and dump and then ham-fistedly trying to stop it.
- TuringNYC 6y ago
  The other first-order losers are RH retail investors who just made a huge unrealized gain and are not allowed to realize the profits by selling in time. I'm on TD and they arent allowing in-the-money call option sell-to-closes to execute.
  - chipotle_coyote 6y ago
    That's what I'm mostly concerned about, yes. If my understanding about the initial involvement of the Reddit crowd is correct -- that it was really about "let's pump this stock up to screw hedge funds that are shorting it" -- that group is presumably okay with losing their investment. But I can't help suspect that over the last few days, that group has become outnumbered by investors who figured they could take advantage of this weird pop by buying and selling within a very short time frame, which it sounds like you're in, and possibly even by investors who want to hold the stock, not understanding that -- even without Robinhood's interference -- it's likely set up for a fall just as quick as its rise.

beezle 6y ago

Brokers can and do change margin requirements in times of high volatility. For instance, IB raised margin reqs going into the election on many products. Also, I am fairly certain that no broker is under obligation to provide you trading access to any specific stock or futures contract. There are many futures I would like to have access to trade but are unavailable at retail. If you have an existing position, they are likely obligated to allow you to close out.

bingojess 6y ago
https://www.finra.org/rules-guidance/rulebooks/finra-rules/5310 https://www.finra.org/rules-guidance/rulebooks/finra-rules/5... Without such regulation what would stop any bad actor from colluding with brokers to halt trading a moments that benefit themselves? Pretty hard to enforce or prove in practise but the idea that brokerages can prevent groups of users from accessing markets willy nilly is absurd. This is for cash products no any futures/options, even for those once they grant access it should not be taken away
- beezle 6y ago
  Nothing in that regulation stipulates that a broker must provide access to a market in any (and therefore every) security. Specifically, it refers to any transaction Clearly, a transaction can't occur unless the broker agrees they will provide that security for trade. As to your second point, it would not be in a broker's best interest to change access to certain securities 'willy nilly' as they will lose business and clients. Whap happened today was not an arbitrary decision. Would you be arguing if these brokers raised the margin requirement on Gamestop, etc to 99%? That is within their rights to do so, the SEC only sets a regulatory minimum margin req, not (to the best of my knowledge) a maximum. People seem to forget that many people "trading" Gamestop and the like are doing so on margin. As such, the broker dealer has financial risk that you will not be able to pay your loan back, ie by a close out of positions. Is it reasonable or unreasonable to expect that the eventual decline in these stocks will be rapid with sizable gaps? How many of the Robinhood traders are going to cry bloody murder when they are automatically closed out 10s, perhaps a hundred points lower from when the call was triggered?