4 ms·

Perhaps that's the way a broker should be, but what Robinhood, TD and other brokers did is 100% legal and has been done thousands of times in the past. There's

Perhaps that's the way a broker should be, but what Robinhood, TD and other brokers did is 100% legal and has been done thousands of times in the past. There's absolutely nothing new or illegal about brokers using their discretion to restrict trading of any stock or asset at any time for any reason.

dehrmann 6y ago
With the risky bets Robinhood encourages, this is an interesting time to get a conscious. At lest the WSB crowd sort of knows what they're doing--it's not like the guy who committed suicide.
- TuringNYC 6y ago
  Spot on. When retail investors were losing their shirts, that was supposedly OK, but now that hedge funds are losing money suddenly there is so much "concern" about retail investors who have made a killing of a profit on the market.
- babypuncher 6y ago
  I don't think the WSB crowd has a clue what they are doing. They practically turned GME into a ponzi scheme, encouraging more and more people to pump up the price by buying it. It was funny when it was just hedge funds losing millions of dollars because they shorted it, but eventually all the WSB people buying the stock are going to be stuck with something worthless once it inevitably comes back down to Earth. Trading on GME probably should have suspended a while ago. Now we're stuck in a situation where RH has blocked purchases, and people are going to blame them when the stock tanks and they lose their money rather than themselves for buying ridiculously overpriced stock to begin with.
malandrew 6y ago
But they didn't restrict the trading of stock. They restricted the buying of stock. People were still able to sell. Blocking only one side of the transactions is blatant market manipulation.
- pyrrhotech 6y ago
  Correct me if I'm wrong, but I believe they disallowed opening of new positions. I.e. if you are currently long, you can sell to close your position or if you are short, you can buy to close position, but you are not allowed to open new longs or new shorts.
  - cmmeur01 6y ago
    Each trade is two way right? Who is buying the retail orders being forced to sell? Does being able to sell (to those already short, who can close their position) not seem like blatant manipulation to help those already short? Or if only retail is unable to open new positions, why are institutional investors allowed to open new positions and profit from the moves while retail cannot?
  - TacticalCoder 6y ago
    But something like 99.9% (guesstimate) of the RH users happen to have long positions opened. So they're allowing something to the tune 99.9% of longs to close by selling, and 0.1% of shorts to close by buying (I take it the big shorters like Melvin Capital aren't shorting on RH). This is so close to "allowing sells but not buys" that it is blatant market manipulation.
    - pyrrhotech 6y ago
      I think it all goes to show that manipulation is a fact of life, and especially of markets. There's 0 doubt that both sides are trying to manipulate to make money from the other. Maybe some folks on WSB believe GME is fairly valued at $80 or $100, but no one with half a brain truly thinks that it's worth $400 or $4200.69 or whatever price they want. I think it'll fall right back down to $20 once this sorts itself out eventually, and I think most of the WSB crowd thinks that too. The only reason people are buying at those prices is to try to force a short squeeze, to effectively steal money from the hedge funds by forcing them to buy at irrational prices as they get margin called. Now the hedge funds are of course trying to prevent this by calling favors from the brokers and putting out fake news that they've already closed out. Both sides are using manipulation and displaying the worst parts of our markets, our capitalism and even our character for the whole world to see. At the end of the day, humans are greedy beings. It's totally natural, and we need to accept that. But as we accept it, we need to figure out ways to regulate that greed so that it is a force for good overall. Capitalism is based on greed, but that doesn't mean it's not the best economic system. On the whole, a group of entirely self-interested individuals can still work together in a sense to grow our economy, build new technology and make the world a better place.
kllrnohj 6y ago
TD's restrictions were on margins & shorts, which both put the brokerage itself at risk. They did not restrict general or options trading.
PKop 6y ago
"It's fine as long as they do it legally" Why is this the pertinent question? Even if it wasn't legal, they would just re-interpret the rules in their own favor. Additionally, this is presented as if any of us had any say whatsoever in the writing of these laws or their enforcement or non-enforcement. It's a distinction without a difference. It implies that "if we don't like it we should change the laws". But none of us wrote the laws in the first place, and certainly if we had the power to change the laws we never would have written them this way. If we had the power to change the laws we would change them. So it's an irrelevant point. The entire point of the situation is "these are the laws" either officially, or unofficially but in practice.

dehrmann 6y ago

With the risky bets Robinhood encourages, this is an interesting time to get a conscious. At lest the WSB crowd sort of knows what they're doing--it's not like the guy who committed suicide.

