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it was the right thing to do on the moment, but what was wrong was: a) cutting corners and ending up in that position b) not being completely transparent abou

it was the right thing to do on the moment, but what was wrong was: a) cutting corners and ending up in that position b) not being completely transparent about what was happening

jimmydorry 5y ago
c) changing story multiple times in an attempt to save face. The CEO claimed they had no liquidity issues at all, then claimed they didn’t have enough money to meet margin requirements. Since then, we have found out that the DTCC that asked for more collateral recanted prior to market open but RH still discontinued retail buying anyway. Like an IT outages reflects poorly on a tech company, not being able to manage your books reflects poorly on a financial company.
gruez 5y ago
>a) cutting corners and ending up in that position What corners were cut? That they didn't prepare for a unprecedented buy wave in meme stocks along with a massive increase in deposit requirements?
- namdnay 5y ago
  Opening (and pushing) call options to a broad userbase without first ensuring they had the capital reserves and the access to additional funding to top-up those reserves it's a bit easy for robinhood to say "fuck the old banks, we don't need to be part of their network, and we're going to open complex derivative trading to everyone", and then as soon as everyone starts buying massive amounts of call options, suddenly realising that they need massive collateral and they don't have any partners to rely on
  - gruez 5y ago
    > Opening (and pushing) call options to a broad userbase without first ensuring they had the capital reserves and the access to additional funding to top-up those reserves Them opening/pushing options to their userbase was a long term move, but GME blowing up and deposit requirements spiking up was a short term event. Therefore those events aren't really contradictory. >fuck the old banks, we don't need to be part of their network That was part of their messaging? I haven't been keeping up with their blog posts, but AFAIK their messaging is closer to "democratizing finance" rather than "fuck the old banks".

it was the right thing to do on the moment, but what was wrong was: a) cutting corners and ending up in that position b) not being completely transparent about what was happening

jimmydorry 5y ago

c) changing story multiple times in an attempt to save face. The CEO claimed they had no liquidity issues at all, then claimed they didn’t have enough money to meet margin requirements. Since then, we have found out that the DTCC that asked for more collateral recanted prior to market open but RH still discontinued retail buying anyway. Like an IT outages reflects poorly on a tech company, not being able to manage your books reflects poorly on a financial company.

gruez 5y ago

>a) cutting corners and ending up in that position What corners were cut? That they didn't prepare for a unprecedented buy wave in meme stocks along with a massive increase in deposit requirements?

namdnay 5y ago
Opening (and pushing) call options to a broad userbase without first ensuring they had the capital reserves and the access to additional funding to top-up those reserves it's a bit easy for robinhood to say "fuck the old banks, we don't need to be part of their network, and we're going to open complex derivative trading to everyone", and then as soon as everyone starts buying massive amounts of call options, suddenly realising that they need massive collateral and they don't have any partners to rely on
- gruez 5y ago
  > Opening (and pushing) call options to a broad userbase without first ensuring they had the capital reserves and the access to additional funding to top-up those reserves Them opening/pushing options to their userbase was a long term move, but GME blowing up and deposit requirements spiking up was a short term event. Therefore those events aren't really contradictory. >fuck the old banks, we don't need to be part of their network That was part of their messaging? I haven't been keeping up with their blog posts, but AFAIK their messaging is closer to "democratizing finance" rather than "fuck the old banks".