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They could have simply let people take the risk and that's that. What happens when I buy stock and the price goes down and I lose? Does any platform really care

They could have simply let people take the risk and that's that. What happens when I buy stock and the price goes down and I lose? Does any platform really care? Nope. Why would they care now? I'd understand if it was only margin trading but why restrict a chance of (winning/losing) whenever they need to? They always had a huge lever but it was not to be used so soon to help their friends. I now hope it becomes deserted. At least I closed my own account after this.

JumpCrisscross 6y ago
> Why would they care now? Because they need to post collateral for every trade that they execute but which hasn't yet settled, and they don't have enough collateral to sustain the concentrated trading volumes they've been processing.
- op00to 6y ago
  > they’ve been processing ... and making money on every trade, win or lose. Important not to forget that.
- swixi 6y ago
  How was the volume of GME enough to cause this problem? Today was around 60 million. Aren't they usually executing billions of trades across the market every day?
  - KMag 6y ago
    If I understand it correctly, RH is making funds available for trading right away, rather than making users wait until T+2 to be able to reinvest those funds. They can't instantly unilaterally change their policies to make users wait until T+2 to reinvest those funds. If you jump into and out of a 10k USD position 5 times today, that eats into almost 50k of RH's collateral with clearing houses for the next 2 days. A very small number of stocks probably account for a vast vast majority of this rapid flipping on their platform, so preventing expanding positions in that small number of names gets rid of the vast majority of the problem. Also, the most volatile stocks have the highest margin requirements, doubly compounding the issues with GME trading. Or, maybe I'm misunderstanding the issue. Maybe it's fully due to the higher clearing house margin requirements for the higher volatility stocks.
  - JumpCrisscross 6y ago
    > Aren't they usually executing billions of trades across the market every day? Clearing collateral requirements vary between 2 and 100%. That means $10bn of trades in one name can require the same amount of capital as $200mm of trades in another.

JumpCrisscross 6y ago

> Why would they care now? Because they need to post collateral for every trade that they execute but which hasn't yet settled, and they don't have enough collateral to sustain the concentrated trading volumes they've been processing.

op00to 6y ago
> they’ve been processing ... and making money on every trade, win or lose. Important not to forget that.
swixi 6y ago
How was the volume of GME enough to cause this problem? Today was around 60 million. Aren't they usually executing billions of trades across the market every day?
- KMag 6y ago
  If I understand it correctly, RH is making funds available for trading right away, rather than making users wait until T+2 to be able to reinvest those funds. They can't instantly unilaterally change their policies to make users wait until T+2 to reinvest those funds. If you jump into and out of a 10k USD position 5 times today, that eats into almost 50k of RH's collateral with clearing houses for the next 2 days. A very small number of stocks probably account for a vast vast majority of this rapid flipping on their platform, so preventing expanding positions in that small number of names gets rid of the vast majority of the problem. Also, the most volatile stocks have the highest margin requirements, doubly compounding the issues with GME trading. Or, maybe I'm misunderstanding the issue. Maybe it's fully due to the higher clearing house margin requirements for the higher volatility stocks.
- JumpCrisscross 6y ago
  > Aren't they usually executing billions of trades across the market every day? Clearing collateral requirements vary between 2 and 100%. That means $10bn of trades in one name can require the same amount of capital as $200mm of trades in another.