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Saying you can only sell an asset but not buy is clearly going affect the price - regardless of the reason they did it. If a broker can't do their job they sho

by nimos 6y ago

Saying you can only sell an asset but not buy is clearly going affect the price - regardless of the reason they did it. If a broker can't do their job they should be forced to shut down completely until they can. Its pretty clear they don't have the liquidity/assets to handle their customers transactions. Letting brokers manipulate asset prices so they can avoid shutting down is a dangerous precedence to set. Really hope IB/RH and everyone else involved gets blown up by this.

valuearb 6y ago
They didn’t manipulate squat, they were fighting to save their life. If they were manipulating GME price they would have tried to pump it higher because each time it crashed their DTCC margin requirements went up. Driving GME price down before all these trades clear likely kills Robinhood.
- nimos 6y ago
  You really think stopping all buying and only allowing selling doesn't manipulate the price? I fully agree they were fighting to save their life. They can't handle their customer trades they should shut down until they can. Really they should have a system to only allow buying with settled funds. I'd be fine with that.
  - valuearb 6y ago
    Robinhood would have no customers if it implemented that system. And Robinhoods actions affect on GMEs price was likely small. The investing world is far larger than Robinhood, and Citadels own statistics show retail investors have been net sellers of GME since Monday. And again, every time that GMEs price crashed, Robinhood’s collateral requirements increased. Why would they try to kill themselves? Saying they manipulated GME trading is like saying one pirhana quitting the school is manipulating the feeding frenzy.
    - bordercases 6y ago
      What's so important with Robinhood making it out alive?
      - valuearb 6y ago
        If it doesn’t every Robinhood trader will have their account locked, and will only ever get paid a fraction of its value years from now. While that is more than fair for WSB traders who caused this mess, there are likely many hundreds of thousands of innocent customers who may have not bought one share in GME getting the same punishment.
        selestify 6y ago
        Really? You’re going to blame WSB rather than the hedge funds?
        cwkoss 6y ago
        haha, whenever I see sour grapes on this subject I wonder how red the author's portfolio is.
        valuearb 6y ago
        Hedge funds didn’t bury Robinhood under 100,000 bad reviews. Both the shorts and longs have a vested interest in keeping Robinhood afloat, but the WSB doesn’t seem to realize that.
        nimos 6y ago
        They are SIPC insured and every single regulation and capital requirement is designed so the broker fails first before any customer assets are at risk. Maybe some stuff in flight might have issues. It might create a liquidity crunch for some people but the idea that people would only get a fraction of their account is pretty much FUD.
        valuearb 6y ago
- yowlingcat 6y ago
  > They didn’t manipulate squat, they were fighting to save their life. These two things don't seem mutually exclusive. Actually, it seems like they'd be positively correlated. If you're fighting to save your life, aren't you more likely to resort to manipulation? And certainly when the cost of fines is several orders of magnitude less than the cost of closing your position at that point, it seems downright economical.
  - lovehashbrowns 6y ago
    It's entirely possible that RH doesn't care if the hedge fund loses all its money from the short and RH's buddy Citadel has to do a bail out to the tune of billions. In that scenario, RH still has to pause buy trades to save their own ass because they're running out of cash they need for the collateral that's required. Do note that RH is not the only one that paused buy trades. What I find more suspicious on RH's part is the timing of this all. RH should have known well before this week that GME was going to be a highly volatile stock. They should have already reached out to investors and banks for credit. They should have already had over a billion lined up to take on the volatility. I can understand other brokers like TD not being prepared because they might not be used to this Reddit-driven WSB volatility. RH, on the other hand, should have been ready. They've been aware of WSB and their antics since its inception. Yet they waited until Thursday to pause trades. That's where I start to go into conspiracy mode.
    - valuearb 6y ago
