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That's untrue. The DTCC waived the additional capital clearing charges for all clearing members prior to market open on January 28th. All DTCC clearing members

That's untrue. The DTCC waived the additional capital clearing charges for all clearing members prior to market open on January 28th. All DTCC clearing members satisfied their requirements before the market opened. EDIT: Updated with source. I'm curious about the downvotes. 1. Page 4. https://www.dtcc.com/-/media/Files/PDFs/DTCC-Statement-February-2021-Mike-Bodson.pdf https://www.dtcc.com/-/media/Files/PDFs/DTCC-Statement-Febru...

gruez 5y ago
>The DTCC waived the additional capital clearing charges for all clearing members prior to market open on January 28th. Source? And for how long? >All DTCC clearing members satisfied their requirements before the market opened. That says nothing about the requirements they'll face later, as a result of trades made on the 28th.
- tptacek 5y ago
  This is a WSB conspiracy theory. What in fact seems to have happened (I'm going from a reported account in Fortune) is that the NSCC substantially waved a multi-billion-dollar collateral call that would have bankrupted Robinhood because they halted trading in the meme stocks at question. WSB has taken this to mean that NSCC was unconcerned with the collateral risk.
  - oakwhiz 5y ago
    What evidence do you have that the NSCC waiver was conditional on a voluntary trade halt? I haven't been able to find the article that you mentioned
    - kasey_junk 5y ago
      https://www.google.com/amp/s/fortune.com/2021/02/02/robinhood-gamestop-restricted-trading-meme-stocks-gme-amc-vlad-tenev-nscc/amp/ https://www.google.com/amp/s/fortune.com/2021/02/02/robinhoo...
      - oakwhiz 5y ago
        The article quotes a third party source who claims "According to the source close to the NSCC, the lower amount came about because of Robinhood’s decision to limit trading in GameStop and other meme shares." but then the article goes on to directly say "While Robinhood did speak with executives at NSCC, the conversation entailed confirming that limiting the stock sales would count toward reducing its $3 billion collateral demand—but did not result in the amount being reduced." I don't believe this is good counter evidence as mentioned in the above comment, it seems self contradictory if anything. How could it be conditional if there was no negotiations, yet the entire thing was waived on a discretional basis?
  - zenbane 5y ago
    Rubbish. TD Ameritrade, WeBull and half a dozen other brokers with gigantic balance sheets also suspended trading. This was a rug pull executed by Robinhood on behalf of it's clients.
    - tptacek 5y ago
      I've read this 3 times trying to figure out how you didn't just pose a self-refuting rebuttal.
- oakwhiz 5y ago
  Robinhood was able to raise 1 billion dollars in capital within a very short time frame to cover any later requirements. It might be a stretch to say that it was easy, but since it is being used for collateral (very liquid), they would hypothetically have an easier proposition to raise that capital than if they were using it to grow their business. Source: https://www.ft.com/content/9a1b24e6-0433-462a-a860-c2504ea565e4 https://www.ft.com/content/9a1b24e6-0433-462a-a860-c2504ea56... Excerpt: "Robinhood, the online brokerage at the centre of wild trading in equities this week, has raised more than $1bn from its existing investors and tapped credit lines from banks to shore up its financial position after a turbulent four days. The company has drawn down at least several hundred million dollars via a credit facility with banks led by JPMorgan and including Goldman Sachs, Morgan Stanley, Barclays and Wells Fargo, according to people familiar with the move."
  - tptacek 5y ago
    They raised $1B against a $3B collateral call. Posted collateral also isn't "very liquid"; the whole point of that money is that if shit goes sideways --- and everything was going sideways at Robinhood --- that money will get spent making counterparties whole. Robinhood couldn't just give the money back to its lenders.
    - oakwhiz 5y ago
      I maintain that collateral is very liquid as it increases and decreases every single day and is a product of risk and volume. Collateral has two "outs" where one is simply reducing risk or waiting for risk to go away, and the other is to reduce the volume of the "hot" positions or liquidate those positions. Exchange-traded securities are categorically considered to be liquid, by themselves. Perhaps Robinhood's huge mistakes have made it more difficult for them to post collateral than if they had acted more trustworthy, but that doesn't change the situation surrounding collateral itself. The $3B collateral call was withdrawn just as quickly as it had been made - even better, since they raised $1B against what seems to be no collateral call. Robinhood actually had two ways of resolving the situation. One was to admit fault and either liquidate the underlying securities or have a portion of their clearing position liquidated, which would have resulted in the ability to return collateral and to be on the hook for the losses they caused for their customers. The other, was to restrict purchases on securities that either were thought to contribute to the VaR collateral assessment, or for which Robinhood's bookkeeping did not match between investor accounts and actual cash/security holdings. As it turns out, neither of these options was necessary according to the facts at hand - Robinhood's collateral call was withdrawn prior to Robinhood taking any action at all, and according to media sources in a Fortune article, no negotiation took place between the NSCC and Robinhood. So there must be another reason that Robinhood's books were not balanced. However, Robinhood used the second option anyway. This is the circumstance which has led to the WSB "conspiracy" theory that you discounted in other comments, which explores the idea that Robinhood is somehow involved, either willingly or not, in some type of market manipulation in conjunction with their payment-for-order-flow market maker, Citadel, who fills basically all of their orders for them. I'm not sure that "conspiracy" is the word to use when fines, penalties, and settlements for breaking securities law are commonplace among financial institutions, but that is just my opinion.

