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A friend is seeing a message from Revolut saying that the reason is due to increased capital requirements, and not something they have done of their own volitio

A friend is seeing a message from Revolut saying that the reason is due to increased capital requirements, and not something they have done of their own volition. > Trading Update for GME and AMC > Unfortunately, our broker-dealer in the US, DriveWealth, can no longer offer Buys on GameStop (NYSE: GME) and AMC Entertainment (NYSE: AMC) due to increased capital requirements set by the Depository Trust Company (DTC) in the US. > While we apologise for the inconvenience this may cause, this is not a decision Revolut has made. As DriveWealth is our broker-dealer, we can only reflect the stocks they make available. We will however keep you informed as and when this situation changes. > For customers with no holdings in these 2 stocks, neither GME nor AMC will appear in search. Please check the email we are sending out to all Revolut Trading Ltd customers for additional information about this situation. > Capital at risk. Share prices can go up as well as down and you may get back less than what you initially paid.

Hamuko 6y ago
Isn't that what Robinhood was also saying?
- jstanley 6y ago
  Yes.
- belval 6y ago
  After a while yes, what caused the initial issue was their initial press release that made no mention of not having enough money to cover transactions for GME/AMC. They said it was to "protect their users", which is what triggered the widespread outrage.
- anonu 6y ago
  RH does their own custody & clearing, so the DTCC was telling them directly what type of collateral they needed to post. Companies like Revolut outsource this function to DriveWealth, which coincidentally are the backend for many trading-focused fintechs. So there is 1 level of indirection. On the other hand - not too clear why everyone is claiming some massive conspiracy. There are rules around liquidity and collateral and they are directly tied to volatility of a stock.
  - Jommi 6y ago
    I thought they used apexclearing
    - anonu 6y ago
      https://robinhood.com/us/en/support/articles/whats-clearing-by-robinhood/ https://robinhood.com/us/en/support/articles/whats-clearing-... They are self-clearing.
- at-fates-hands 6y ago
  Nope. They were pretty vague about why they did it: "We continuously monitor the markets and make changes where necessary. In light of recent volatility, we are restricting transactions for certain securities to position closing only." The statement, which was posted on Robinhood's websiteand sent via email to its millions of users, also went on to say, "Amid significant market volatility, it's important as ever that we help customers stay informed." https://www.fool.com/the-ascent/buying-stocks/articles/why-did-robinhood-shut-down-gamestop-trading/ https://www.fool.com/the-ascent/buying-stocks/articles/why-d... A lot of people in finance said they should have said they didn't have the capital to cover these positions instead of what they did say. I'm pretty sure they would've faced the same rage mob regardless of what they said - it was what they did that got people so fired up. Here's the full statement from their site: https://blog.robinhood.com/news/2021/1/28/keeping-customers-informed-through-market-volatility https://blog.robinhood.com/news/2021/1/28/keeping-customers-...
deleted 6y ago
[deleted]
downandout 6y ago
DTCC [1] is increasing collateral requirements for these shares. Last week they raised them by over $9 billion, which is why Robinhood stopped the trading. So the question is...who at DTCC made the decision to raise the collateral requirements, and why? Was it discretionary, or was there a long-standing policy spelling out exactly when they raise collateral requirements? If I were a hedge manager having my career destroyed in a matter of minutes by a bunch of amateurs, I'd pressure someone with the power to cause the halt of trading across the market - not just a single brokerage. So while it is not a smoking gun of any wrongdoing, if wrongdoing has occurred, it occurred between a hedge fund and DTCC. [1] https://www.dtcc.com/ https://www.dtcc.com/

Hamuko 6y ago

Isn't that what Robinhood was also saying?

jstanley 6y ago
Yes.
belval 6y ago
After a while yes, what caused the initial issue was their initial press release that made no mention of not having enough money to cover transactions for GME/AMC. They said it was to "protect their users", which is what triggered the widespread outrage.
anonu 6y ago
RH does their own custody & clearing, so the DTCC was telling them directly what type of collateral they needed to post. Companies like Revolut outsource this function to DriveWealth, which coincidentally are the backend for many trading-focused fintechs. So there is 1 level of indirection. On the other hand - not too clear why everyone is claiming some massive conspiracy. There are rules around liquidity and collateral and they are directly tied to volatility of a stock.
- Jommi 6y ago
  I thought they used apexclearing
  - anonu 6y ago
    https://robinhood.com/us/en/support/articles/whats-clearing-by-robinhood/ https://robinhood.com/us/en/support/articles/whats-clearing-... They are self-clearing.
at-fates-hands 6y ago
Nope. They were pretty vague about why they did it: "We continuously monitor the markets and make changes where necessary. In light of recent volatility, we are restricting transactions for certain securities to position closing only." The statement, which was posted on Robinhood's websiteand sent via email to its millions of users, also went on to say, "Amid significant market volatility, it's important as ever that we help customers stay informed." https://www.fool.com/the-ascent/buying-stocks/articles/why-did-robinhood-shut-down-gamestop-trading/ https://www.fool.com/the-ascent/buying-stocks/articles/why-d... A lot of people in finance said they should have said they didn't have the capital to cover these positions instead of what they did say. I'm pretty sure they would've faced the same rage mob regardless of what they said - it was what they did that got people so fired up. Here's the full statement from their site: https://blog.robinhood.com/news/2021/1/28/keeping-customers-informed-through-market-volatility https://blog.robinhood.com/news/2021/1/28/keeping-customers-...

deleted 6y ago

[deleted]

downandout 6y ago

DTCC [1] is increasing collateral requirements for these shares. Last week they raised them by over $9 billion, which is why Robinhood stopped the trading. So the question is...who at DTCC made the decision to raise the collateral requirements, and why? Was it discretionary, or was there a long-standing policy spelling out exactly when they raise collateral requirements? If I were a hedge manager having my career destroyed in a matter of minutes by a bunch of amateurs, I'd pressure someone with the power to cause the halt of trading across the market - not just a single brokerage. So while it is not a smoking gun of any wrongdoing, if wrongdoing has occurred, it occurred between a hedge fund and DTCC. [1] https://www.dtcc.com/ https://www.dtcc.com/