4 ms·

This is another way of saying Robinhood did not have the capital reserves required to fulfill their obligations as a broker-dealer to their customers. Also, it

• gruez 4y ago
  > This is another way of saying Robinhood did not have the capital reserves required to fulfill their obligations as a broker-dealer to their customers. That's basically how the entire financial system works. You're supposed to be able to withdraw deposits as cash, but if everybody does it (from say, an internet meme event), the banks obviously wouldn't be able to "fulfill their obligations [...] to their customers". It's also unreasonable to have 100% of deposits as cash on hand on the unlikely chance that occurs. >Also, it is not correct that they "didn't have enough money to buy GME". Restricting trading of GME was a choice they made to post less collateral, which they didn't have. I don't get what distinction you're trying to make here? That "money" doesn't mean "collateral"? Those seem fairly interchangeable in this context.
  • adhesive_wombat 4y ago
    > It's also unreasonable to have 100% of deposits as cash on hand on the unlikely chance that occurs. Indeed, that's the whole point of fractional reserve.
• dragontamer 4y ago
  > Also, it is not correct that they "didn't have enough money to buy GME". Restricting trading of GME was a choice they made to post less collateral, which they didn't have. Collateral in this case is just a fancy word meaning "money".