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Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

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Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#191

Post by vincentmarle »

It’s real. They just announced it on their blog: https://blog.robinhood.com/news/2021/1/28/keeping-customers-...

> Our mission at Robinhood is to democratize finance for all. We’re proud to have created a platform that has helped everyday people, from all backgrounds, shape their financial futures and invest for the long term.

> We continuously monitor the markets and make changes where necessary. In light of recent volatility, we are restricting transactions for certain securities to position closing only, including $AMC, $BB, $BBBY, $EXPR, $GME, $KOSS, $NAKD and $NOK. We also raised margin requirements for certain securities.

> Amid significant market volatility, it’s important as ever that we help customers stay informed.

> We fundamentally believe that everyone should have access to financial markets. We’re humbled to have helped many people invest in the markets for the first time.

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#192

Post by tylerhou »

batmenace wrote: post #110
baybal2 wrote: post #78

Earlier quoted context omitted.

I've heard the talk that Robinhood website is an op by a financial fund called Citadel LLC. It may be considered market manipulation on their side well more solidly than some speculation on the internet, not to say a breach of brokerage contractual obligations.

Not quite. Citadel is a very well known quant hedge fund. The main way Robinhood makes money (and can let people trade without commission) is by selling their customers order flow (legally) to Citadel. Citadel (legally) uses this customer information to, in the milliseconds before the customer, front-run the trade, buy the shares and sell them to the Robinhood users at a marginal profit.

This is missing the context that Robinhood is required to seek the "best" execution of trades [1]. So Citadel is making a profit yes, but the customer is not necessarily harmed in that profit as Citadel may still be delivering a better execution than other market makers or the actual exchange itself.

[1] https://www.sec.gov/fast-answers/answersbestexhtm.html

Robinhood publishes their execution numbers (as required by the SEC), along with other brokers. At a quick glance, there is nothing out of the ordinary. It's also worth noting that you cannot directly compare numbers as different platforms have different trading behavior.

https://robinhood.com/us/en/about-us/our-execution-quality/

https://www.schwab.com/execution-quality

https://www.fidelity.com/trading/execution-quality/overview

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#193

Post by GVIrish »

nickjj wrote: post #154

I don't think the title of this post does the story justice. The buy UI widget under GameStop's stock symbol has been replaced with: "This stock is not supported on Robinhood." It seems the ability to buy the stock has been completely removed, however they left in the ability to sell. That is much different than "limited" because other platforms only prevented options trading but still allowed purchasing it with fund…

You can't even look at the stock on RH, it's like it doesn't exist. Same with Nokia, AMC, etc.

And all this with no explanation whatsoever. It would be one thing if they put out a press release or something to explain themselves but the fact that they did it on the sly stinks to high heaven.

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#194

Post by firebird84 »

rvnx wrote: post #7

Interactive Brokers now blocking purchase call and put options (even to institutional investors!) on $GME, you can only close a position. On the other side, Robinhood is asking for account to be funded with cash to execute the calls at expiration, or else they will liquidate your position :|

That last sentence is extremely scary. Do you have a source?

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#196

Post by mrguyorama »

bradleyjg wrote: post #64
sokoloff wrote: post #13

Earlier quoted context omitted.

It's absolutely paternalism, IMO. I'm less sure whether I think it's a good thing or not (because I think people buying new positions in GME at this point are unlikely to end up happy about that in mid-Feb.) I'm all for "let 'em play" in general but this is not going to end well for a lot of folks...

It’s pretty hypocritical for a casino to say that you are welcome to keep playing our table games and lose your money to us slowly but you aren’t allowed to sit down at that table full of poker sharks because we are worried you’ll lose your shirt.

Casinos LITERALLY do this though, with segregated/exclusive higher stakes games. You only get to play the ultra high stakes poker if you set it up yourself or get invited

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#197

Post by stonesweep »

batmenace wrote: post #148
pdevr wrote: post #50

99.99% (or more) of people who buy lotteries, lose ALL their money. However, government allows anyone to buy them. There is no meaningful restriction for an assured destruction of wealth for most of those who buy them. While this GME/AMC run will not end well for many people, restricting people from buying those stocks - whether it is through actions of trading platforms or governing agencies - smacks not just of pat…

Im guessing their argument would be that while a majority of people know what they're doing / the risk they are exposed to, a lot of people are seeing the gains online right now and are jumping into it blindly. Big difference between WSBers buying in at 10-30$, and people from all around the internet now buying in at 300$

Back in 1999 when Red Hat went IPO (dsiclaimer: I had FoC options), eTrade denied a very large swath of first-time investors with their platform trying to take advantage of Red Hat's FoC share options; I was one of them.

There was a followup round of reach-out "hey, you might want to take this quiz again and maybe we'll let you play" (meaning go answer the questions and lie that you're an experienced investor) to try and get the disenfranchised back into the game.

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#198

Post by bjeds »

thonos wrote: post #157

I too bought those shares with the anticipation that the price will go up due to the hype generated. I made a careful decision to do so by estimating that the traffic on /r/wsb will increase because of the news coverage, which causes people to buy those shares. I don't live in the states and don't use Robinhood, but a local broker that charged me a good bit for US stock trading. Robinhood halting trading tanked the p…

I think you should file a complaint to your local financial authorities.

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#199

Post by GVIrish »

kasey_junk wrote: post #58

I don’t have a data feed available to verify but it’s at least possible there is no one on the other side of the order book for these symbols so Robinhood can’t execute any more buy orders. Judging this as a policy decision from a 1 sentence tweet and some screen shots seems premature.

If that were the case then why didn't RH put out a statement saying exactly that? They haven't even put out a tweet.
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