4 ms·

Various trading halts occur fairly regularly. If it's possible to win a suit against an exchange halting trades, institutional investors would be suing exchange

by boh 6y ago

Various trading halts occur fairly regularly. If it's possible to win a suit against an exchange halting trades, institutional investors would be suing exchanges on a regular basis. Also the creation of the SEC was essentially to protect retail investors from speculative investments (that typically cleaned them out). It would be less likely to see a trade halt as going "against the people" but as a consumer protection practice, so it's doubtful it will be wagging too many fingers at RH.

zionic 6y ago
"halting trades" is not the same as "halting buys only while allowing people to sell in an attempt to crash the price so our biggest customer doesn't lose money"
- boh 6y ago
  It is. Halting trades always produces winners/losers. Retail investors are RH's biggest customers. They're diminishing their risk of suits they'd likely lose/regulatory scrutiny by halting buys. The SEC will more likely hit you for allowing pumps rather than preventing them.
  - Tokelin 6y ago
    How is halting trades the same as only halting buys? By halting trades it is implied selling is also halted.
  - shawabawa3 6y ago
    It's absolutely not the same Trading halts are at the exchange level and stop _all_ buys and sells What happened here is some brokers/clearing houses prevented _retail traders_ from buying, but not from selling
    - boh 6y ago
      Exchanges are able to decide what to halt (obviously since that's what they did). The SEC/class action suits are free to argue the issue, but the likelihood the suit will succeed is low and SEC intervention (beyond an opinion statement) is also low. In the investment space, retail investors are generally treated like children who need to be protected (that's what the SEC is mostly tasked with). RH will make the argument that it was protecting the children from hurting themselves and the SEC will likely go along with it (that's their assumption anyway). Fairness isn't something you generally see in trading.
danhak 6y ago
This is nothing like the relatively common trading halts imposed by the exchanges under various circumstances—-which halt all trading, not just buying. This is a specific broker—-one with direct financial ties to this trade, by the way—-totally shutting down the ability to enter an opening order for a specific ticker. Pretty unprecedented artificial suppression of demand.
- shuckles 6y ago
  Didn’t IBKR do the same, among others?
- boh 6y ago
  No this actually happens and it's not the first time (see retail investors vs dot com bubble for more). RH likely has lawyers that referenced past instances of SEC action and decided to take the path of least resistance.
- rootusrootus 6y ago
  > This is a specific broker Several did it. I heard WeBull did the same. I know I got a TastyWorks notification when they did it (and a little while ago when they turned it back on). The more I hear, the less convinced I am that RH in particular did something nefarious.
tlholaday 6y ago
Do you have an example of a broker halting purchases, but not sales, for customers who have the cash?
jonwachob91 6y ago
Exchanges have very clearly defined rules for when they will halt trading. With clearly defined rules, you always know why a stock was halted, and when it will resume. Robinhood has no set rules, and it was impossible to predict when or if they'd halt purchasing shares. It was also not possible for Robinhood traders to know when trading of the stock would resume. Also; Robinhood didn't halt the trading of GME, AAL, AMC, BB, and others. They just halted the purchasing of new shares. Robinhood tried limiting who could buy shares of those stocks to only the hedge funds. That would drive the stock price down, thus manipulating the stock price in the favor of Citadel / Melvin and their short positions.
esyir 6y ago
Trade halts are generally by exchanges and not individual brokers, no?

by boh 6y ago

zionic 6y ago

"halting trades" is not the same as "halting buys only while allowing people to sell in an attempt to crash the price so our biggest customer doesn't lose money"

boh 6y ago
It is. Halting trades always produces winners/losers. Retail investors are RH's biggest customers. They're diminishing their risk of suits they'd likely lose/regulatory scrutiny by halting buys. The SEC will more likely hit you for allowing pumps rather than preventing them.
- Tokelin 6y ago
  How is halting trades the same as only halting buys? By halting trades it is implied selling is also halted.
- shawabawa3 6y ago
  It's absolutely not the same Trading halts are at the exchange level and stop _all_ buys and sells What happened here is some brokers/clearing houses prevented _retail traders_ from buying, but not from selling
  - boh 6y ago
    Exchanges are able to decide what to halt (obviously since that's what they did). The SEC/class action suits are free to argue the issue, but the likelihood the suit will succeed is low and SEC intervention (beyond an opinion statement) is also low. In the investment space, retail investors are generally treated like children who need to be protected (that's what the SEC is mostly tasked with). RH will make the argument that it was protecting the children from hurting themselves and the SEC will likely go along with it (that's their assumption anyway). Fairness isn't something you generally see in trading.

danhak 6y ago

This is nothing like the relatively common trading halts imposed by the exchanges under various circumstances—-which halt all trading, not just buying. This is a specific broker—-one with direct financial ties to this trade, by the way—-totally shutting down the ability to enter an opening order for a specific ticker. Pretty unprecedented artificial suppression of demand.

shuckles 6y ago
Didn’t IBKR do the same, among others?
boh 6y ago
No this actually happens and it's not the first time (see retail investors vs dot com bubble for more). RH likely has lawyers that referenced past instances of SEC action and decided to take the path of least resistance.
rootusrootus 6y ago
> This is a specific broker Several did it. I heard WeBull did the same. I know I got a TastyWorks notification when they did it (and a little while ago when they turned it back on). The more I hear, the less convinced I am that RH in particular did something nefarious.

tlholaday 6y ago

Do you have an example of a broker halting purchases, but not sales, for customers who have the cash?

jonwachob91 6y ago

Exchanges have very clearly defined rules for when they will halt trading. With clearly defined rules, you always know why a stock was halted, and when it will resume. Robinhood has no set rules, and it was impossible to predict when or if they'd halt purchasing shares. It was also not possible for Robinhood traders to know when trading of the stock would resume. Also; Robinhood didn't halt the trading of GME, AAL, AMC, BB, and others. They just halted the purchasing of new shares. Robinhood tried limiting who could buy shares of those stocks to only the hedge funds. That would drive the stock price down, thus manipulating the stock price in the favor of Citadel / Melvin and their short positions.

esyir 6y ago

Trade halts are generally by exchanges and not individual brokers, no?