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Much of the outrage is caused by the fact that they disabled only BUYING of certain stocks. Systematic risks should be addressed, yes. But a broker should neve

Much of the outrage is caused by the fact that they disabled only BUYING of certain stocks. Systematic risks should be addressed, yes. But a broker should never do such manipulation.

huffmsa 6y ago
Disabling buying on margin would be one thing, but disabling all together is another
- franklampard 6y ago
  They did the latter didn’t they?
  - fastball 6y ago
    Exactly. I have a RH account with zero margin and was not able to even look at GME in the RH app (i.e. not even see a chart – didn't show up in the search results at all). People who already owned shares were able to sell, but nothing else.
  - Kranar 6y ago
    They disabled it altogether, cash and margin.
slg 6y ago
Do you honestly think the situation would have been better if they prevented both buying and selling? At least with the current approach people could sell their shares as the price dropped. It would have been much worse in my opinion if people just had to sit and watch as the value of their positions evaporated with no recourse.
- franklampard 6y ago
  Better for the retail investors? No. For the retail investors, if a broker didn’t foresee systematic risks and cannot clear, the better thing can happen is the broker own up to mistakes and go bankrupt. Bankruptcy is legal and investors understand such risks.
  - slg 6y ago
    >Bankruptcy is legal and investors understand such risks. The type of retail investor that is using RH doesn't understand the bankruptcy process and certainly wouldn't be happy to be stuck in SIPC limbo while the value of their stock plummets. When it comes to what is best for RH users, this seems like it was one of the least bad options among a collection of horrible options that are due to the way RH is managed.
    - franklampard 6y ago
      > The type of retail investor that is using RH doesn't understand the bankruptcy process That's your rationale for manipulating the market? SMH
- ManofPeace 6y ago
  The price dropped because there was no buying pressure (speculation of players shorting the stock at the top aside). Disabling the ability to buy in several brokerages removes the price discovery aspect of the system.
  - slg 6y ago
    The price dropped because it is in an insane bubble at the moment. Whether that drop would have happened today or some other day without RH's actions is unknowable. But if a lesser drop still did happen today and people couldn't sell their positions, that would have been even worse for users.
  - nrmitchi 6y ago
    > The price dropped because there was no buying pressure Robinhood is not the entire market. I don't know what the exact number is, but I doubt they're even a material number of the entire stock market. If Robinhood is the entire buying market, to the point that Robinhood pausing buying is detrimental, then how does that not make it clear that this entire situation is setting up Robinhood users to lose everything they buy?
    - svnt 6y ago
      Robinhood was not the only firm blocking buying new positions. Schwab did, TD Ameritrade did, and ETrade did, IBKR did for varying lengths of time. That is the majority of retail. Here is a fascinating interview with the CEO of IBKR where he literally says they prevented buying for retail and closed large short positions for others: https://streamable.com/ycdec9 https://streamable.com/ycdec9
- adrr 6y ago
  Sec would crack down if you didn’t let me people close their positions and RH would be on the hook for any losses incurred. I assume you can still buy GME on RH if you wrote a call option or shorted the stock. You’ll also still able to execute your call option to get shares.
  - cdash 6y ago
    If Robinhood couldn't meet their collateral obligations then they should have just gone into default/bankruptcy. They absolutely should not be allowed to make market manipulation decisions that bail themselves out.
tinyhouse 6y ago
I have no dog in this. I've stayed away from RH as I always suspected they are shady. However, blocking people also from selling is even worse imho. If the exchange does it then that's OK because trading halts for everyone. But if RH does it, people can still sell on other platforms. I would be very upset if my trader is blocking me from selling. I do understand that disabling buying caused the stock to tank, but I think it would've happened even if they disabled both. Was that their way to manipulate the stock price? idk but it makes sense.
- samhld 6y ago
  I'm confused why you're bringing up "blocking people from selling". Has that ever happened? It certainly isn't happening here. Edit: I'm guessing it's because the above comment said "only BUYING". I think that was a distinction from blocking both buying AND selling. If you block only one, it forces the market.
- abnry 6y ago
  Someone somewhere has to still be able to buy if RH is still allowing people to sell. It's just not the people on RH.
cmdli 6y ago
Just to be clear here, they are restricting opening new positions. If you are short on GME, you are allowed to buy in order to close out your position. However, most people are long, so they only have the option to sell.
- ianhawes 6y ago
  Just a side note but Robinhood does not allow shorting on their platform. Options (calls/puts) are permitted.
  - adrr 6y ago
    I assume they allow writing of calls and puts in order to do common option strategies. I wonder if they’ll let you buy the stocks to cover your calls.
deleted 6y ago
[deleted]
stainforth 6y ago
I'd also like a reporting of when they force closed some of their customers positions - did they do it selectively at a time when GME was lowest? From the examples I've seen it was later in the day. If they were already taking action before market open, then why didn't they also close those accounts then?