      Yes, infinite credit lines are easily arranged within a one week notice for a thinly capitalized broker. Dont you realize how big a $1B credit line is for a broker with so few assets such as Robinhood?
      - lovehashbrowns 6y ago
        Sorry just to fully understand, "credit lines" is the issue here, yes?
        6y ago
- urda 6y ago
  Illegally stopping all buying and only allowing sale of an asset or stock is market manipulation.
  - valuearb 6y ago
    There was nothing illegal in what Robinhood did, and every broker has the right to determine which instruments they are willing to sell or buy, at any time. Would you prefer Robinhood to implode so you have to wait years to get a small fraction of your account paid?
    - astrange 6y ago
      Brokers can't stop you from selling shares; they're your shares. Only the regulator can prevent sales. This made what RH did look unfair, but stopping buys was all they could do.
      - nimos 6y ago
        They could have limited buying to settled cash only. Orders of magnitude lower risk for them.
        astrange 6y ago
        The issue was between Robinhood and DTCC, and couldn't be resolved by having customers' settled cash because of the rules that forbid using the customers cash as collateral. Though it might have worked if it just slowed down buys enough.
        nimos 6y ago
        I'm not tuned in enough to know the exact relationship between RH and DTCC. I am tuned in enough to know there is a big difference between rolling up and asking for credit saying "Hey I've got X dollars in settled cash to buy Y. Please lend me some money." and saying "Hey I've lent out X dollars to buy Y. Please lend me some money."
paulgb 6y ago
I understand where you’re coming from, but if they halted selling and it came out that people were stuck in positions they couldn’t sell out of, people who wanted to sell and couldn’t would be even madder than people who wanted to buy are now (and might also have more legal standing.) Put another way, just because they have to halt buying, they don’t owe it to their customers who are holding to not allow other customers who want to sell to do so.
- nimos 6y ago
  Yes definitely, it would have been a total shitstorm. I think that shitstorm is preferable to allowing brokers to manipulate asset prices to protect themselves.
  - filoleg 6y ago
    >I think that shitstorm is preferable to allowing brokers to manipulate asset prices to protect themselves. I don't think that "biting off the nose to spite the face" is the approach I would prefer when it comes to my money. And, I think, a lot of people would agree with me this. Also, the whole "protect themselves" line sounds like pure outrage without thinking about the actual consequences. If your brokerage doesn't "protect itself" and implodes, what do you think is gonna happen to the value of your assets sitting in that brokerage (as well as the assets of everyone else in that brokerage)?
    - nimos 6y ago
      I doubt there are many people on RH that wouldn't get covered fully by SIPC even in the worst case. The idea that a broker going under wipes out all its members assets is just not true. MAYBE some stuff in flight would have issues. All the capital requirements and regulations are designed specifically so the brokerage fails first before customer assets are at risk. And again, still SIPC insured.
jariel 6y ago
It's actually rational. They're flooded and can't handle the scenario - but they definitely can't stop people from selling because that would be locking them into positions. I don't like RH as a company, but if they are facing difficulties, this is a reasonable thing to do. People are giving RH heat for this most recent policy but frankly that's not remotely the reason they should be upset. I for one, basically believe RH on it. The reason 'RH' is 'shady' is for their normal business practices. Frankly, the notion of 'free option trading for unsophisticated investors' sounds like the biggest hustle ever. Surely there are a lot of folk using it who really know what's what, but mostly not.
billylindeman 6y ago
Exactly. IMO if there was a liquidity issue / settlement issue they should've gone to the SEC / NYSE and HALTED trading. Not manipulate the market dynamics via volume. It's incredibly shady, and I've already withdrawn what assets I could from their platform. They destroyed their brand in one day.
KirillPanov 6y ago
Ding ding ding! You win all the internets. If the only way for you to comply with regulations is to violate other regulations (market manipulation), you must shut down your company. It's really quite simple. Robinhood is like some guy driving without a license who gets pulled over by a cop and says "but I'm ineligible for a driver's license, so obtaining one would be illegal fraud, so I didn't do that". Guess what buddy, you don't get to drive.

