https://www.entrepreneur.com/article/364436?fbclid=IwAR0vr3_…
Chump change compared to how much they made from closing trading on those stocks. Take with one hand, give with the other.
Robinhood Raises $1 Billion to Support Purchases of GameStop Stock after shutting down Transactions
[Deactivated] on 30/01/2021 - 21:12
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I am a big hater of RobinHood, but to play devil's advocate, the rush of interest and skyrocketing share price of a dud stock would legitimately have caught them by surprise. They probably were close to breaching capital requirements.
I think RH should have to answer how all the brokerages magically acted the same way only allowing selling. The connection to Citadel should be fully investigated. I think their decisions did amount to market manipulation…but they probably do have genuine liquidity problems due to the boom of users and random stock explosions.
decision came from Apex Clearing Corporation for most other brokers
check out louis rossmann on YT (yeh the board repair guy) (specifically the WeBull CEO video) - he has been covering this (given the downturn that COVID is causing him).
apparently the clearing houses (specifically DTCC) raised the captial requirement (collateral reserve) from the usual 1-3% per share to 100% per share.
meaning any broker wanting to BUY that NYSE:GME (on behalf of a client) had to pay upfront for that share, rather than DTCC essentially fronting the money for that share to the seller…
selling the share doesn't have the same requirement because when you sell the share you (well your broker & clearing house) just transfer that share…
basically because "money is slow", a lot of people in between the actually buyer and seller are "putting up the money temporarily"… in a risky trade (ie imagine if/when Melvin go insolvent (where is all that $$$ gone) the whole system falls over…. ) everyone is asked to put up money in advance…
phew, that was more long and retarded that I originally hoped…
edit - this is the excuse anyways, do i think its BS - yes; do I think RH are manipulating that excuse to stop buying - yes.
Yes, but who's paying the money for the stock that's sold?
Additionally given the circumstances wouldn't it have been wiser to stop but and sell (i.e. halt the stock value?) rather than close the day with sell only causing a massive drop in value of the stock to $190 while pre market was still $350?But I'm sure they'll bullshit their way out of it, even if there's a senate enquiry into it.
They're (profanity) from the big gains by retail
Rubbish binhooh, I participated the storm, and still holding GME, AMC and NOK. We continue to buy next week.
I'm curious what the long term plan is here. I'm definitely not an expert in shares and Reddit there's just way too much going on over there to try and get a simple answer. You're (speaking collectively) continuing to buy and hold but what's the exit plan? It's a massively inflated stock and long term there's only one way the price can go so how are you literally not just throwing money away? I know this is causing trouble for institutions but I'm taking the little individual. How are they not going to lose out buying a share that's currently at US$325 with no future anywhere near that? Am I missing something?
The theory is that Melvin Capital (or worst case their prime broker) and some other shorters still have to close out their short positions and the clock started ticking on Friday. Over the next 2 - 6 business days they have to buy tens of millions of shares. The true figure remaining isn't known but might be a large part of the 140% GME short interest that drew attention to this stock. Melvin 'claim' they closed out days ago and don't need to buy anything. Someone is wrong.
It is risky from the WSB side. People should only be investing YOLO small, play money en masse and holding but it is now FOMO amounts and there are people throwing $200K etc.
OK, but why do they need to buy back short term? My understanding is there's no limit (maybe there is on individual agreements) on when the borrowed stock needs to be returned so I assume the gamble is on their credit position and them not being able to wait to buy?
In the mean time people are continuing to buy raising the price of their average holding and likely also raising their risk that even when the institutions do start buying that it'll now be below their average unit cost. Yet I keep seeing people throwing in their life savings and other significant amounts that have only just started buying. If you were in at the start or early then I can see you'd be likely to end up OK if not ahead but I don't see why are people still starting and jumping aboard now (and I'm guessing it's simply because they don't understand this?)
@apsilon: 29/1/2021 was a GME January contract expiry date. Time for shorters to close out their short position. (Many people don't read the instructions, but part of this squeeze is for the reddit side to instruct their broker NOT to allow their stock to be loaned for shorting which usually happens behind the scenes.)
Those new reddit GME investors have been caught up in the 'to the moon', life changing hype that WSB is a bit guilty of to generate public interest. I am anti Melvin Capital, but objectively, WSB is using greed and pump to make this whole squeeze happen.
The theory is that the shorters needing to close going on a buying spree in a tightly held market will drive the price to the moon. That is the theory. I was awake at all hours Friday night and will be the rest of this new week watching how the shorters dig their way out of big trouble. I only want a screenshot of GME at $1000, so I think it is possible, but equally Melvin have some high connections and it might be a trainwreck if they scramble a secret deal. Fun to watch and I don't have any sympathy for either side. This is a contact sport.
29/1/2021 was a GME January contract expiry date.
OK, this is the part I wasn't aware of so makes a little more sense but I still think those jumping aboard now, especially with life changing amounts if they lose, are taking a massive gamble where the odds are 50/50 at best. You're betting on not only the market (and friends bailing friends out) but those WSB shareholders that bought sub $10 to not sell and take a huge profit at any minute.
Hodl?
Am I the only one who thinks the OP doesn't understand the story? RH are extending their credit lines to keep trading WSB stock. They are not giving anyone anything except interest on loans.
RH has kill its credibility
can't even use robinhood in aus can you? checked out stake, a platform to trade US shares and the delay is just trash so useless for anything volatile like GME,etc where timing is everything.
there's ibkr, schwab or tastyworks
Will have a look ty
If this is true then surely RH and other brokers could change their T's & C's to say that with nominated volatile stocks clients will have cleared funds debited from their account at the time of trade execution.
Except brokers are not allowed to use client funds to satisfy collateral requirements with clearing houses…
Robinhood 'robbin the hood'-
no further from the truth d.