4 ms·

This may be a perfectly good explanation, but if this is the case, why doesn't the Robinhood people release a statement explaining this instead of the puff piec

This may be a perfectly good explanation, but if this is the case, why doesn't the Robinhood people release a statement explaining this instead of the puff piece the CEO did for PR.

SpicyLemonZest 6y ago
WSB users are known to exploit Robinhood problems for fun. There was one case a few years back where they found a way to evade margin requirements and get arbitrarily high leverage, for example. If I were Vlad Tenev, I'd be seriously concerned that a detailed description of which kinds of trades cause problems for Robinhood would be used to collect WSB accolades by knocking the company over.
- thefounder 6y ago
  Quite a brush to put all wsb "accolades" in the same bucket. I could say some very nasty things about some ycombinator "accolades" as well.
- mancerayder 6y ago
  > WSB users are known That's a dubious way to refer to people. There are 7.5 million users in the sub at the moment.
azinman2 6y ago
They did: https://blog.robinhood.com/news/2021/1/29/what-happened-this-week https://blog.robinhood.com/news/2021/1/29/what-happened-this...
- negrit 6y ago
  After the CEO got caught lying on TV, that's unacceptable.
  - gruez 6y ago
    The "lied" bit is debatable because there's multiple ways of interpreting his statement. It could be "there's no liquidity issue [and we could have let GME stock trade freely without running into liquidity issues]" but also "there's no liquidity issue [anymore, because we stopped GME from being traded]". The former clearly favors WSB's narrative, so that's what everyone there believed, even though it's reading too much into the CEO's statement.
EGreg 6y ago
More to the point... why didn’t Robin Hood simply make the buys in those tickers REAL buys instead of margin buys and explain the situation?
- nrmitchi 6y ago
  So much of Robinhood's product is built on the facade of a margin-account-not-being-a-margin-account that that would be impractical. Doing so would have likely pissed people of more. "New sign up to Robinhood? Just started a transfer? Awesome! I know all our marketting material says 'trade right away', but actually you have to wait 2 days right now." "Just sell a bunch of other stock in order to buy GME? Well, unfortunately right now you can't use that money for 2 days. See you next week! Ps: thanks for the taxable event that you probably wouldn't have done if you understood that you'd have to wait!"
- phil21 6y ago
  Because that's not actually the problem. If it was just ACH deposit clearing time, I'm sure they could have found bridge money rather quickly for that as their ACH failure rate has to be tiny. The problem was clearing house margins. It went from a few percentage points every buy of GME to 100%. You cannot use customer money for these deposits, it must come from the brokerage firm's funds itself. I think it really needs to be discussed that there were multiple "liquidity" crunches for RH here, one far more significant than the other. You could have had every single buyer of GME locked and loaded with $100k of cash in their account for a month, but if they all bought GME last week for cash RH would still have the same exact margin requirement problem they have now with their clearing house. That they still had hundreds of billions of their customer's capital on deposit would have been irrelevant.
  - erik_seaberg 6y ago
    Why can't you use my money as collateral on the securities I told you to buy for me? Is this a "funds transfers used to be very slow" thing between the broker and the clearinghouse?
    - 6y ago
MrMan 6y ago
Because they are better at growth hacking than providing a service
np_tedious 6y ago
https://twitter.com/Camp4/status/1355701648182501378?s=19 https://twitter.com/Camp4/status/1355701648182501378?s=19 presents an argument about how they should have and how it might've been done well

This may be a perfectly good explanation, but if this is the case, why doesn't the Robinhood people release a statement explaining this instead of the puff piece the CEO did for PR.

SpicyLemonZest 6y ago

WSB users are known to exploit Robinhood problems for fun. There was one case a few years back where they found a way to evade margin requirements and get arbitrarily high leverage, for example. If I were Vlad Tenev, I'd be seriously concerned that a detailed description of which kinds of trades cause problems for Robinhood would be used to collect WSB accolades by knocking the company over.

thefounder 6y ago
Quite a brush to put all wsb "accolades" in the same bucket. I could say some very nasty things about some ycombinator "accolades" as well.
mancerayder 6y ago
> WSB users are known That's a dubious way to refer to people. There are 7.5 million users in the sub at the moment.

azinman2 6y ago

They did: https://blog.robinhood.com/news/2021/1/29/what-happened-this-week https://blog.robinhood.com/news/2021/1/29/what-happened-this...

negrit 6y ago
After the CEO got caught lying on TV, that's unacceptable.
- gruez 6y ago
  The "lied" bit is debatable because there's multiple ways of interpreting his statement. It could be "there's no liquidity issue [and we could have let GME stock trade freely without running into liquidity issues]" but also "there's no liquidity issue [anymore, because we stopped GME from being traded]". The former clearly favors WSB's narrative, so that's what everyone there believed, even though it's reading too much into the CEO's statement.

EGreg 6y ago

More to the point... why didn’t Robin Hood simply make the buys in those tickers REAL buys instead of margin buys and explain the situation?

nrmitchi 6y ago
So much of Robinhood's product is built on the facade of a margin-account-not-being-a-margin-account that that would be impractical. Doing so would have likely pissed people of more. "New sign up to Robinhood? Just started a transfer? Awesome! I know all our marketting material says 'trade right away', but actually you have to wait 2 days right now." "Just sell a bunch of other stock in order to buy GME? Well, unfortunately right now you can't use that money for 2 days. See you next week! Ps: thanks for the taxable event that you probably wouldn't have done if you understood that you'd have to wait!"
phil21 6y ago
Because that's not actually the problem. If it was just ACH deposit clearing time, I'm sure they could have found bridge money rather quickly for that as their ACH failure rate has to be tiny. The problem was clearing house margins. It went from a few percentage points every buy of GME to 100%. You cannot use customer money for these deposits, it must come from the brokerage firm's funds itself. I think it really needs to be discussed that there were multiple "liquidity" crunches for RH here, one far more significant than the other. You could have had every single buyer of GME locked and loaded with $100k of cash in their account for a month, but if they all bought GME last week for cash RH would still have the same exact margin requirement problem they have now with their clearing house. That they still had hundreds of billions of their customer's capital on deposit would have been irrelevant.
- erik_seaberg 6y ago
  Why can't you use my money as collateral on the securities I told you to buy for me? Is this a "funds transfers used to be very slow" thing between the broker and the clearinghouse?
  - 6y ago

MrMan 6y ago

Because they are better at growth hacking than providing a service

np_tedious 6y ago

https://twitter.com/Camp4/status/1355701648182501378?s=19 https://twitter.com/Camp4/status/1355701648182501378?s=19 presents an argument about how they should have and how it might've been done well