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Personally speaking, I blame the customers. They are paying for $0 trades to a very, very small trading firm with well-known trade-execution problems months /

Personally speaking, I blame the customers. They are paying for $0 trades to a very, very small trading firm with well-known trade-execution problems months / years before the GME instance. No serious trader actually trusted Robinhood, and nobody was surprised when Robinhood's trading ability was shown to be so weak in that timeframe. There were many respectable banks with much stronger finances who were able to support the GME-rush. It was just the small guys without much $$$$ who failed, like Robinhood. -------- If you did a bit of research, you would have found Interactive Brokers (for instance). I'm not a customer of IB, but they have plenty of online material for what exactly you're paying for. And that is, trade execution. It matters, especially in times of trouble / times of risk. The stronger the bank, the better their ability to continue operations during weird times. > The reason I dislike the analogy is because brokers aren't (typically) supposed to run out of shares to buy and sell. Except they do. All the time when bubbles pop and other crisis form. Good luck selling stocks during the crash of (whatever). When the stock market is crashing, there's no buyers, so the price keeps dropping and dropping. Without any buyers, you will never be matched and you'll never be able to sell until its too late. Understanding these mechanics is very important to any market participant. "Flash crashes" with stop-loss orders are particularly lulzy. Your stock is automatically put up for a sale on a flash-crash. There's no buyers, so you sell the stock at a grossly lower price than expected (when some savvy buyer finally decides the price is low enough). That's when you're matched up. By the time you look at the stock, the "flash crash" is over, your stock is randomly sold and at a bad price. Etc. etc. Its annoying, but these sorts of events happen all the time, and its important to remember the mechanics of buying/selling stocks at all times when trading.

Denvercoder9 5y ago
IB might not be the best example, as they also restricted GME option trading to liquidation only.
- dragontamer 5y ago
  > option trading Options are extremely different than the underlying stock. Options is everything we discussed except with way less volume and way more margin requirements. It doesn't seem like IB restricted GME-stock, only options-on-GME-stock, which is a very, very different instrument. ------ That being said, if I were a paying customer to IB and was hoping for good options-trades during that time, I guess I would have been pissed off. Still though, its a far more understandable issue to have a derivative-trade fall through rather than the underlying stock-trade fall through.
  - Denvercoder9 5y ago
    Yes, but the end result was still the same: customers couldn't trade what they wanted to, because the broker couldn't or didn't satisfy their collateral requirements.
- MrMan 5y ago
  I think many brokers had these restrictions, so what is the point of this discussion
BigBubbleButt 5y ago
> Except they do. All the time when bubbles pop and other crisis form. Market halts are completely different from what we are discussing. And one of the purposes of market makers is to provide liquidity in extreme cases as you are describing (I'm not saying it works perfectly, but it's one of their reasons for existing). Anyway, I feel like we aren't quite getting our points across to each other. Not blaming you just saying let's agree to disagree.
- dragontamer 5y ago
  > Market halts are completely different from what we are discussing I'm not talking about market halts. I'm saying when all the buy-orders vanish from the marketplace, it results in a "flash crash". Hitting the "sell" button will do really weird things at these times. After all, a "sell" can only mechanically happen if the market pairs you up with a "buy". That's just how the stock market works. If there's no buyers, you can't sell, even if you're hitting the "sell" button.
  - BigBubbleButt 5y ago
    Then what you're saying makes even less sense. Because what happened with Robinhood is they turned off the buy button, but still people could sell (which means there were buyers from other brokers or outside retail). I realize every buy needs a sell. I also said "typically" and considering there obviously were buyers since you could still sell, everything you're saying is irrelevant to the discussion we had about GME in 2021. Anyway, we're not getting anywhere. You can respond but I'm not responding anymore.
    - WoahNoun 5y ago
      >Because what happened with Robinhood is they turned off the buy button, but still people could sell (which means there were buyers from other brokers or outside retail) No, RH matched the sell order with an internal buy order and netted them out to reduce their collateral requirements over the T+2 settlement period. They didn't use cash to buy stock from other brokerages.
chrismcb 5y ago
Wait... What? You are blaming customers for being... customers? You have repeated multiple times that Robinhood essentially ran out of money. But then finally you mentioned why people are leaving... Because they don't trust Robinhood. It doesn't matter why they stopped trading, it simply matters that they did.
- jjeaff 5y ago
  The customers aren't to blame, but it's a little unfair to blame Robin Hood for what amounted to a black swan event. One of the main reasons they ran out of capital in this case was not because of the volume of trading, it was because of the one sidedness of the trades (lots of buys) and all being on one stock. RH's margin requirements skyrocketed because so much of their liability was concentrated in one stock. Risk (and this margin requirements) go up the more the risk is focused into a single point of failure.
- dragontamer 5y ago
  They shouldn't have trusted Robinhood to begin with. https://www.sec.gov/news/press-release/2020-321 https://www.sec.gov/news/press-release/2020-321 Robinhood was all kinds of shady long before the GME events.

