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Stop being "less smart". Robinhood's clients are/is a hedge fund manager, Citadel Securities - Robinhood’s largest customer, which tried to bail out Melvin Capi

Stop being "less smart". Robinhood's clients are/is a hedge fund manager, Citadel Securities - Robinhood’s largest customer, which tried to bail out Melvin Capital which got bankrupted in the short squeeze on GME. Unless you've lived under a rock you should know by now how Robinhood is making the money.

paulie_a 6y ago
Hopefully wsb goes to war against citadel next
adrr 6y ago
Unless you’re paying for trades you’re routed to someone buying order flow. E*TRADE, Ameritrade, etc sell order flow for revenue. IB charges for orders and doesn’t sell order flow but also cut off GME. What’s the theory around that broker?
- platz 6y ago
  I could buy GME through ETrade but IB wouldn't allow a buy with cash. The chairman said something about market health but the reason he gave was about margin without using that word.
- themihai 6y ago
  When you put some billionaire guys, some of them happen to be have multiple roles such market makers, brokers, hedge funds that short GME and even the investors in the brokerage platform where GME is traded on one side and some poor retailers on the side side you don't need a big brain to figure out who wins. Maybe you are not aware but Melvin lost almost 3 billions and was bailed out by Citadel and Point72 and probably they will loose even more and go bankrupt if they don't stop people buying GME. Do you think these guys want to leave all that cash on the table and play fair? If you look at Point72 owner(Cohen) you see some really "interesting" things.
- amluto 6y ago
  Cut off how? A quick search suggests that they have increased margin requirements but still allow trading.
  - themihai 6y ago
    They allowed only to "Sell" not buying. Not even with cash (no leverage). Source: Personal experience.
- bhk 6y ago
  IB's CEO was interviewed on CNBC, and he actually said that his motivation was to "protect the market" ... specifically large players important to the market, whose solvency was threatened by the short squeeze. "... we are concerned about the financial viability of intermediaries and the clearing house." https://streamable.com/tfg1ow https://streamable.com/tfg1ow
  - adrr 6y ago
    That is really scary. If few of them go under, what happens to the market in terms of liquidity?
    - bhk 6y ago
      A year old, but on point... https://www.russellclarkim.com/marketviews/russell-clark/2019/11/clearing-houses-and-initial-margin https://www.russellclarkim.com/marketviews/russell-clark/201... > There is no doubt that a default by a clearinghouse member is more likely when initial margins are low and may be caused by a sharp unexpected move in the underlying markets. In the event of a default by one member this could trigger a chain reaction. Firstly, initial margins will rise in an event of a default, which will restrict other trader’s ability to participate in the market possibly acerbating the move in the underlying markets. Secondly, if the defaulting member was a particularly large player in one asset (likely, as this would be the cause of the default), the members with opposite positions may not receive variation margin and hence will become unhedged at the very moment they need hedging. Thirdly, the clearinghouse may well have to recapitalise itself from the surviving members. Major clearinghouse members (including JP Morgan) appear to be seriously worried about a clearinghouse problem after the default by a member of Nasdaq Clearing AB ..." Be careful out there. :-)
  - nayuki 6y ago
    Much better quality but shorter length: https://www.youtube.com/watch?v=7RH4XKP55fM https://www.youtube.com/watch?v=7RH4XKP55fM (uploaded by CNBC, so might get deleted someday)

paulie_a 6y ago

Hopefully wsb goes to war against citadel next

adrr 6y ago

Unless you’re paying for trades you’re routed to someone buying order flow. E*TRADE, Ameritrade, etc sell order flow for revenue. IB charges for orders and doesn’t sell order flow but also cut off GME. What’s the theory around that broker?

platz 6y ago
I could buy GME through ETrade but IB wouldn't allow a buy with cash. The chairman said something about market health but the reason he gave was about margin without using that word.
themihai 6y ago
When you put some billionaire guys, some of them happen to be have multiple roles such market makers, brokers, hedge funds that short GME and even the investors in the brokerage platform where GME is traded on one side and some poor retailers on the side side you don't need a big brain to figure out who wins. Maybe you are not aware but Melvin lost almost 3 billions and was bailed out by Citadel and Point72 and probably they will loose even more and go bankrupt if they don't stop people buying GME. Do you think these guys want to leave all that cash on the table and play fair? If you look at Point72 owner(Cohen) you see some really "interesting" things.
amluto 6y ago
Cut off how? A quick search suggests that they have increased margin requirements but still allow trading.
- themihai 6y ago
  They allowed only to "Sell" not buying. Not even with cash (no leverage). Source: Personal experience.
bhk 6y ago
IB's CEO was interviewed on CNBC, and he actually said that his motivation was to "protect the market" ... specifically large players important to the market, whose solvency was threatened by the short squeeze. "... we are concerned about the financial viability of intermediaries and the clearing house." https://streamable.com/tfg1ow https://streamable.com/tfg1ow
- adrr 6y ago
  That is really scary. If few of them go under, what happens to the market in terms of liquidity?
  - bhk 6y ago
    A year old, but on point... https://www.russellclarkim.com/marketviews/russell-clark/2019/11/clearing-houses-and-initial-margin https://www.russellclarkim.com/marketviews/russell-clark/201... > There is no doubt that a default by a clearinghouse member is more likely when initial margins are low and may be caused by a sharp unexpected move in the underlying markets. In the event of a default by one member this could trigger a chain reaction. Firstly, initial margins will rise in an event of a default, which will restrict other trader’s ability to participate in the market possibly acerbating the move in the underlying markets. Secondly, if the defaulting member was a particularly large player in one asset (likely, as this would be the cause of the default), the members with opposite positions may not receive variation margin and hence will become unhedged at the very moment they need hedging. Thirdly, the clearinghouse may well have to recapitalise itself from the surviving members. Major clearinghouse members (including JP Morgan) appear to be seriously worried about a clearinghouse problem after the default by a member of Nasdaq Clearing AB ..." Be careful out there. :-)
- nayuki 6y ago
  Much better quality but shorter length: https://www.youtube.com/watch?v=7RH4XKP55fM https://www.youtube.com/watch?v=7RH4XKP55fM (uploaded by CNBC, so might get deleted someday)