gruez 5y ago

>The DTCC waived the additional capital clearing charges for all clearing members prior to market open on January 28th. Source? And for how long? >All DTCC clearing members satisfied their requirements before the market opened. That says nothing about the requirements they'll face later, as a result of trades made on the 28th.

tptacek 5y ago
This is a WSB conspiracy theory. What in fact seems to have happened (I'm going from a reported account in Fortune) is that the NSCC substantially waved a multi-billion-dollar collateral call that would have bankrupted Robinhood because they halted trading in the meme stocks at question. WSB has taken this to mean that NSCC was unconcerned with the collateral risk.
- oakwhiz 5y ago
  What evidence do you have that the NSCC waiver was conditional on a voluntary trade halt? I haven't been able to find the article that you mentioned
  - kasey_junk 5y ago
    https://www.google.com/amp/s/fortune.com/2021/02/02/robinhood-gamestop-restricted-trading-meme-stocks-gme-amc-vlad-tenev-nscc/amp/ https://www.google.com/amp/s/fortune.com/2021/02/02/robinhoo...
    - oakwhiz 5y ago
      The article quotes a third party source who claims "According to the source close to the NSCC, the lower amount came about because of Robinhood’s decision to limit trading in GameStop and other meme shares." but then the article goes on to directly say "While Robinhood did speak with executives at NSCC, the conversation entailed confirming that limiting the stock sales would count toward reducing its $3 billion collateral demand—but did not result in the amount being reduced." I don't believe this is good counter evidence as mentioned in the above comment, it seems self contradictory if anything. How could it be conditional if there was no negotiations, yet the entire thing was waived on a discretional basis?
- zenbane 5y ago
  Rubbish. TD Ameritrade, WeBull and half a dozen other brokers with gigantic balance sheets also suspended trading. This was a rug pull executed by Robinhood on behalf of it's clients.
  - tptacek 5y ago
    I've read this 3 times trying to figure out how you didn't just pose a self-refuting rebuttal.
oakwhiz 5y ago
Robinhood was able to raise 1 billion dollars in capital within a very short time frame to cover any later requirements. It might be a stretch to say that it was easy, but since it is being used for collateral (very liquid), they would hypothetically have an easier proposition to raise that capital than if they were using it to grow their business. Source: https://www.ft.com/content/9a1b24e6-0433-462a-a860-c2504ea565e4 https://www.ft.com/content/9a1b24e6-0433-462a-a860-c2504ea56... Excerpt: "Robinhood, the online brokerage at the centre of wild trading in equities this week, has raised more than $1bn from its existing investors and tapped credit lines from banks to shore up its financial position after a turbulent four days. The company has drawn down at least several hundred million dollars via a credit facility with banks led by JPMorgan and including Goldman Sachs, Morgan Stanley, Barclays and Wells Fargo, according to people familiar with the move."
- tptacek 5y ago
  They raised $1B against a $3B collateral call. Posted collateral also isn't "very liquid"; the whole point of that money is that if shit goes sideways --- and everything was going sideways at Robinhood --- that money will get spent making counterparties whole. Robinhood couldn't just give the money back to its lenders.
  - oakwhiz 5y ago
    I maintain that collateral is very liquid as it increases and decreases every single day and is a product of risk and volume. Collateral has two "outs" where one is simply reducing risk or waiting for risk to go away, and the other is to reduce the volume of the "hot" positions or liquidate those positions. Exchange-traded securities are categorically considered to be liquid, by themselves. Perhaps Robinhood's huge mistakes have made it more difficult for them to post collateral than if they had acted more trustworthy, but that doesn't change the situation surrounding collateral itself. The $3B collateral call was withdrawn just as quickly as it had been made - even better, since they raised $1B against what seems to be no collateral call. Robinhood actually had two ways of resolving the situation. One was to admit fault and either liquidate the underlying securities or have a portion of their clearing position liquidated, which would have resulted in the ability to return collateral and to be on the hook for the losses they caused for their customers. The other, was to restrict purchases on securities that either were thought to contribute to the VaR collateral assessment, or for which Robinhood's bookkeeping did not match between investor accounts and actual cash/security holdings. As it turns out, neither of these options was necessary according to the facts at hand - Robinhood's collateral call was withdrawn prior to Robinhood taking any action at all, and according to media sources in a Fortune article, no negotiation took place between the NSCC and Robinhood. So there must be another reason that Robinhood's books were not balanced. However, Robinhood used the second option anyway. This is the circumstance which has led to the WSB "conspiracy" theory that you discounted in other comments, which explores the idea that Robinhood is somehow involved, either willingly or not, in some type of market manipulation in conjunction with their payment-for-order-flow market maker, Citadel, who fills basically all of their orders for them. I'm not sure that "conspiracy" is the word to use when fines, penalties, and settlements for breaking securities law are commonplace among financial institutions, but that is just my opinion.