4 ms·

I've only been sorta paying attention so i could be wrong but trades were not suspended or halted? only buying was prevented, and only for some brokerages?

csours 6y ago
Trades at the exchange level were repeatedly halted over the course of two weeks or so of the most volatile trading. Trades by certain brokers or apps were also notably halted on a Thursday due to lack of liquidity.
- ycombobreaker 6y ago
  Exchanges repeatedly halted for brief periods, based on predetermined rules. That part was nothing special, it's something like 5 minutes at a time, Buying to open new positions was blocked by some brokers in response to the the bump in collateral requirements they were required to fulfill. Some brokers were capable of blocking only margin account trading, but RH sounds like they blocked all buyers (plus their target market is margin account holders) DTCC is basically interested in ensuring that trade settlement occurs. They eliminate a lot of counterparty risk, but the flipside to that is that they clearly have discretion that surprises brokers.
freeone3000 6y ago
It's the collateral increase that caused Robinhood and other no-fee brokerages to halt trading. Brokerages which had the ability to charge for trades simply required more cash on hand and charged slightly more for the trade.
jimminy 6y ago
> Only buying was prevented, and only for some brokerages? The first part of that has been a common bit of misinformation. Opening new positions (either by attempting to buy shares of the stock, or entering into a new short position) is what was prevented. Closing positions (selling for owners of shares, or in the case of short obligations buying shares) was still allowed as closing reduces credit risk for the broker. The brokerages that did restrict, were smaller firms and did so to maintain liquidity for all assets, instead of allowing a vast amount of their capital to be consolidated largely into a few assets, due to the increased capital cost of clearing.
- lrem 6y ago
  Hasn't the largest brokerage also restricted? Edit: OK, I think the list I looked at is wrong. I meant Charles Schwab, but I don't know which one is _actually_ the largest.
  - jimminy 6y ago
    It's a fair question. A bunch of the larger guys like Charles Schwab and TD did implement restrictions as well. In their case, it may not have been a necessity to maintain liquidity for other assets, but capping the exposure to how much capital they were putting down for it probably still made sense.
    - 3001 6y ago
      Charles Schwab did not implement restrictions.They had a banner until last week saying that when you log in.Stop spreading misinformation
      - jimminy 6y ago
        > “The bottom line is that clients are still able to trade in GME, but we’ve put some restrictions on certain types of transactions in the interest of helping mitigate risk for our clients,” Schwab said Wednesday in a statement.[0] They very much did 3 weeks ago. Not to the same degree as the smaller brokerages, but they still put limitations on margin trading, and restrictions on options. [0] https://www.thinkadvisor.com/2021/01/29/gamestop-lawsuits-hit-schwab-td-ameritrade-interactive-brokers/ https://www.thinkadvisor.com/2021/01/29/gamestop-lawsuits-hi...
        onedognight 6y ago
        RH kept you from buying GME; Schwab did not. This is a huge difference.
        perl4ever 6y ago

csours 6y ago

Trades at the exchange level were repeatedly halted over the course of two weeks or so of the most volatile trading. Trades by certain brokers or apps were also notably halted on a Thursday due to lack of liquidity.

ycombobreaker 6y ago
Exchanges repeatedly halted for brief periods, based on predetermined rules. That part was nothing special, it's something like 5 minutes at a time, Buying to open new positions was blocked by some brokers in response to the the bump in collateral requirements they were required to fulfill. Some brokers were capable of blocking only margin account trading, but RH sounds like they blocked all buyers (plus their target market is margin account holders) DTCC is basically interested in ensuring that trade settlement occurs. They eliminate a lot of counterparty risk, but the flipside to that is that they clearly have discretion that surprises brokers.

freeone3000 6y ago

It's the collateral increase that caused Robinhood and other no-fee brokerages to halt trading. Brokerages which had the ability to charge for trades simply required more cash on hand and charged slightly more for the trade.

jimminy 6y ago

> Only buying was prevented, and only for some brokerages? The first part of that has been a common bit of misinformation. Opening new positions (either by attempting to buy shares of the stock, or entering into a new short position) is what was prevented. Closing positions (selling for owners of shares, or in the case of short obligations buying shares) was still allowed as closing reduces credit risk for the broker. The brokerages that did restrict, were smaller firms and did so to maintain liquidity for all assets, instead of allowing a vast amount of their capital to be consolidated largely into a few assets, due to the increased capital cost of clearing.

lrem 6y ago
Hasn't the largest brokerage also restricted? Edit: OK, I think the list I looked at is wrong. I meant Charles Schwab, but I don't know which one is _actually_ the largest.
- jimminy 6y ago
  It's a fair question. A bunch of the larger guys like Charles Schwab and TD did implement restrictions as well. In their case, it may not have been a necessity to maintain liquidity for other assets, but capping the exposure to how much capital they were putting down for it probably still made sense.
  - 3001 6y ago
    Charles Schwab did not implement restrictions.They had a banner until last week saying that when you log in.Stop spreading misinformation
    - jimminy 6y ago
      > “The bottom line is that clients are still able to trade in GME, but we’ve put some restrictions on certain types of transactions in the interest of helping mitigate risk for our clients,” Schwab said Wednesday in a statement.[0] They very much did 3 weeks ago. Not to the same degree as the smaller brokerages, but they still put limitations on margin trading, and restrictions on options. [0] https://www.thinkadvisor.com/2021/01/29/gamestop-lawsuits-hit-schwab-td-ameritrade-interactive-brokers/ https://www.thinkadvisor.com/2021/01/29/gamestop-lawsuits-hi...
      - onedognight 6y ago
        RH kept you from buying GME; Schwab did not. This is a huge difference.
        perl4ever 6y ago