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As a brokerage or an exchange, you are required to guarantee best execution and fairness among your customers. It's true that it could legitimately be consider
by satellite2 6y ago
As a brokerage or an exchange, you are required to guarantee best execution and fairness among your customers.
It's true that it could legitimately be considered an exceptional situation requiring exceptional mesure.
But in that case the only way to do that while simultaneously respecting your obligations would have been a complete halt on that instrument.
So the market manipulation accusations seem legitimate.
- Traster 6y agoIf Robinhood users are massively long GME, a lot on margin, that's a systemic risk for RH. Firstly, there's the risk they're going to lose a tonne from these margin trades. Secondly, there's a risk they're going to destroy their business when the shorts unwind and GME turns out to genuinely be worth $20. Thirdly, if the market does go up there's a whole load of counter party risk where these short sellers don't exit, they go bankrupt. Fourthly, if this behaviour continues their business model is fucked because no one will be paying for toxic order flow. There are lots of really good reasons why RH would want to try and get their clients' net positions flat. Since they are exposed to an aggregate risk that individual clients aren't exposed to - and obviously, those clients won't think about this, but they have operational risk that RH can't execute trades.