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Just a reminder that robinhood prevented people buying certain stocks while allowing them to sell, causing many people to lose money, but supporting the short s

by flefto 5y ago

Just a reminder that robinhood prevented people buying certain stocks while allowing them to sell, causing many people to lose money, but supporting the short selling hedge funds, whilst claiming to be “investment for the people”. Possibly they are rushing to IPO before facing court. I would neither buy shares IN Robinhood nor would I buy shares using a Robinhood account.

jw1224 5y ago
This is very important to know. Robinhood actively colluded with their hedge fund owners, by blocking buy orders — but not sell orders — under the guise of “increased margin requirements”. In fact, those margin requirements were being set by Robinhood’s prime broker and investor, Citadel Securities — who were set to lose billions if retail were allowed to keep buying.
- flefto 5y ago
  Robinhood’s own customers got tossed to the dogs because Citadel told the CEO of Robinhood to manipulate the market. If you have a Robinhood account then you risk Robinhood making decision that lose you money so that the hedge funds make money.
- jasode 5y ago
  >under the guise of “increased margin requirements”. >In fact, those margin requirements were being set by Robinhood’s prime broker and investor, Citadel Securities To clarify, you're saying NSCC(DTCC) National Securities Clearing Corporation was instructed by Citadel to increase margin requirements? Example story: https://www.cnn.com/2021/02/01/investing/robinhood-gamestop-vlad-tenev/index.html https://www.cnn.com/2021/02/01/investing/robinhood-gamestop-... Regardless of whether NSCC acted independently or under secret pressure from Citadel, what could Robinhood have done differently? If they didn't have the billions in the bank to control their destiny, what other options do they have? If the clearing house cuts off Robinhood's trade settlement, what are the realistic alternatives?
  - mandmandam 5y ago
    >Regardless of whether NSCC acted independently or under secret pressure from Citadel, what could Robinhood have done differently? If they didn't have the billions in the bank to control their destiny, what other options do they have? If the clearing house cuts off Robinhood's trade settlement, what are the realistic alternatives? What is integrity?
vkou 5y ago
Just a reminder that Robinhood didn't prevent this. Automatic increases to clearing house collateral requirements prevented this. If Robinhood allowed those trades to go through, they'd have been cut off from the clearing houses, and none of their customers would have been able to perform any trades. Unfortunately, due to the low level of public understanding of how stock trades actually settle, the conspiracy narrative you're presenting was the one that made it into the public consciousness. There's no such thing as an instant stock trade. Retail brokerages are a leaky abstraction over what is actually an incredibly messy settlement layer. This abstraction holds when everything is normal, and leaks when stock prices become too volatile.
- jw1224 5y ago
  No, Robinhood’s collateral requirements were increased by their clearing house only because their clearing house were on the hook to lose billions to retail investors during January’s short squeezes. The same clearing house used by Robinhood were the same people illegally naked-shorting GME. This is collusion, plain and simple. No part of this is representative of the “free” market.
  - vkou 5y ago
    Nonsense. Clearing houses don't lose anything during a short squeeze, as long as funds committed to a trade actually clear. They aren't the ones on the hook for a short exploding. They raise their collateral requirements during a period of high volatility. As it turns out, when you run a zero-fee brokerage, you don't just have a couple of extra billions of dollars lying around that you can put up as collateral on a moment's notice. > illegally naked-shorting GME. You don't understand how shorts work. You don't need anyone doing a naked short for a stock to exceed 100% short. This has been explained hundreds of times, both here, and on Reddit.
    - deleted 5y ago
      [deleted]
    - jw1224 5y ago
      > The only people allowed to naked short are market makers The SEC made naked short selling illegal after the 2008 financial crisis. Market makers are not allowed to naked short. > Clearing houses don't lose anything during a short squeeze, as long as funds committed to a trade actually clear Exactly my point — as long as funds clear, which they were at risk of not doing, thus putting clearing houses like the DTCC on the hook, in the event of a margin call. Let me break it down: - Melvin Capital were aggressively shorting GME - Retail investors used Robinhood to take advantage of a short squeeze opportunity - During the short squeeze, Citadel (who partly own Melvin Capital) bailed-out Melvin with a $2.8bn investment - Citadel is Robinhood's prime brokerage, paying them for preferential order flow - Citadel's global Head of Operations is on the board of the DTCC, the clearing house responsible for increasing collateral requirements - As a market maker, Citadel care a huge amount about GME exploding, because if Melvin Capital were margin-called, Citadel end up holding the bag - If Citadel are margin-called themselves, the DTCC clearing house end up holding the bag. This is really just the tip of the iceberg. I'm consistently surprised at how defensive comments on HN seem to be towards hedge funds and the whole short-squeeze debacle — which is still very much ongoing. I can happily point anyone with an open mind in the direction of excellent research summarising the ongoing situation, and there's mounds of evidence indicating hedge funds never actually covered in January. Not to mention the math on vote tallies in GME's latest 8-K filing from 2 days ago clearly proves more GME shares exist than should be mathematically possible, enabled only by naked short sellers who never covered. Oh, and whilst I'm at it, their 8-K also disclosed that they've been working with the SEC since May to assist them with an active investigation in to market manipulation. Doesn't get much more obvious than that, does it? But if it's easier to turn a blind eye, then each to their own.
Traster 5y ago
Is there any actual evidence this is true beyond just internet accusations?
- ruairispain 5y ago
  There is evidence, was involved in it. Someone else took a screenshot. https://i.redd.it/86xuz0p7w2e61.jpg https://i.redd.it/86xuz0p7w2e61.jpg RH is a front for organised crime, selling data to Citadel so the can front run retailers trades. Hope to see Senate action on it at some point.
  - Traster 5y ago
    That's not evidence that RH was: > supporting the short selling hedge funds Just to be clear: Robinhood claims that they prevented buying certain stocks because of increase collateral requirements by DTCC due to high volatility. Do you have any evidence that's untrue. Let's establish that before we move on to the claim that Citadel front-runs retail flow.
    - Miner49er 5y ago
      From my understanding, the reason the DTCC raised collaterals so heavily was mostly due to the risk on the short side. So they were protecting the hedge funds by protecting themselves, and it carried on to Robinhood. So Robinhood didn't really have a choice, but they still were protecting the shorts in the end.
      - vkou 5y ago
        And that's what happens when you play financial games you don't understand. If your strategy for driving a short squeeze, or a pump-and-dump does not take into account counterparty risk, you are going to get taken to the cleaners. When you making money causes the brokerage you are using to be unable to execute that trade, this is 100% your fault. As the saying goes, don't invest in financial instruments you don't understand. Entering a long position in a volatile, high-volume stock through a discount brokerage was a financial instrument that most of /wsb did not understand, and it blew up in its face.

