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Most people claiming that Citadel is pulling the strings seems to be missing the following facts: - Robinhood was one of many brokerages to implement trading r

Most people claiming that Citadel is pulling the strings seems to be missing the following facts: - Robinhood was one of many brokerages to implement trading restrictions. e.g. Bank of America/Merrill Edge also shut down buy orders for GME. Citadel does not have the same relationship with these other brokerages. So, to say Robinhood made their decision based on a conflict of interest doesn't hold water. - Just because Citadel accounts for $xx million of Robinhood revenue, doesn't mean Robinhood stands to lose $xx million if they piss off Citadel. There are plenty of other market makers willing to fulfill Robinhood's orders. Presumably these other market makers would pay slightly less than Citadel, but Robinhood would only stand to lose some small percentage of $xx million. Putting yourself in Robinhood's shoes, it makes little financial sense to comply with Citadel's demands even if Citadel attempted to coerce them into implementing these trade restrictions.

dalbasal 6y ago
It's always true that the assumed conversations in smokey rooms are inaccurately reported. So sure, nothing about Citadel's role in this story is actually known. OTOH, in this case, it's genuinely hard to conceive of an alternative story that isn't a cabal story. Also, in practical terms... most of the action was on robin hood. If other brokers/originators/banks didn't shut down buys then this entire wallstreetbets craziness would flood in their direction. Q: Did BoM & Merrill Edge shut down trading on #wallstreetbetmadness stocks entirely, or just the buy side? One of the most damning things here is that robinhood only shut down buys. Seems like blatant market manipulation, but I don't really know the rules.
- reducesuffering 6y ago
  > Genuinely hard Actually incredibly easy. $GME isn't worth anywhere near $350 or $20B market cap. These people are in a world of hurt when you have WSB spinning stories and encouraging reckless behavior, where some are throwing their last $20,000 into it, which will eventually disappear to $100 unless they passed the buck to some other chump before it all blows up. RH could genuinely believe that the sooner the GME pump stops, the less damage is done to these extremely naive retail investors, because the future naive bagholders flooding in are prevented from throwing their little savings at it. Brokerage execution halting or not, this story has an incredibly obvious ending, and it's that some WSB pumpers will profit huge, some hedge funds will lose huge, but the majority of WSB will lose immensely.
  - skulk 6y ago
    If RH thought something was fishy, shouldn't they have completely halted GME trading instead of only disabling buys?
    - reducesuffering 6y ago
      Backlash would be even worse. We've already seen a "class action lawsuit" from WSB to Robinhood back in March when RH couldn't execute buy or sell during a few days and people were furious about their options expiring worthless. People will claim they had no chance to sell GME for $250, after a few days spikes it back down to $20 or so, and they'll claim Robinhood caused them to lose $50k or whatever.
      - dalbasal 6y ago
        IDK about that. There's a class action regardless, and (IDK, but seems logical) a market manipulation case as well. Honestly I don't understand how this is even a question. WTF is supposed to happen to the price of an asset if a big chunk of the owners can only sell.
        fairity 6y ago
        It seems obvious that the claimed damages for the class action lawsuit would be much larger if sell orders were blocked. Since we know with certainty price will crash, claimed damages would increase by the share value of shareholders at time of restriction.
        unanswered 6y ago
        > we know with certainty price will crash I agree, and yet I seriously doubt even 5% of people saying this have opened a short position, e.g. bought puts.
        fairity 6y ago
matttb 6y ago
> Robinhood was one of many brokerages to implement trading restrictions. e.g. Bank of America/Merrill Edge also shut down buy orders for GME. Citadel does not have the same relationship with these other brokerages. So, to say Robinhood made their decision based on a conflict of interest doesn't hold water. My issue is those brokerages said they were closing orders because of Apex clearing. Robinhood basically said that they chose to do it themselves: https://blog.robinhood.com/news/2021/1/28/keeping-customers-informed-through-market-volatility https://blog.robinhood.com/news/2021/1/28/keeping-customers-...
wadefletch 6y ago
1. How likely is it BofA-ML has short positions or investments in funds who do? 2. Isn't Citadel's deal with Robinhood dependent on the flow being "dumb" and not having any broad effect on the market? That's obviously no longer the case, if it ever was. Robinhood is still venture backed, so they're feeling the pressure to show growth in users and profits. Is it possible the market for their "much-less-dumb-than-previously-thought" flow has shrunk substantially? Also, the retail traders involved and the press surrounding them have (accurately imo) painted this as a populist "sticking it to the elites" movement. What if the so-called elites really do want to disenfranchise and mitigate retail investors impact on the market? BofA, Citadel, and peers might have an interest in maintaining the status quo.
deleted 6y ago
[deleted]
e15ctr0n 6y ago
> Bank of America/Merrill Edge also shut down buy orders for GME. I heard that Bank of America/Merrill Edge was requiring posting a 100% margin as collateral if wanting to buy GME options. I didn't hear that they shut down buy orders for GME stock.

