5 ms·
> “HSBC has no appetite for direct exposure to virtual currencies and limited appetite to facilitate products or securities that derive their value from VCs (vi
by Someone1234 6y ago
> “HSBC has no appetite for direct exposure to virtual currencies and limited appetite to facilitate products or securities that derive their value from VCs (virtual currencies),” HSBC said in a statement.
But you wouldn't be? This is a product literally called "InvestDirect" where private individuals are buying stocks and assuming all the risk.
If you don't want to offer margin on virtual currency products, more power to you, that is your risk. But if customers are buying with cash, it seems pretty suspect for the bank to claim that is increasing the bank's risk exposure.
Honestly it wouldn't be the worst idea to have a "Net Neutrality" for brokers.
- exit 6y ago> Honestly it wouldn't be the worst idea to have a "Net Neutrality" for brokers. and/or we could tokenize securities onto permissionless and decentralised ledgers and stop feeding the intermediaries note that a ledger with transaction validation rules which enforce KYC can still be permissionless and decentralised bitcoin isn't "permissioned" just because you need a valid signature to spend an output
- niceairport 6y agoMaybe they have issues with people taking on a margin that they cannot afford? Cryptocurrencies being as volatile as they are shorting them on a margin can result in high losses that HSBC prefers not to be involved with? Just a guess.
- ptero 6y agoNot impossible, but IMO highly unlikely: stocks, especially smaller ones can be way more volatile than any currency with over 1T market value. And you can still buy those on margin.
- niceairport 6y agoThat's true. Maybe something to do with regulations then? HSBC is already being accused of being involved with money laundering quite a lot. Also, what other coins except BTC have market cap >1T?
- ptero 6y agoI suspect regulation (or fear of impending one) is the likely culprit; but again, not sure. Re: size -- I was including regular fiat currencies, not just digitals.
- perl4ever 6y ago>you can still buy those on margin That is absolutely not the case in a categorical sense. Brokers can and do apply different margin requirements on a stock by stock or customer by customer basis. There's nothing out of the ordinary about a security not being marginable or having increased requirements due to risk assessment. For example, here is a list of stocks at one broker with particular margin requirements, and it says it "changes frequently": https://invest.ameritrade.com/cgi-bin/apps/u/MarginReq https://invest.ameritrade.com/cgi-bin/apps/u/MarginReq Given that there are hundreds starting with "A", I'd assume the entire list is in the thousands, of securities that have individual margin requirements. I think in fact the ticker GBTC which is a trust that owns Bitcoin isn't marginable.
- codetrotter 6y agoNote, the page you linked to requires login.
- perl4ever 6y agoWell, here is a public page (with just GME) that proves the point that they can and do apply requirements to individual stocks, anyway: https://www.tdameritrade.com/td-ameritrade-trading-restrictions-stocks.page https://www.tdameritrade.com/td-ameritrade-trading-restricti... Here's another with GME and AMC: https://www.schwab.com/margin-updates https://www.schwab.com/margin-updates But there are also lots of others you never heard of, that aren't mentioned.
- klodolph 6y agoDoesn't the market volume have a multiplicative effect, though? In other words, it's not just volatility, it's volatility x volume. Or something like that.
- gruez 6y agoI'm pretty sure bitcoin has less volatility than some of the meme stocks (eg. GME or AMC).
- elliekelly 6y agoKnowing absolutely nothing about this particular situation I’d be willing to bet this decision is a lingering side effect of HSBC’s most recent (and seemingly perpetual) AML issues. I suspect they’re trying to appear squeaky clean and an action like this is quick, easy to implement operationally, and looks good to regulators who are uneasy about cryptocurrency’s reputation for facilitating criminal activity online.
- deleted 6y ago[deleted]
- BelenusMordred 6y agoI don't see how kyc/aml applies to this particular stock over every single other ticker they will happily sell you? There's no difference, they aren't selling cryptocurrency here.
- londons_explore 6y agoBuying or shorting this stock to the tune of billions of dollars might be a good way for a drug dealer to mitigate the currency fluctuation risk to his big pile of illicit bitcoins stashed under his bed.