TuringNYC 6y ago
Spot on. When retail investors were losing their shirts, that was supposedly OK, but now that hedge funds are losing money suddenly there is so much "concern" about retail investors who have made a killing of a profit on the market.
babypuncher 6y ago
I don't think the WSB crowd has a clue what they are doing. They practically turned GME into a ponzi scheme, encouraging more and more people to pump up the price by buying it. It was funny when it was just hedge funds losing millions of dollars because they shorted it, but eventually all the WSB people buying the stock are going to be stuck with something worthless once it inevitably comes back down to Earth. Trading on GME probably should have suspended a while ago. Now we're stuck in a situation where RH has blocked purchases, and people are going to blame them when the stock tanks and they lose their money rather than themselves for buying ridiculously overpriced stock to begin with.

malandrew 6y ago

But they didn't restrict the trading of stock. They restricted the buying of stock. People were still able to sell. Blocking only one side of the transactions is blatant market manipulation.

pyrrhotech 6y ago
Correct me if I'm wrong, but I believe they disallowed opening of new positions. I.e. if you are currently long, you can sell to close your position or if you are short, you can buy to close position, but you are not allowed to open new longs or new shorts.
- cmmeur01 6y ago
  Each trade is two way right? Who is buying the retail orders being forced to sell? Does being able to sell (to those already short, who can close their position) not seem like blatant manipulation to help those already short? Or if only retail is unable to open new positions, why are institutional investors allowed to open new positions and profit from the moves while retail cannot?
- TacticalCoder 6y ago
  But something like 99.9% (guesstimate) of the RH users happen to have long positions opened. So they're allowing something to the tune 99.9% of longs to close by selling, and 0.1% of shorts to close by buying (I take it the big shorters like Melvin Capital aren't shorting on RH). This is so close to "allowing sells but not buys" that it is blatant market manipulation.
  - pyrrhotech 6y ago
    I think it all goes to show that manipulation is a fact of life, and especially of markets. There's 0 doubt that both sides are trying to manipulate to make money from the other. Maybe some folks on WSB believe GME is fairly valued at $80 or $100, but no one with half a brain truly thinks that it's worth $400 or $4200.69 or whatever price they want. I think it'll fall right back down to $20 once this sorts itself out eventually, and I think most of the WSB crowd thinks that too. The only reason people are buying at those prices is to try to force a short squeeze, to effectively steal money from the hedge funds by forcing them to buy at irrational prices as they get margin called. Now the hedge funds are of course trying to prevent this by calling favors from the brokers and putting out fake news that they've already closed out. Both sides are using manipulation and displaying the worst parts of our markets, our capitalism and even our character for the whole world to see. At the end of the day, humans are greedy beings. It's totally natural, and we need to accept that. But as we accept it, we need to figure out ways to regulate that greed so that it is a force for good overall. Capitalism is based on greed, but that doesn't mean it's not the best economic system. On the whole, a group of entirely self-interested individuals can still work together in a sense to grow our economy, build new technology and make the world a better place.

kllrnohj 6y ago

TD's restrictions were on margins & shorts, which both put the brokerage itself at risk. They did not restrict general or options trading.

PKop 6y ago

"It's fine as long as they do it legally" Why is this the pertinent question? Even if it wasn't legal, they would just re-interpret the rules in their own favor. Additionally, this is presented as if any of us had any say whatsoever in the writing of these laws or their enforcement or non-enforcement. It's a distinction without a difference. It implies that "if we don't like it we should change the laws". But none of us wrote the laws in the first place, and certainly if we had the power to change the laws we never would have written them this way. If we had the power to change the laws we would change them. So it's an irrelevant point. The entire point of the situation is "these are the laws" either officially, or unofficially but in practice.