Denvercoder9 5y ago

IB might not be the best example, as they also restricted GME option trading to liquidation only.

dragontamer 5y ago
> option trading Options are extremely different than the underlying stock. Options is everything we discussed except with way less volume and way more margin requirements. It doesn't seem like IB restricted GME-stock, only options-on-GME-stock, which is a very, very different instrument. ------ That being said, if I were a paying customer to IB and was hoping for good options-trades during that time, I guess I would have been pissed off. Still though, its a far more understandable issue to have a derivative-trade fall through rather than the underlying stock-trade fall through.
- Denvercoder9 5y ago
  Yes, but the end result was still the same: customers couldn't trade what they wanted to, because the broker couldn't or didn't satisfy their collateral requirements.
MrMan 5y ago
I think many brokers had these restrictions, so what is the point of this discussion

BigBubbleButt 5y ago

> Except they do. All the time when bubbles pop and other crisis form. Market halts are completely different from what we are discussing. And one of the purposes of market makers is to provide liquidity in extreme cases as you are describing (I'm not saying it works perfectly, but it's one of their reasons for existing). Anyway, I feel like we aren't quite getting our points across to each other. Not blaming you just saying let's agree to disagree.

dragontamer 5y ago
> Market halts are completely different from what we are discussing I'm not talking about market halts. I'm saying when all the buy-orders vanish from the marketplace, it results in a "flash crash". Hitting the "sell" button will do really weird things at these times. After all, a "sell" can only mechanically happen if the market pairs you up with a "buy". That's just how the stock market works. If there's no buyers, you can't sell, even if you're hitting the "sell" button.
- BigBubbleButt 5y ago
  Then what you're saying makes even less sense. Because what happened with Robinhood is they turned off the buy button, but still people could sell (which means there were buyers from other brokers or outside retail). I realize every buy needs a sell. I also said "typically" and considering there obviously were buyers since you could still sell, everything you're saying is irrelevant to the discussion we had about GME in 2021. Anyway, we're not getting anywhere. You can respond but I'm not responding anymore.
  - WoahNoun 5y ago
    >Because what happened with Robinhood is they turned off the buy button, but still people could sell (which means there were buyers from other brokers or outside retail) No, RH matched the sell order with an internal buy order and netted them out to reduce their collateral requirements over the T+2 settlement period. They didn't use cash to buy stock from other brokerages.

chrismcb 5y ago

Wait... What? You are blaming customers for being... customers? You have repeated multiple times that Robinhood essentially ran out of money. But then finally you mentioned why people are leaving... Because they don't trust Robinhood. It doesn't matter why they stopped trading, it simply matters that they did.

jjeaff 5y ago
The customers aren't to blame, but it's a little unfair to blame Robin Hood for what amounted to a black swan event. One of the main reasons they ran out of capital in this case was not because of the volume of trading, it was because of the one sidedness of the trades (lots of buys) and all being on one stock. RH's margin requirements skyrocketed because so much of their liability was concentrated in one stock. Risk (and this margin requirements) go up the more the risk is focused into a single point of failure.
dragontamer 5y ago
They shouldn't have trusted Robinhood to begin with. https://www.sec.gov/news/press-release/2020-321 https://www.sec.gov/news/press-release/2020-321 Robinhood was all kinds of shady long before the GME events.