by nimos 6y ago

valuearb 6y ago

They didn’t manipulate squat, they were fighting to save their life. If they were manipulating GME price they would have tried to pump it higher because each time it crashed their DTCC margin requirements went up. Driving GME price down before all these trades clear likely kills Robinhood.

nimos 6y ago
You really think stopping all buying and only allowing selling doesn't manipulate the price? I fully agree they were fighting to save their life. They can't handle their customer trades they should shut down until they can. Really they should have a system to only allow buying with settled funds. I'd be fine with that.
- valuearb 6y ago
  Robinhood would have no customers if it implemented that system. And Robinhoods actions affect on GMEs price was likely small. The investing world is far larger than Robinhood, and Citadels own statistics show retail investors have been net sellers of GME since Monday. And again, every time that GMEs price crashed, Robinhood’s collateral requirements increased. Why would they try to kill themselves? Saying they manipulated GME trading is like saying one pirhana quitting the school is manipulating the feeding frenzy.
  - bordercases 6y ago
    What's so important with Robinhood making it out alive?
    - valuearb 6y ago
      If it doesn’t every Robinhood trader will have their account locked, and will only ever get paid a fraction of its value years from now. While that is more than fair for WSB traders who caused this mess, there are likely many hundreds of thousands of innocent customers who may have not bought one share in GME getting the same punishment.
      - selestify 6y ago
        Really? You’re going to blame WSB rather than the hedge funds?
        cwkoss 6y ago
        haha, whenever I see sour grapes on this subject I wonder how red the author's portfolio is.
      - valuearb 6y ago
        Hedge funds didn’t bury Robinhood under 100,000 bad reviews. Both the shorts and longs have a vested interest in keeping Robinhood afloat, but the WSB doesn’t seem to realize that.
      - nimos 6y ago
        They are SIPC insured and every single regulation and capital requirement is designed so the broker fails first before any customer assets are at risk. Maybe some stuff in flight might have issues. It might create a liquidity crunch for some people but the idea that people would only get a fraction of their account is pretty much FUD.
        valuearb 6y ago
yowlingcat 6y ago
> They didn’t manipulate squat, they were fighting to save their life. These two things don't seem mutually exclusive. Actually, it seems like they'd be positively correlated. If you're fighting to save your life, aren't you more likely to resort to manipulation? And certainly when the cost of fines is several orders of magnitude less than the cost of closing your position at that point, it seems downright economical.
- lovehashbrowns 6y ago
  It's entirely possible that RH doesn't care if the hedge fund loses all its money from the short and RH's buddy Citadel has to do a bail out to the tune of billions. In that scenario, RH still has to pause buy trades to save their own ass because they're running out of cash they need for the collateral that's required. Do note that RH is not the only one that paused buy trades. What I find more suspicious on RH's part is the timing of this all. RH should have known well before this week that GME was going to be a highly volatile stock. They should have already reached out to investors and banks for credit. They should have already had over a billion lined up to take on the volatility. I can understand other brokers like TD not being prepared because they might not be used to this Reddit-driven WSB volatility. RH, on the other hand, should have been ready. They've been aware of WSB and their antics since its inception. Yet they waited until Thursday to pause trades. That's where I start to go into conspiracy mode.
  - valuearb 6y ago
    Yes, infinite credit lines are easily arranged within a one week notice for a thinly capitalized broker. Dont you realize how big a $1B credit line is for a broker with so few assets such as Robinhood?
    - lovehashbrowns 6y ago
      Sorry just to fully understand, "credit lines" is the issue here, yes?
      - 6y ago
urda 6y ago
Illegally stopping all buying and only allowing sale of an asset or stock is market manipulation.
- valuearb 6y ago
  There was nothing illegal in what Robinhood did, and every broker has the right to determine which instruments they are willing to sell or buy, at any time. Would you prefer Robinhood to implode so you have to wait years to get a small fraction of your account paid?
  - astrange 6y ago
    Brokers can't stop you from selling shares; they're your shares. Only the regulator can prevent sales. This made what RH did look unfair, but stopping buys was all they could do.
    - nimos 6y ago
      They could have limited buying to settled cash only. Orders of magnitude lower risk for them.
      - astrange 6y ago
        The issue was between Robinhood and DTCC, and couldn't be resolved by having customers' settled cash because of the rules that forbid using the customers cash as collateral. Though it might have worked if it just slowed down buys enough.
        nimos 6y ago
        I'm not tuned in enough to know the exact relationship between RH and DTCC. I am tuned in enough to know there is a big difference between rolling up and asking for credit saying "Hey I've got X dollars in settled cash to buy Y. Please lend me some money." and saying "Hey I've lent out X dollars to buy Y. Please lend me some money."

paulgb 6y ago

I understand where you’re coming from, but if they halted selling and it came out that people were stuck in positions they couldn’t sell out of, people who wanted to sell and couldn’t would be even madder than people who wanted to buy are now (and might also have more legal standing.) Put another way, just because they have to halt buying, they don’t owe it to their customers who are holding to not allow other customers who want to sell to do so.

nimos 6y ago
Yes definitely, it would have been a total shitstorm. I think that shitstorm is preferable to allowing brokers to manipulate asset prices to protect themselves.
- filoleg 6y ago
  >I think that shitstorm is preferable to allowing brokers to manipulate asset prices to protect themselves. I don't think that "biting off the nose to spite the face" is the approach I would prefer when it comes to my money. And, I think, a lot of people would agree with me this. Also, the whole "protect themselves" line sounds like pure outrage without thinking about the actual consequences. If your brokerage doesn't "protect itself" and implodes, what do you think is gonna happen to the value of your assets sitting in that brokerage (as well as the assets of everyone else in that brokerage)?
  - nimos 6y ago
    I doubt there are many people on RH that wouldn't get covered fully by SIPC even in the worst case. The idea that a broker going under wipes out all its members assets is just not true. MAYBE some stuff in flight would have issues. All the capital requirements and regulations are designed specifically so the brokerage fails first before customer assets are at risk. And again, still SIPC insured.

jariel 6y ago

It's actually rational. They're flooded and can't handle the scenario - but they definitely can't stop people from selling because that would be locking them into positions. I don't like RH as a company, but if they are facing difficulties, this is a reasonable thing to do. People are giving RH heat for this most recent policy but frankly that's not remotely the reason they should be upset. I for one, basically believe RH on it. The reason 'RH' is 'shady' is for their normal business practices. Frankly, the notion of 'free option trading for unsophisticated investors' sounds like the biggest hustle ever. Surely there are a lot of folk using it who really know what's what, but mostly not.

billylindeman 6y ago

Exactly. IMO if there was a liquidity issue / settlement issue they should've gone to the SEC / NYSE and HALTED trading. Not manipulate the market dynamics via volume. It's incredibly shady, and I've already withdrawn what assets I could from their platform. They destroyed their brand in one day.

KirillPanov 6y ago

Ding ding ding! You win all the internets. If the only way for you to comply with regulations is to violate other regulations (market manipulation), you must shut down your company. It's really quite simple. Robinhood is like some guy driving without a license who gets pulled over by a cop and says "but I'm ineligible for a driver's license, so obtaining one would be illegal fraud, so I didn't do that". Guess what buddy, you don't get to drive.