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I like this comment. I am going to buy and hold this comment forever. lolz Your comment sounds similar to the explanation from the mouth of Interactive Brokers

I like this comment. I am going to buy and hold this comment forever. lolz Your comment sounds similar to the explanation from the mouth of Interactive Brokers chairman and founder Thomas Peterffy [1]. His comments are based on a broader concern beyond just Robinhood. I think a lot of people don't understand what I can only describe as the physics of the system. Like a utility, there is only so many electrons that can get pumped through the system from generators through the transmission system, through substation and distribution networks to your house. It is big and powerful, but if there is an unplanned for event that draws too much power it doesn't matter how much generation you have, the system just can't take it. Substation will pop, power will go out if not isolated. Robinhood is small player that could never have planned for this type of event and likely doesn't want this. Most retail shops likely don't have the sophistication to handle an event like this. [1]https://youtu.be/7RH4XKP55fM https://youtu.be/7RH4XKP55fM

vmception 6y ago
> I think a lot of people don't understand what I can only describe as the physics of the system. Market microstructure is a term I've adopted when studying options and the circumstances where they influence the underlying market prices more than any other factor.
wavefunction 6y ago
This is a nonsensical post.
JumpCrisscross 6y ago
> Robinhood is small player that could never have planned for this type of event I disagree. It wasn't that long ago that securities and cash from unsettled trades were unavailable to customers. The modern abstraction of frictionless trading is just that--an abstraction. Adding "free" to the mix removes a balancing factor. (Less cash coming in at t=0.) Becoming a clearing broker removes another, though it adds control. There are vendors selling off-the-shelf systems to calculate clearing margin requirements and risks real time. I'm looking forward to hearing if Robinhood used one of those, or if they tried to roll their own. Either way, it's not an excusable pain point to push to one's customers. Particularly not retail customers. Particularly not unsophisticated retail customers. These are complicated systems, far more than most professionals fully grasp. A simple back-up plan, like a fallback introducing broker arrangement, would have avoided this whole mess.
- SkyMarshal 6y ago
  > There are vendors selling off-the-shelf systems to calculate clearing margin requirements and risks real time. I'm looking forward to hearing if Robinhood used one of those, or if they tried to roll their own. This would be really interesting to know. If you find out, please do post it.
s_dev 6y ago
Are high frequency traders not a thing? Where trades are made according to speed -- and lots of trades. How does this not impact the same system?
- blueblisters 6y ago
  HFT firms are apparently hooked up directly to the exchange. So they probably settle trades in real-time. The whole chain of retail to broker to clearinghouse is what creates the need of credit-collateral at every stage and create systemic risk if some players don't have the right risk control in place. At least that's what I have figured from a few hours of reading.
  - dmurray 6y ago
    > So they probably settle trades in real-time. They do not. They settle trades in 2 business days like everyone else. Think about it: if you sell a share to a HFT, how could the HFT receive it immediately when you don't need to deliver it for two days? However there is a process called CNS (Continuous Net Settlement) which means you generally only have to settle the net of your trades each day.
- maest 6y ago
  HFT hold no overnight positions (with rare exceptions) so don't have to worry about settling.

vmception 6y ago

> I think a lot of people don't understand what I can only describe as the physics of the system. Market microstructure is a term I've adopted when studying options and the circumstances where they influence the underlying market prices more than any other factor.

wavefunction 6y ago

This is a nonsensical post.

JumpCrisscross 6y ago

> Robinhood is small player that could never have planned for this type of event I disagree. It wasn't that long ago that securities and cash from unsettled trades were unavailable to customers. The modern abstraction of frictionless trading is just that--an abstraction. Adding "free" to the mix removes a balancing factor. (Less cash coming in at t=0.) Becoming a clearing broker removes another, though it adds control. There are vendors selling off-the-shelf systems to calculate clearing margin requirements and risks real time. I'm looking forward to hearing if Robinhood used one of those, or if they tried to roll their own. Either way, it's not an excusable pain point to push to one's customers. Particularly not retail customers. Particularly not unsophisticated retail customers. These are complicated systems, far more than most professionals fully grasp. A simple back-up plan, like a fallback introducing broker arrangement, would have avoided this whole mess.

SkyMarshal 6y ago
> There are vendors selling off-the-shelf systems to calculate clearing margin requirements and risks real time. I'm looking forward to hearing if Robinhood used one of those, or if they tried to roll their own. This would be really interesting to know. If you find out, please do post it.

s_dev 6y ago

Are high frequency traders not a thing? Where trades are made according to speed -- and lots of trades. How does this not impact the same system?

blueblisters 6y ago
HFT firms are apparently hooked up directly to the exchange. So they probably settle trades in real-time. The whole chain of retail to broker to clearinghouse is what creates the need of credit-collateral at every stage and create systemic risk if some players don't have the right risk control in place. At least that's what I have figured from a few hours of reading.
- dmurray 6y ago
  > So they probably settle trades in real-time. They do not. They settle trades in 2 business days like everyone else. Think about it: if you sell a share to a HFT, how could the HFT receive it immediately when you don't need to deliver it for two days? However there is a process called CNS (Continuous Net Settlement) which means you generally only have to settle the net of your trades each day.
maest 6y ago
HFT hold no overnight positions (with rare exceptions) so don't have to worry about settling.