by flefto 5y ago

jw1224 5y ago

This is very important to know. Robinhood actively colluded with their hedge fund owners, by blocking buy orders — but not sell orders — under the guise of “increased margin requirements”. In fact, those margin requirements were being set by Robinhood’s prime broker and investor, Citadel Securities — who were set to lose billions if retail were allowed to keep buying.

flefto 5y ago
Robinhood’s own customers got tossed to the dogs because Citadel told the CEO of Robinhood to manipulate the market. If you have a Robinhood account then you risk Robinhood making decision that lose you money so that the hedge funds make money.
jasode 5y ago
>under the guise of “increased margin requirements”. >In fact, those margin requirements were being set by Robinhood’s prime broker and investor, Citadel Securities To clarify, you're saying NSCC(DTCC) National Securities Clearing Corporation was instructed by Citadel to increase margin requirements? Example story: https://www.cnn.com/2021/02/01/investing/robinhood-gamestop-vlad-tenev/index.html https://www.cnn.com/2021/02/01/investing/robinhood-gamestop-... Regardless of whether NSCC acted independently or under secret pressure from Citadel, what could Robinhood have done differently? If they didn't have the billions in the bank to control their destiny, what other options do they have? If the clearing house cuts off Robinhood's trade settlement, what are the realistic alternatives?
- mandmandam 5y ago
  >Regardless of whether NSCC acted independently or under secret pressure from Citadel, what could Robinhood have done differently? If they didn't have the billions in the bank to control their destiny, what other options do they have? If the clearing house cuts off Robinhood's trade settlement, what are the realistic alternatives? What is integrity?

vkou 5y ago

Just a reminder that Robinhood didn't prevent this. Automatic increases to clearing house collateral requirements prevented this. If Robinhood allowed those trades to go through, they'd have been cut off from the clearing houses, and none of their customers would have been able to perform any trades. Unfortunately, due to the low level of public understanding of how stock trades actually settle, the conspiracy narrative you're presenting was the one that made it into the public consciousness. There's no such thing as an instant stock trade. Retail brokerages are a leaky abstraction over what is actually an incredibly messy settlement layer. This abstraction holds when everything is normal, and leaks when stock prices become too volatile.

