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I’m not keeping my money with a financial institution that lies to me. End of story. Transfer initiated on my cash, and I’ll deal with moving stocks in the morn
by peytn 6y ago
I’m not keeping my money with a financial institution that lies to me. End of story. Transfer initiated on my cash, and I’ll deal with moving stocks in the morning.
- MattGaiser 6y agoWould you have kept it with a near insolvent one? I suspect they lost you as a customer either way.
- killaken2000 6y ago>I suspect they lost you as a customer either way. yes
- peytn 6y agoThey’ve had a number of technical issues over the past year, and I’ve given them the benefit of the doubt. This is the last straw for me personally.
- deleted 6y ago[deleted]
- ric2b 6y agoYeah, well, there are more competent players in the space. We owe them nothing.
- gryz 6y agoDo users actually lose the stocks, if something that happens to the Robinhood itself? I live under assumption that it is not happening. In any case stocks should stay belonging to the folks who purchased them.
- conceptme 6y agoThat is normally what happens if the broker goes bankrupt the stocks should still be yours.
- MattGaiser 6y agoYes, but it can be a messy process: https://www.investopedia.com/articles/investing/050515/what-happens-when-stock-broker-goes-bust.asp https://www.investopedia.com/articles/investing/050515/what-...
- Elv13 6y agoStocks don't belong to you, unless you have the actual physical stock. Everybody borrow them from 3rd party who borrow them from 3rd party who borrow them from 3rd party, who actually lended them multiple time to short the stock, who borrow them from a 3rd party, who actually have the physical piece of paper in a vault somewhere. I am not even joking. And it's the same for transactions or your bank balance. The bank doesn't keep your money and give it back to you. At least, for banks, they are backed by the government and IMF. For stocks and gift card balance, I am not so sure.
- mkl 6y agoIf I understand correctly, it's actually even stranger: "Nobody owns stock. What you own is an entitlement to stock held for you by your broker. But your broker doesn't own the stock either. What your broker owns is an entitlement to stock held for it by Cede & Co., which is a nominee of the Depository Trust Company, which is a company that is in the business of owning everyone's stock for them." - https://www.bloomberg.com/opinion/articles/2015-07-14/banks-forgot-who-was-supposed-to-own-dell-shares https://www.bloomberg.com/opinion/articles/2015-07-14/banks-...
- MrMan 6y agoWhich system evolved partly to make it more straightforward for custody to be resolved when a broker goes out of business
- deepGem 6y agoI doubt users will lose the stocks. This will be really weird. Worst case, you will be given some time to transfer your stocks to another brokerage and perhaps RH will make that process a lot faster than the nominal 2-3 days it takes now.
- thefounder 6y agoWell something weird happened already so I dobut it's that hard for them to loose your shares
- faffe 6y agoIn practice, share lending is backed by (over)colateralization ( e.g cash or highly liquid short term debt). The worst case for you would be to receive cash instead of the he stock itself.though this doesn't give relief to the broker not to fulfill its obligations.
- bluquark 6y agoRobinhood is a SIPC member. It rarely comes into play, but my understanding is that SIPC is there to ensure securities get back to their rightful owner in the event that something weird happens to the brokerage.
- swarnie_ 6y agoThe issue is when? If that takes several weeks or months in a highly volatile market its basically life or doing a flip.
- cma 6y agoThey are only covered up to $5 billion for the entire brokerage industry, it may be like 2008 and they all get turned into FDIC insured banks over night if tons of margin accounts fail.
- ArtTimeInvestor 6y agoIf the stocks are still there, then you are entitled to get them. Unfortunately, there is no way to check if the stocks are really there. RH showed you some pixels on the screen saying they hold stocks for you. If RH maliciously or by mistake lost them or never bought them, then there is no third party that will make you whole.
- marvin 6y agoFailure to deliver on borrowed/shorted stocks would be a conpletely plausible scenario during a short squeeze.
- dataflow 6y agoI hear your stocks can get lent out for shorting by others, which means you might not actually have them even while Robinhood is alive when you think you do...
- pishpash 6y agoOnly if you have a margin account and made purchases on margin.
- dataflow 6y agoInstant deposit & instant settlement both open a margin account though. And purchasing with unsettled funds requires margin. Which I would bet a huge number of people have enabled on their accounts, if not actively use.
- throwaway23819 6y agoThis is why I prefer my money be with IBKR. I already know when it comes to volatility, they are going to choose IBKR over my account which is good because usually "my account" is fine but its the others who are doing really crazy things. I know IBKR will be around in the morning. That's why I love them.
- nullc 6y agoIBKR's highly visible and active risk management-- e.g. their proactive increase in margin requirements in advance of recent political events-- is a major positive point in their favour.
