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Do you believe that about all the brokerages that halted trading on GME et al? Or did Robinhood call a halt due to insolvency, and coincidentally, other brokera

Do you believe that about all the brokerages that halted trading on GME et al? Or did Robinhood call a halt due to insolvency, and coincidentally, other brokerages called a halt for unrelated reasons?

pmiller2 6y ago
Suppose you're right. How do you explain the $1B loan Robinhood took out?
- rdiddly 6y ago
  Taking out a loan, in itself, doesn't indicate insolvency. If it did, nobody would lend, ever. Now defaulting on a loan - that does indicate insolvency.
  - valuearb 6y ago
    You are correct. But an emergency loan indicates increased risk of insolvency. Robinhood isn’t going to borrow money they don’t need, and raise their interest costs. Likely the loans were preexisting credit lines, so they were obligated to find Robinhood upon request. The question is whether it will be enough and if not, whether new loans or investment will be available. Sitting on the outside it’s impossible to know whether this is an eminently comfortable buffer or a last finger in the dike.
valuearb 6y ago
I suspect if they didn’t have liquidity issues, they were just quicker that Robinhood to prevent them. I’m sure they didn’t want to tie up a huge part of their collateral in BME.
- xenadu02 6y ago
  You think eTrade, owned by Morgan Stanley, had liquidity problems?? That's so outrageous it beggars belief. There was absolutely some kind of coordinated manipulation happening. It is telling that the SEC's statement seems to have scared at least some of the brokers away from trying to prohibit buying (but allowing selling). The market has circuit breakers for a reason and brokers can and do stop all trades on a symbol in certain extraordinary circumstances. But only allowing selling is basically forcing the price down and obvious manipulation.
  - valuearb 6y ago
    I doubt E-Trade has access to much of Morgan Stanley’s liquidity, that would be absurd. Even they have limitations their parent enforces, and it would be really inefficient to operate with a massive surplus of collateral. But again I said they may just not have liked tying up so much collateral for a single trade. Different companies with different needs. And restricting purchases while allowing selling is the fastest way to reduce your collateral requirements. Every share sold is money the DTCC owes you, every purchase is money you owe them. Lastly, it wasn’t a very useful conspiracy if restricting purchases on this rabble of minor brokers was the method. You could still buy GME across over 90% of the brokers by client base. Even my broker, InteractiveBrokers, only restricted options. I could buy all day long. Or go long all day by.

pmiller2 6y ago

Suppose you're right. How do you explain the $1B loan Robinhood took out?

rdiddly 6y ago
Taking out a loan, in itself, doesn't indicate insolvency. If it did, nobody would lend, ever. Now defaulting on a loan - that does indicate insolvency.
- valuearb 6y ago
  You are correct. But an emergency loan indicates increased risk of insolvency. Robinhood isn’t going to borrow money they don’t need, and raise their interest costs. Likely the loans were preexisting credit lines, so they were obligated to find Robinhood upon request. The question is whether it will be enough and if not, whether new loans or investment will be available. Sitting on the outside it’s impossible to know whether this is an eminently comfortable buffer or a last finger in the dike.

valuearb 6y ago

I suspect if they didn’t have liquidity issues, they were just quicker that Robinhood to prevent them. I’m sure they didn’t want to tie up a huge part of their collateral in BME.

xenadu02 6y ago
You think eTrade, owned by Morgan Stanley, had liquidity problems?? That's so outrageous it beggars belief. There was absolutely some kind of coordinated manipulation happening. It is telling that the SEC's statement seems to have scared at least some of the brokers away from trying to prohibit buying (but allowing selling). The market has circuit breakers for a reason and brokers can and do stop all trades on a symbol in certain extraordinary circumstances. But only allowing selling is basically forcing the price down and obvious manipulation.
- valuearb 6y ago
  I doubt E-Trade has access to much of Morgan Stanley’s liquidity, that would be absurd. Even they have limitations their parent enforces, and it would be really inefficient to operate with a massive surplus of collateral. But again I said they may just not have liked tying up so much collateral for a single trade. Different companies with different needs. And restricting purchases while allowing selling is the fastest way to reduce your collateral requirements. Every share sold is money the DTCC owes you, every purchase is money you owe them. Lastly, it wasn’t a very useful conspiracy if restricting purchases on this rabble of minor brokers was the method. You could still buy GME across over 90% of the brokers by client base. Even my broker, InteractiveBrokers, only restricted options. I could buy all day long. Or go long all day by.