jw1224 5y ago
No, Robinhood’s collateral requirements were increased by their clearing house only because their clearing house were on the hook to lose billions to retail investors during January’s short squeezes. The same clearing house used by Robinhood were the same people illegally naked-shorting GME. This is collusion, plain and simple. No part of this is representative of the “free” market.
- vkou 5y ago
  Nonsense. Clearing houses don't lose anything during a short squeeze, as long as funds committed to a trade actually clear. They aren't the ones on the hook for a short exploding. They raise their collateral requirements during a period of high volatility. As it turns out, when you run a zero-fee brokerage, you don't just have a couple of extra billions of dollars lying around that you can put up as collateral on a moment's notice. > illegally naked-shorting GME. You don't understand how shorts work. You don't need anyone doing a naked short for a stock to exceed 100% short. This has been explained hundreds of times, both here, and on Reddit.
  - deleted 5y ago
    [deleted]
  - jw1224 5y ago
    > The only people allowed to naked short are market makers The SEC made naked short selling illegal after the 2008 financial crisis. Market makers are not allowed to naked short. > Clearing houses don't lose anything during a short squeeze, as long as funds committed to a trade actually clear Exactly my point — as long as funds clear, which they were at risk of not doing, thus putting clearing houses like the DTCC on the hook, in the event of a margin call. Let me break it down: - Melvin Capital were aggressively shorting GME - Retail investors used Robinhood to take advantage of a short squeeze opportunity - During the short squeeze, Citadel (who partly own Melvin Capital) bailed-out Melvin with a $2.8bn investment - Citadel is Robinhood's prime brokerage, paying them for preferential order flow - Citadel's global Head of Operations is on the board of the DTCC, the clearing house responsible for increasing collateral requirements - As a market maker, Citadel care a huge amount about GME exploding, because if Melvin Capital were margin-called, Citadel end up holding the bag - If Citadel are margin-called themselves, the DTCC clearing house end up holding the bag. This is really just the tip of the iceberg. I'm consistently surprised at how defensive comments on HN seem to be towards hedge funds and the whole short-squeeze debacle — which is still very much ongoing. I can happily point anyone with an open mind in the direction of excellent research summarising the ongoing situation, and there's mounds of evidence indicating hedge funds never actually covered in January. Not to mention the math on vote tallies in GME's latest 8-K filing from 2 days ago clearly proves more GME shares exist than should be mathematically possible, enabled only by naked short sellers who never covered. Oh, and whilst I'm at it, their 8-K also disclosed that they've been working with the SEC since May to assist them with an active investigation in to market manipulation. Doesn't get much more obvious than that, does it? But if it's easier to turn a blind eye, then each to their own.

Traster 5y ago

Is there any actual evidence this is true beyond just internet accusations?

ruairispain 5y ago
There is evidence, was involved in it. Someone else took a screenshot. https://i.redd.it/86xuz0p7w2e61.jpg https://i.redd.it/86xuz0p7w2e61.jpg RH is a front for organised crime, selling data to Citadel so the can front run retailers trades. Hope to see Senate action on it at some point.
- Traster 5y ago
  That's not evidence that RH was: > supporting the short selling hedge funds Just to be clear: Robinhood claims that they prevented buying certain stocks because of increase collateral requirements by DTCC due to high volatility. Do you have any evidence that's untrue. Let's establish that before we move on to the claim that Citadel front-runs retail flow.
  - Miner49er 5y ago
    From my understanding, the reason the DTCC raised collaterals so heavily was mostly due to the risk on the short side. So they were protecting the hedge funds by protecting themselves, and it carried on to Robinhood. So Robinhood didn't really have a choice, but they still were protecting the shorts in the end.
    - vkou 5y ago
      And that's what happens when you play financial games you don't understand. If your strategy for driving a short squeeze, or a pump-and-dump does not take into account counterparty risk, you are going to get taken to the cleaners. When you making money causes the brokerage you are using to be unable to execute that trade, this is 100% your fault. As the saying goes, don't invest in financial instruments you don't understand. Entering a long position in a volatile, high-volume stock through a discount brokerage was a financial instrument that most of /wsb did not understand, and it blew up in its face.