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It feels like you're poisoning the well here. There's no conspiracy; there's a clear conflict of interest. Obviously, I don't know for a fact if RH acted on tha
by dvt 6y ago
It feels like you're poisoning the well here. There's no conspiracy; there's a clear conflict of interest. Obviously, I don't know for a fact if RH acted on that conflict of interest, but it seems crazy to me that people are willing to give financial institutions the benefit of the doubt after 2008. I'm personally not.
- creddit 6y ago> It feels like you're poisoning the well here. How do you mean? I don't quite understand in this context. RH wasn't the only broker to suspend trading in GME et al. Are all of the other brokers as equally beholden to Citadel? EDIT: I'd be more happy to believe in the possibility of a conspiracy at the DTCC level, but even then the logic seems fairly sound for collateral issues here.
- jcranmer 6y agoSo we should discount the evidence given by many independent actors that the issue behind Thursday's restriction of trades (that occurred on several independent retail platforms!) was a mundane issue regarding risk in clearance in favor of the hypothesis that RH was colluding^H^H^H^H^H^H^H^H taking the sword for other financial institutions, because... some financial people lied a decade ago? There's a perfectly rational explanation for what happened yesterday that is backed up with an understanding of how the financial system actually not works, not the pretense that is usually pretended by the public, and that doesn't involve a nefarious scheme to manipulate the market. Don't let your desire to vilify Robinhood and the financial system in general blind yourself from evidence to the contrary.
- dvt 6y ago> that occurred on several independent retail platforms Let's be fair: it only occurred on zero-commission platforms (Fidelity had no problems, for example) that sell their order flows to hedge funds -- some of which specialize in shorting. Is it really likely that they just all experienced "liquidity issues" at the same time and had to block just the buying of $AMC and $GME at the same time?
- jcranmer 6y agoYes. They all use the same underlying vendor to clear their actual trades, and that vendor raised the necessary collateral for all of its clients (the platforms) at the same time.
- dvt 6y agoAll platforms that blocked trading (sorry, I mean blocked buying) use different clearinghouses (WeBull is Apex, RH is Clearing by Robinhood, TD Ameritrade is TD Ameritrade Clearing), so I'm not sure if I buy this.
- jcranmer 6y agoWhen I say "clearing house", I mean DTCC. I'm not entirely sure what specific role it plays because I honestly don't care about that level of financial detail, but I do know that it's basically the entity that everything ultimately routes through.
- tptacek 6y agoI'm not an authority on any of this stuff but I believe you've confused clearing brokers with clearinghouses.
- maest 6y agoNit: RH is self clearing, most other retail brokerages use Apex. Both Apex and RH had the same collateral issues though.
- tptacek 6y agoBoth RH and Apex are NSCC member firms. The policy change came from NSCC (which is a part of DTCC).
- tonfa 6y agoIB had restricted trading on their pro offering (which does not sell order flows and doesn't have commission free trades)