4 ms·

I don't understand what you mean? Somebody offers to sell the stock for X, somebody else (with the money stored on the stock exchange) offers the buy for the pr

by pgsimp 6y ago

I don't understand what you mean? Somebody offers to sell the stock for X, somebody else (with the money stored on the stock exchange) offers the buy for the price X. Person A gets the money, person B gets the stock. That probably happens a billion times every day. Why should it make a difference which stock is being traded?

imladyboy 6y ago
According to this interview[0], a similar firm's CEO is saying it's not that simple, and their clearing firm stopped the trades due to the costs > Our clearing firm gave us a call and said we're going to have to stop allowing new opening positions... there is a two-day settlement between if you buy the stock today, those brokerage firms that you bought that stock on have to fund that trade with the clearing central house called DTC for two whole days... our clearing firm simply cannot afford the cost to settle those trades. We cannot use customer funds to front that cost due to regulation. [0] https://finance.yahoo.com/video/heres-why-robinhood-restricting-users-173049721.html https://finance.yahoo.com/video/heres-why-robinhood-restrict...
TeMPOraL 6y ago
I don't know anything about stock trading, but I think I can piece an idea from some HN comments I've seen earlier. The exchange between A and B isn't direct, or instantaneous. The actual money transfer takes days, and there are parties in between that make it possible to pretend it's immediate - much like with insta-transfers of money between the banks. Apparently, these parties are on the hook for any money that is "in flight", so they need to have a substantial buffer. Once you get this many people trading on a stock this volatile, apparently the buffer in the middle isn't sufficient to cover the risk, so the parties in the middle stop accepting these trades. EDIT: 'imladyboy quotes the source from which I pieced most of the interpretation above. See also 'JumpCrisscross here: https://news.ycombinator.com/item?id=25951475 https://news.ycombinator.com/item?id=25951475.
ABeeSea 6y ago
Because the trade isn’t instant. It takes 2 days to settle the clearinghouse during which time RH has to put down cash as collateral that they won’t go bankrupt in those two days.
sroussey 6y ago
The clearinghouse for Public, for example, was the culprit: https://twitter.com/public/status/1354826467184578571?s=21 https://twitter.com/public/status/1354826467184578571?s=21
deleted 6y ago
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by pgsimp 6y ago

imladyboy 6y ago

According to this interview[0], a similar firm's CEO is saying it's not that simple, and their clearing firm stopped the trades due to the costs > Our clearing firm gave us a call and said we're going to have to stop allowing new opening positions... there is a two-day settlement between if you buy the stock today, those brokerage firms that you bought that stock on have to fund that trade with the clearing central house called DTC for two whole days... our clearing firm simply cannot afford the cost to settle those trades. We cannot use customer funds to front that cost due to regulation. [0] https://finance.yahoo.com/video/heres-why-robinhood-restricting-users-173049721.html https://finance.yahoo.com/video/heres-why-robinhood-restrict...

TeMPOraL 6y ago

I don't know anything about stock trading, but I think I can piece an idea from some HN comments I've seen earlier. The exchange between A and B isn't direct, or instantaneous. The actual money transfer takes days, and there are parties in between that make it possible to pretend it's immediate - much like with insta-transfers of money between the banks. Apparently, these parties are on the hook for any money that is "in flight", so they need to have a substantial buffer. Once you get this many people trading on a stock this volatile, apparently the buffer in the middle isn't sufficient to cover the risk, so the parties in the middle stop accepting these trades. EDIT: 'imladyboy quotes the source from which I pieced most of the interpretation above. See also 'JumpCrisscross here: https://news.ycombinator.com/item?id=25951475 https://news.ycombinator.com/item?id=25951475.

ABeeSea 6y ago

Because the trade isn’t instant. It takes 2 days to settle the clearinghouse during which time RH has to put down cash as collateral that they won’t go bankrupt in those two days.

sroussey 6y ago

The clearinghouse for Public, for example, was the culprit: https://twitter.com/public/status/1354826467184578571?s=21 https://twitter.com/public/status/1354826467184578571?s=21

deleted 6y ago

[deleted]