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>> When you transfer money in, Robinhood doesn’t actually get that money until a couple days later. They allow you to buy stock immediately, but that happens (t

>> When you transfer money in, Robinhood doesn’t actually get that money until a couple days later. They allow you to buy stock immediately, but that happens (transparently) on margin. The solution would be to disallow this feature, not to stop trading of certain tickets on all accounts, most of which are seasoned and funded

PragmaticPulp 6y ago
The cost of trading meme stocks also increased exponentially due to regulatory requirements. Full explanation with math here: https://twitter.com/kralctrebor/status/1354952686165225478?s=21 https://twitter.com/kralctrebor/status/1354952686165225478?s... Also, it’s not realistic to expect them to completely retool their entire app and infrastructure in a matter of hours to disallow margin-based trades of only certain securities. If this was a long-term concern I’m sure they’d do exactly what you suggested. However, this even ramped up in only a couple of days. Let’s be realistic about what they can re-engineer, test, and deploy to end users in that timeframe.
- deleted 6y ago
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- tomerico 6y ago
  It's also hard to believe that their margin based algorithm doesn't have parameters that can be tuned easily. It's not the first time that a single stock has crazy volatility and speculation.
  - jcranmer 6y ago
    A financial institution didn't foresee a black swan financial event? Color me shocked. If I'm reading the Twitter thread right, what killed Robinhood was the component of ">30% of your flow is in one stock", which is something that I could absolutely see never having happened to Robinhood until now.
- TuringNYC 6y ago
  If you want to side with current customers, another easy fix is to disallow new customers (if they cannot allow auto-margin for new customers.) How hard a change would it be to disable new account creation...at worst commenting out /customer/new on the route file for a day until they can fix the actual problem?
  - jcranmer 6y ago
    To be perfectly honest, given the way that narrative of the entire debacle has been built up to "hoi polloi stick it to the evil financial gurus", I don't think there is anything Robinhood could have done that wouldn't have immediately been spun as "THEY'RE TRYING TO BAIL OUT THE HEDGE FUNDS!"
- tekknik 6y ago
  > Also, it’s not realistic to expect them to completely retool their entire app and infrastructure in a matter of hours to disallow margin-based trades of only certain securities. They do have the ability to change the margin requirements for a particular stock, as well as disable “instant deposits”. They don’t let you withdrawal money until it’s cleared so adding the ability to hold the funds in the account until they clear wouldn’t be hard if it’s not already there.
deleted 6y ago
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nv-vn 6y ago
I suspect that removing that functionality would take more work than can be accomplished in 1 day, which is why they temporarily suspended it and why they're adding "limited buys" tomorrow

PragmaticPulp 6y ago

The cost of trading meme stocks also increased exponentially due to regulatory requirements. Full explanation with math here: https://twitter.com/kralctrebor/status/1354952686165225478?s=21 https://twitter.com/kralctrebor/status/1354952686165225478?s... Also, it’s not realistic to expect them to completely retool their entire app and infrastructure in a matter of hours to disallow margin-based trades of only certain securities. If this was a long-term concern I’m sure they’d do exactly what you suggested. However, this even ramped up in only a couple of days. Let’s be realistic about what they can re-engineer, test, and deploy to end users in that timeframe.

deleted 6y ago
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tomerico 6y ago
It's also hard to believe that their margin based algorithm doesn't have parameters that can be tuned easily. It's not the first time that a single stock has crazy volatility and speculation.
- jcranmer 6y ago
  A financial institution didn't foresee a black swan financial event? Color me shocked. If I'm reading the Twitter thread right, what killed Robinhood was the component of ">30% of your flow is in one stock", which is something that I could absolutely see never having happened to Robinhood until now.
TuringNYC 6y ago
If you want to side with current customers, another easy fix is to disallow new customers (if they cannot allow auto-margin for new customers.) How hard a change would it be to disable new account creation...at worst commenting out /customer/new on the route file for a day until they can fix the actual problem?
- jcranmer 6y ago
  To be perfectly honest, given the way that narrative of the entire debacle has been built up to "hoi polloi stick it to the evil financial gurus", I don't think there is anything Robinhood could have done that wouldn't have immediately been spun as "THEY'RE TRYING TO BAIL OUT THE HEDGE FUNDS!"
tekknik 6y ago
> Also, it’s not realistic to expect them to completely retool their entire app and infrastructure in a matter of hours to disallow margin-based trades of only certain securities. They do have the ability to change the margin requirements for a particular stock, as well as disable “instant deposits”. They don’t let you withdrawal money until it’s cleared so adding the ability to hold the funds in the account until they clear wouldn’t be hard if it’s not already there.

deleted 6y ago

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nv-vn 6y ago

I suspect that removing that functionality would take more work than can be accomplished in 1 day, which is why they temporarily suspended it and why they're adding "limited buys" tomorrow