- throwaway23819 6y agoExactly. And it turns out, if you are a good trader, you can negotiate your margin.
- throwawaaaaay17 6y agoI am a big fan of IBKR, but if you want someone who will be there in the morning... Pick someone bigger. Fidelity, for example, is Too Big To Fail. They will get bailed out if something happens. Not 100% sure that Interactive brokers will be.
- throwaway23819 6y agoDoes Fidelity have an API?
- MrMan 6y agoMy rep at fidelity said they don’t really have the same offerings.
- danr4 6y agoHave you seen the CNBC interview [1] with IBKR chairman, basically saying "once the stock goes back to the price we want we'll let retail investor trade it again"? [1] https://www.youtube.com/watch?v=7RH4XKP55fM https://www.youtube.com/watch?v=7RH4XKP55fM
- onion2k 6y agoI’m not keeping my money with a financial institution that lies to me. I know for a fact my bank lies. They've been fined hundreds of millions of dollars for money laundering (it's HSBC). A few years ago I looked in to moving to a more honest bank, but I couldn't find one that also met basic criteria like having access to cash points in the UK and having a half decent mobile banking app. Literally every major bank that operates in the UK has stories of doing frankly awful things. Since then I've joined Monzo, who do seem to be genuinely above board, but finding an honest financial institution is really hard.
- mprev 6y agoYou didn’t look at Nationwide or the other handful of building societies that offer current accounts? Or Triodos if you want to go the full way.
- dustinmoris 6y agoStarling or Monzo?
- celticninja 6y agoStarling Starlink is the space internet from Musk
- dustinmoris 6y agoAuto correct what can I do. Of course I meant Starling, they were the first challenger bank to offer business accounts as well and I’m very happy so far.
- Jake232 6y agoStarling is neat except you need to request a special exemption from them for EVERY payment you send over £25,000. Only takes them an hour or so to approve it for you, but it gets pretty old having to do it 3-5x per week.
- swarnie_ 6y ago> I’m not keeping my money with a financial institution that lies to me. End of story. So you're keeping cash under the mattress then i assume?
- klodolph 6y agoCouldn’t be your own mattress, obviously. You’d have to find a robot with a bed and use that.
- neximo64 6y agoYour bank actually has to lie to you to remain solvent. All banks do. The Central Bank also encourage it. Last year you saw both that banks were 'forced' to withhold dividends and they were perfectly capitalised. Both cant be true of course. If they hide it from you your money and everyones money is safe. If they tell the truth everyone loses, so it is actually the best outcome for you and everyone else. The fractional reserve system relies on not everyone withdrawing their money at once.
- pishpash 6y agoThat's why there should be no banks, only money market funds. Every deposit is an investment decision. You may as well reap the rewards if you take all the risks of lending and cut out the middleman. I've been using a brokerage account for banking for years.
- nly 6y agoTaking those risks has trade offs most people aren't prepared to make. The online P2P lending boom here in the UK from financial crisis onward gave people this opportunity. The end result, 10+ years in, has been subdued returns (relative to e.g. stocks) and crippling illiquidity, as you are exposed to all those late payments, defaults, and have no access to a functional secondary market. Honestly you're lucky if you can get most people to even use a separate savings account. I know many people who keep 100% of their savings in their current (checking) account.
- shadowgovt 6y agoLying in what sense?
- gruez 6y agoFractional reserve.
- jaywalk 6y agoLying about the fact that your money is actually there. Individually, the money in each account is at the bank. You can go withdraw all of the money in your account without any issue. But collectively, all of the money in all of the accounts is definitely not there.
- short_sells_poo 6y agoHint: every broker will do this. If you think any broker (let alone retail) will let the client's risk taking threaten their existence, you are deluding yourself. It's a little bit like insurance: as long as most clients take diversified risks and don't push the system to it's limits, the system works. When a significant portion (majority?) of the clients all pile into an increasingly hairy position, the broker will step in and prevent the clients exacerbating the situation further.
- victor106 6y agoDitto. Shutting down my account. Enough is enough. Robinhood has proven its intentions by its actions all the other things they say is just marketing and PR bullshit
- awb 6y agoChamath would agree with you: https://twitter.com/chamath/status/1354947541125611526?s=20 https://twitter.com/chamath/status/1354947541125611526?s=20
- disgrunt 6y agoI'd be more concerned with how illiquid Robin Hood apparently is here.
- walleeee 6y agoSince finance itself is a socially convenient system of alignment fabrication, you might as well start subsistence farming. It's turtles all the way down. You could say trust emerges when people agree to believe in a shared lie.