Much of the outrage is caused by the fact that they disabled only BUYING of certain stocks. Systematic risks should be addressed, yes. But a broker should never do such manipulation.

huffmsa 6y ago

Disabling buying on margin would be one thing, but disabling all together is another

franklampard 6y ago
They did the latter didn’t they?
- fastball 6y ago
  Exactly. I have a RH account with zero margin and was not able to even look at GME in the RH app (i.e. not even see a chart – didn't show up in the search results at all). People who already owned shares were able to sell, but nothing else.
- Kranar 6y ago
  They disabled it altogether, cash and margin.

slg 6y ago

Do you honestly think the situation would have been better if they prevented both buying and selling? At least with the current approach people could sell their shares as the price dropped. It would have been much worse in my opinion if people just had to sit and watch as the value of their positions evaporated with no recourse.

franklampard 6y ago
Better for the retail investors? No. For the retail investors, if a broker didn’t foresee systematic risks and cannot clear, the better thing can happen is the broker own up to mistakes and go bankrupt. Bankruptcy is legal and investors understand such risks.
- slg 6y ago
  >Bankruptcy is legal and investors understand such risks. The type of retail investor that is using RH doesn't understand the bankruptcy process and certainly wouldn't be happy to be stuck in SIPC limbo while the value of their stock plummets. When it comes to what is best for RH users, this seems like it was one of the least bad options among a collection of horrible options that are due to the way RH is managed.
  - franklampard 6y ago
    > The type of retail investor that is using RH doesn't understand the bankruptcy process That's your rationale for manipulating the market? SMH
ManofPeace 6y ago
The price dropped because there was no buying pressure (speculation of players shorting the stock at the top aside). Disabling the ability to buy in several brokerages removes the price discovery aspect of the system.
- slg 6y ago
  The price dropped because it is in an insane bubble at the moment. Whether that drop would have happened today or some other day without RH's actions is unknowable. But if a lesser drop still did happen today and people couldn't sell their positions, that would have been even worse for users.
- nrmitchi 6y ago
  > The price dropped because there was no buying pressure Robinhood is not the entire market. I don't know what the exact number is, but I doubt they're even a material number of the entire stock market. If Robinhood is the entire buying market, to the point that Robinhood pausing buying is detrimental, then how does that not make it clear that this entire situation is setting up Robinhood users to lose everything they buy?
  - svnt 6y ago
    Robinhood was not the only firm blocking buying new positions. Schwab did, TD Ameritrade did, and ETrade did, IBKR did for varying lengths of time. That is the majority of retail. Here is a fascinating interview with the CEO of IBKR where he literally says they prevented buying for retail and closed large short positions for others: https://streamable.com/ycdec9 https://streamable.com/ycdec9
adrr 6y ago
Sec would crack down if you didn’t let me people close their positions and RH would be on the hook for any losses incurred. I assume you can still buy GME on RH if you wrote a call option or shorted the stock. You’ll also still able to execute your call option to get shares.
- cdash 6y ago
  If Robinhood couldn't meet their collateral obligations then they should have just gone into default/bankruptcy. They absolutely should not be allowed to make market manipulation decisions that bail themselves out.

tinyhouse 6y ago

I have no dog in this. I've stayed away from RH as I always suspected they are shady. However, blocking people also from selling is even worse imho. If the exchange does it then that's OK because trading halts for everyone. But if RH does it, people can still sell on other platforms. I would be very upset if my trader is blocking me from selling. I do understand that disabling buying caused the stock to tank, but I think it would've happened even if they disabled both. Was that their way to manipulate the stock price? idk but it makes sense.

samhld 6y ago
I'm confused why you're bringing up "blocking people from selling". Has that ever happened? It certainly isn't happening here. Edit: I'm guessing it's because the above comment said "only BUYING". I think that was a distinction from blocking both buying AND selling. If you block only one, it forces the market.
abnry 6y ago
Someone somewhere has to still be able to buy if RH is still allowing people to sell. It's just not the people on RH.

cmdli 6y ago

Just to be clear here, they are restricting opening new positions. If you are short on GME, you are allowed to buy in order to close out your position. However, most people are long, so they only have the option to sell.

ianhawes 6y ago
Just a side note but Robinhood does not allow shorting on their platform. Options (calls/puts) are permitted.
- adrr 6y ago
  I assume they allow writing of calls and puts in order to do common option strategies. I wonder if they’ll let you buy the stocks to cover your calls.

deleted 6y ago

[deleted]

stainforth 6y ago

I'd also like a reporting of when they force closed some of their customers positions - did they do it selectively at a time when GME was lowest? From the examples I've seen it was later in the day. If they were already taking action before market open, then why didn't they also close those accounts then?