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> This is incompetence Is it? I thought it was just a liquidity issue at the clearing house level. They had to temporarily ban selling. We get it, it benefitte

> This is incompetence Is it? I thought it was just a liquidity issue at the clearing house level. They had to temporarily ban selling. We get it, it benefitted the "evil" hedge funds to the tune of billions. Wildly coincidental to the point that it's being treated as if it was corruption. But if it really was a liquidity issue at the clearing house level, what could have been done differently? From how I understand it, they were floating people who where long GME on unsettled transactions credit wise. If the entity you have a credit line with says "you're about to be in danger to the terms you agreed upon unless you fix the problem", they simply fixed the problem (stop allowing more people to rack up GME shares on their credit). Sucks but that's the reality.

manfredo 6y ago
I didn't know about any liquidity issues. But of that's the case then yeah, this is just regulatory limits kicking in. Though one could make the argument that they should have banned the sale of all stocks, not just GME, AMC, and other stocks targeted by the reddit short squeeze.
- pb7 6y ago
  I think Robinhood fucked up greatly here in the eyes of their customers, even if they had no real choice in the matter, but they stopped the buying of a dozen or more stocks (e.g. AAL which was not at all targeted by WSB) that had their reserve requirements increased. I believe normally its in the single digit percent, many of them were increased up to 100%.
- MuffinFlavored 6y ago
  > I didn't know about any liquidity issues. Of course not. There were 9,000,000 people in a subreddit convincing each other the stock was headed to the moon getting thousands of upvotes. The real information on what was going on (like the shares short / float metrics being outdated by 15 days) were deeply buried.
- ratsmack 6y ago
  >liquidity issues Yes, there was. Robinhood was not meeting the deposit requirements of their clearing house which is why they required a huge cash infusion from Citadel.
iso1631 6y ago
They stopped people with cleared credit from buying stock
- MuffinFlavored 6y ago
  because they themselves were swamped with 10,000 other users who did not have cleared credit who were buying the stock
  - milesdyson_phd 6y ago
    Every single Robinhood user could have had $5M in cash in their accounts and they still would have had to suspend purchasing shares. Brokerages cannot use client funds for depository requirements. Every purchase transaction required Robinhood to cover 100% with their own cash until settlement.

manfredo 6y ago

I didn't know about any liquidity issues. But of that's the case then yeah, this is just regulatory limits kicking in. Though one could make the argument that they should have banned the sale of all stocks, not just GME, AMC, and other stocks targeted by the reddit short squeeze.

pb7 6y ago
I think Robinhood fucked up greatly here in the eyes of their customers, even if they had no real choice in the matter, but they stopped the buying of a dozen or more stocks (e.g. AAL which was not at all targeted by WSB) that had their reserve requirements increased. I believe normally its in the single digit percent, many of them were increased up to 100%.
MuffinFlavored 6y ago
> I didn't know about any liquidity issues. Of course not. There were 9,000,000 people in a subreddit convincing each other the stock was headed to the moon getting thousands of upvotes. The real information on what was going on (like the shares short / float metrics being outdated by 15 days) were deeply buried.
ratsmack 6y ago
>liquidity issues Yes, there was. Robinhood was not meeting the deposit requirements of their clearing house which is why they required a huge cash infusion from Citadel.

iso1631 6y ago

They stopped people with cleared credit from buying stock

MuffinFlavored 6y ago
because they themselves were swamped with 10,000 other users who did not have cleared credit who were buying the stock
- milesdyson_phd 6y ago
  Every single Robinhood user could have had $5M in cash in their accounts and they still would have had to suspend purchasing shares. Brokerages cannot use client funds for depository requirements. Every purchase transaction required Robinhood to cover 100% with their own cash until settlement.