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They are paid to route their order flow through the same firm that is heavily invested in shorting GameStop. The specific action I’m referring to is the banning

They are paid to route their order flow through the same firm that is heavily invested in shorting GameStop. The specific action I’m referring to is the banning of buying any more shares of $GME. Assuming everyone was playing by the rules, there should be no reason why margin requirements would increase for buyers of a stock but not for the shorts whose collective positions had recently become net-negative in the $10,000,000,000+ range. Robinhood may have simply been coerced to do this, but regardless, it eroded my trust in their ability to provide me with any share I want in any quantity I can afford. I and many other retail investors switched to bigger firms that won’t have liquidity issues, or enact arbitrary restrictions on stock purchases because of those issues or their close relationships with the billionaires on the other side of the trade.

gruez 5y ago
>there should be no reason why margin requirements would increase for buyers of a stock but not for the shorts source for margin requirement only increasing for longs but not shorts? Some non-nefarious explanations I can think off the top of my head: * hedge funds and their prime brokers has much easier access to credit than retail brokerages, which allow them fulfill their deposit obligations than a discount brokerage * since the hedge funds shorted GME a long time ago, the trades were already settled, so they're not subject to any deposit obligations (since deposit obligations only exist for unsettled trades)
- nrmitchi 5y ago
  > which allow them fulfill their deposit obligations than a discount brokerage Not even just easier access to new capital, but you can be sure they are able to move money faster than someone doing an ACH transaction to Robinhood that would take multiple days to actually settle.
nrmitchi 5y ago
> no reason why margin requirements would increase for buyers of a stock but not for the shorts There are tons of reasons why (counter-party risk, correlated risk of brokerages with high exposure, T+2 settlement, etc). You seem particularly keen on ignoring them though. > Robinhood may have simply been coerced to do this, but regardless Please stop ignoring known facts in favor of your conspiracy theory. > I and many other retail investors switched to bigger firms that won’t have liquidity issues It is completely logical that larger brokerages will be able to weather liquidity issues more easily. If this was super important to you, going with the discount brokerage was a poor decision in the first place.

gruez 5y ago

>there should be no reason why margin requirements would increase for buyers of a stock but not for the shorts source for margin requirement only increasing for longs but not shorts? Some non-nefarious explanations I can think off the top of my head: * hedge funds and their prime brokers has much easier access to credit than retail brokerages, which allow them fulfill their deposit obligations than a discount brokerage * since the hedge funds shorted GME a long time ago, the trades were already settled, so they're not subject to any deposit obligations (since deposit obligations only exist for unsettled trades)

nrmitchi 5y ago
> which allow them fulfill their deposit obligations than a discount brokerage Not even just easier access to new capital, but you can be sure they are able to move money faster than someone doing an ACH transaction to Robinhood that would take multiple days to actually settle.

nrmitchi 5y ago

> no reason why margin requirements would increase for buyers of a stock but not for the shorts There are tons of reasons why (counter-party risk, correlated risk of brokerages with high exposure, T+2 settlement, etc). You seem particularly keen on ignoring them though. > Robinhood may have simply been coerced to do this, but regardless Please stop ignoring known facts in favor of your conspiracy theory. > I and many other retail investors switched to bigger firms that won’t have liquidity issues It is completely logical that larger brokerages will be able to weather liquidity issues more easily. If this was super important to you, going with the discount brokerage was a poor decision in the first place.