3 ms·

I'm with Ally bank and right now they're telling people that it's their clearing firm (Apex Clearing Corp) that's blocking buys of GME and some other stocks. C

I'm with Ally bank and right now they're telling people that it's their clearing firm (Apex Clearing Corp) that's blocking buys of GME and some other stocks. Could it be that other trading platforms use the same clearing firm?

misframer 6y ago
Apex is the clearing firm for Tastyworks and Webull too. I got an email from Tastyworks about restrictions (which just got lifted).
neom 6y ago
Interestingly, I bank with HSBC and I could buy and sell GME and AMC the whole time outside of when it was halted. I called them to ask why and they said they clear their own trades. Not sure how exactly that is possible though (if anyone can explain...)
- kenhwang 6y ago
  Typically when you buy/sell a stock, it's not moving anywhere. Robinhood would try to sell the stock to someone on Robinhood buying the stock first. The big banks and brokerages have enough people buying/selling within its platform that it has enough supply to trade within itself. For a small brokerage, they would have to work with other brokerages to help them trade, as they wouldn't have enough shares they already hold to trade them within their users. So Robinhood asks Apex for more shares, and Apex has to ask HSBC/Fidelity/JPMC/Goldman if Apex doesn't have any. At some point, all the other institutions also don't want to give up their shares because they need to satisfy demand from their own users. Trading with other firms tends to be really slow too. It's a short squeeze too, by definition there's not enough stocks available for everyone who wants to buy. So some firms ran out and couldn't get more.
  - amluto 6y ago
    You may want to look up Reg NMS and the various rules about internalizers.
  - TedDoesntTalk 6y ago
    You left out the exchange. Why can't the small brokerages go directly to the exchange?
    - kenhwang 6y ago
      Defeats the purpose of using a broker/clearing house, there are products that let you trade on the exchange directly. RH probably figured there's no point in integrating all the way to the end if no one would normally use it. Same with doing your own clearing, there's complexity involved with clearing and maybe you don't want to implement it all yourself when someone does it better for cheaper. It's like asking why we don't all program in assembly all the time, or even have the option to mix assembly into our high level code. It's just nice having layers of abstraction that handle the annoying stuff for you, even if there's a minor cost. Why have complexity you don't expect to need?
kenhwang 6y ago
Robinhood uses Apex behind the scenes too. Apex is probably having trouble clearing these trades (given how one sided it is) and just decided to not trade them, resulting in the butterfly effect of multiple brokerages not trading these stock.
- gruez 6y ago
  >Apex is probably having trouble clearing these trades (given how one sided it is) That's... not how stock markets work. For every buy there must be a seller. If there are too many buyers but not enough sellers the price simply goes up.
  - kenhwang 6y ago
    Sure, that's what would happen if buys and sells could reasonably be paired up. Robinhood/Apex could've just kept these buy orders open until it found a seller at any price and closed unfilled orders at the end of the day. That would probably be less preferable to all involved as I doubt these people were placing limit orders.
- misframer 6y ago
  I don't think they use Apex anymore. https://blog.robinhood.com/news/2018/10/9/introducing-clearing-by-robinhood https://blog.robinhood.com/news/2018/10/9/introducing-cleari...
ClumsyPilot 6y ago
trading212 wouldn't let me buy, but fairtrade app did.

misframer 6y ago

Apex is the clearing firm for Tastyworks and Webull too. I got an email from Tastyworks about restrictions (which just got lifted).

neom 6y ago

Interestingly, I bank with HSBC and I could buy and sell GME and AMC the whole time outside of when it was halted. I called them to ask why and they said they clear their own trades. Not sure how exactly that is possible though (if anyone can explain...)

kenhwang 6y ago
Typically when you buy/sell a stock, it's not moving anywhere. Robinhood would try to sell the stock to someone on Robinhood buying the stock first. The big banks and brokerages have enough people buying/selling within its platform that it has enough supply to trade within itself. For a small brokerage, they would have to work with other brokerages to help them trade, as they wouldn't have enough shares they already hold to trade them within their users. So Robinhood asks Apex for more shares, and Apex has to ask HSBC/Fidelity/JPMC/Goldman if Apex doesn't have any. At some point, all the other institutions also don't want to give up their shares because they need to satisfy demand from their own users. Trading with other firms tends to be really slow too. It's a short squeeze too, by definition there's not enough stocks available for everyone who wants to buy. So some firms ran out and couldn't get more.
- amluto 6y ago
  You may want to look up Reg NMS and the various rules about internalizers.
- TedDoesntTalk 6y ago
  You left out the exchange. Why can't the small brokerages go directly to the exchange?
  - kenhwang 6y ago
    Defeats the purpose of using a broker/clearing house, there are products that let you trade on the exchange directly. RH probably figured there's no point in integrating all the way to the end if no one would normally use it. Same with doing your own clearing, there's complexity involved with clearing and maybe you don't want to implement it all yourself when someone does it better for cheaper. It's like asking why we don't all program in assembly all the time, or even have the option to mix assembly into our high level code. It's just nice having layers of abstraction that handle the annoying stuff for you, even if there's a minor cost. Why have complexity you don't expect to need?

kenhwang 6y ago

Robinhood uses Apex behind the scenes too. Apex is probably having trouble clearing these trades (given how one sided it is) and just decided to not trade them, resulting in the butterfly effect of multiple brokerages not trading these stock.

gruez 6y ago
>Apex is probably having trouble clearing these trades (given how one sided it is) That's... not how stock markets work. For every buy there must be a seller. If there are too many buyers but not enough sellers the price simply goes up.
- kenhwang 6y ago
  Sure, that's what would happen if buys and sells could reasonably be paired up. Robinhood/Apex could've just kept these buy orders open until it found a seller at any price and closed unfilled orders at the end of the day. That would probably be less preferable to all involved as I doubt these people were placing limit orders.
misframer 6y ago
I don't think they use Apex anymore. https://blog.robinhood.com/news/2018/10/9/introducing-clearing-by-robinhood https://blog.robinhood.com/news/2018/10/9/introducing-cleari...

ClumsyPilot 6y ago

trading212 wouldn't let me buy, but fairtrade app did.