- Uw7yTcf36gTc 6y agoEasier and cheaper to do with Bitcoin futures
- AnthonyMouse 6y ago> I don't see how kyc/aml applies to this particular stock over every single other ticker they will happily sell you? There's no difference, they aren't selling cryptocurrency here. It's the equivalent of security theater. Do something conspicuous that they can spin as having done something about the problem. That serves their purpose regardless of whether it actually does any good or makes any sense. On top of that, cryptocurrency kind of competes with banks, so they have an excuse to cause trouble for the competition.
- petre 6y agoThey just have appetite for drug and weapons money laundring. https://www.theguardian.com/business/2012/dec/14/hsbc-money-laundering-fine-management https://www.theguardian.com/business/2012/dec/14/hsbc-money-...
- robjan 6y agoThis is one of the reasons that HSBC are so strict now.
- the_local_host 6y agoIf they're concerned about exposure, they could simply set the margin trading leverage below 1 (e.g. offering 0.1x leverage so that customers have to post $10 in margin to buy $1 in MicroStrategy shares).
- wutXthree 6y agoAre you saying someone would need to post more than the value of the share?
- the_local_host 6y ago> Are you saying someone would need to post more than the value of the share? Yes, as an alternative to not allowing the trade. If the bank considers something highly risky, it makes sense to protect themselves and the customer by making sure they've got some money locked up outside of the trade (a bankrupt customer is no longer a customer, after all). It would basically cap the percentage of net worth that they could put at risk, where they'd need to have $10 set aside for every $1 in the risky position.
- sokoloff 6y agoThere’s no need for a bank to nanny their customers. If you don’t want to book the trade, don’t book it. Going beyond that in some tortured logic to ensure they tie up extra money (possibly incurring unjustified margin calls on other positions) has almost exclusively downsides for HSBC.
- riffraff 6y agothis seems to clearly fall under "facilitate" tho.
- revel 6y agoThey already have a version of Net Neutrality for brokers: reg NMS. HSBC are well within their rights to refuse to accept bad orders. HSBC are exposed to specific regulatory risk not shared by US banks. Having a ton of customers go bust because a regulatory change nuked some meme stocks seems undesirable to me. If you don't like it you can always find another broker.
- deleted 6y ago[deleted]
- deleted 6y ago[deleted]
- kolinko 6y ago> If you don't like it you can find another broker It's like saying that net neutrality exists, because "if you don't like throttling you can find another ISP"
- jamespo 6y agoThere are a lot more brokers available than ISPs
- wutXthree 6y agoWhy would an exchange allow a "meme stock"?
- goatinaboat 6y agoMicroStrategy has been around since the 80s hasn't it? I thought they made business intelligence software. They are not some weird company that appeared overnight out of nowhere.
- powerapple 6y agoHSBC does a lot money laundry for rich people around the world, and now it is worrying about risks? I don't think so. But it is a telling for potential direction of US government is taking for bitcoin. HSBC is doing many things to please the US government, this may be one of them.
- JumpCrisscross 6y ago> if customers are buying with cash, it seems pretty suspect for the bank to claim that is increasing the bank's risk exposure Cash trades still expose brokers to volatility due to settlement. This policy is likely one part regulatory theatre and one part customer selection. Customers buying MicroStrategy stock are unlikely to be lucrative customers for the banking products HSBC hocks.
- kasey_junk 6y agoYeah if they were worried about settlement risk they could just not release funds/shares until they settle. But that’s probably harder to implement than a blanket ban and they have nothing to gain by catering to the meme shares crowd.
- JumpCrisscross 6y ago> if they were worried about settlement risk they could just not release funds/shares until they settle This doesn’t solve the problem of clearing collateral. That said, HSBC is a money centre bank. It isn’t worried about clearing collateral. The policy is almost certainly a filter. If you’re trading MicroStrategy, you’re probably not a fit for their banking and wealth management services.
- kasey_junk 6y agoNot to get too far in the weeds (as I agree with your point) but why wouldn’t holding the funds/shares until settlement cover the clearing? Especially given they control the order routing and risk systems involved?