dalbasal 6y ago

It's always true that the assumed conversations in smokey rooms are inaccurately reported. So sure, nothing about Citadel's role in this story is actually known. OTOH, in this case, it's genuinely hard to conceive of an alternative story that isn't a cabal story. Also, in practical terms... most of the action was on robin hood. If other brokers/originators/banks didn't shut down buys then this entire wallstreetbets craziness would flood in their direction. Q: Did BoM & Merrill Edge shut down trading on #wallstreetbetmadness stocks entirely, or just the buy side? One of the most damning things here is that robinhood only shut down buys. Seems like blatant market manipulation, but I don't really know the rules.

reducesuffering 6y ago
> Genuinely hard Actually incredibly easy. $GME isn't worth anywhere near $350 or $20B market cap. These people are in a world of hurt when you have WSB spinning stories and encouraging reckless behavior, where some are throwing their last $20,000 into it, which will eventually disappear to $100 unless they passed the buck to some other chump before it all blows up. RH could genuinely believe that the sooner the GME pump stops, the less damage is done to these extremely naive retail investors, because the future naive bagholders flooding in are prevented from throwing their little savings at it. Brokerage execution halting or not, this story has an incredibly obvious ending, and it's that some WSB pumpers will profit huge, some hedge funds will lose huge, but the majority of WSB will lose immensely.
- skulk 6y ago
  If RH thought something was fishy, shouldn't they have completely halted GME trading instead of only disabling buys?
  - reducesuffering 6y ago
    Backlash would be even worse. We've already seen a "class action lawsuit" from WSB to Robinhood back in March when RH couldn't execute buy or sell during a few days and people were furious about their options expiring worthless. People will claim they had no chance to sell GME for $250, after a few days spikes it back down to $20 or so, and they'll claim Robinhood caused them to lose $50k or whatever.
    - dalbasal 6y ago
      IDK about that. There's a class action regardless, and (IDK, but seems logical) a market manipulation case as well. Honestly I don't understand how this is even a question. WTF is supposed to happen to the price of an asset if a big chunk of the owners can only sell.
      - fairity 6y ago
        It seems obvious that the claimed damages for the class action lawsuit would be much larger if sell orders were blocked. Since we know with certainty price will crash, claimed damages would increase by the share value of shareholders at time of restriction.
        unanswered 6y ago
        > we know with certainty price will crash I agree, and yet I seriously doubt even 5% of people saying this have opened a short position, e.g. bought puts.
        fairity 6y ago

matttb 6y ago

> Robinhood was one of many brokerages to implement trading restrictions. e.g. Bank of America/Merrill Edge also shut down buy orders for GME. Citadel does not have the same relationship with these other brokerages. So, to say Robinhood made their decision based on a conflict of interest doesn't hold water. My issue is those brokerages said they were closing orders because of Apex clearing. Robinhood basically said that they chose to do it themselves: https://blog.robinhood.com/news/2021/1/28/keeping-customers-informed-through-market-volatility https://blog.robinhood.com/news/2021/1/28/keeping-customers-...

wadefletch 6y ago

1. How likely is it BofA-ML has short positions or investments in funds who do? 2. Isn't Citadel's deal with Robinhood dependent on the flow being "dumb" and not having any broad effect on the market? That's obviously no longer the case, if it ever was. Robinhood is still venture backed, so they're feeling the pressure to show growth in users and profits. Is it possible the market for their "much-less-dumb-than-previously-thought" flow has shrunk substantially? Also, the retail traders involved and the press surrounding them have (accurately imo) painted this as a populist "sticking it to the elites" movement. What if the so-called elites really do want to disenfranchise and mitigate retail investors impact on the market? BofA, Citadel, and peers might have an interest in maintaining the status quo.

deleted 6y ago

[deleted]

e15ctr0n 6y ago

> Bank of America/Merrill Edge also shut down buy orders for GME. I heard that Bank of America/Merrill Edge was requiring posting a 100% margin as collateral if wanting to buy GME options. I didn't hear that they shut down buy orders for GME stock.