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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

#691

Post by potta_coffee »

josho wrote: post #457
vergessenmir wrote: post #365

Earlier quoted context omitted.

This is so true. It's all connected. It's probable that Reddit, Discord, RobinHood have all received calls to disrupt retail traders from political players or financial backers. There's no evidence of this, the truth is we'll never know, but how its most obvious reason. If only RobinHood would live up to its namesake. It is alarming that "soft" circuit breakers are being used to target retail traders on exchanges. I…

I look forward to the investigations on market manipulation that RH, Schwann, and TD did by not allowing their customers to trade on that stock. Or is it normal for brokers to independently halt trades on stocks they deem too risky?

"Investigations for thee and not for me." Or, I think no investigation will occur.

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

#692

Post by Aunche »

Kranar wrote: post #606
Aunche wrote: post #555

Earlier quoted context omitted.

This narrative doesn't make any sense. Hedge funds aren't a monolithic entity. Some hedge funds lost billions of dollars on shorts. Redditors made millions of dollars. Where do you think the rest of the money went to? That's right, other, more powerful, hedge funds. BlackRock held 9.2 million shares as of a few weeks ago.

There is a saying that if you're not paying for a product, you are the product. Robinhood's real customer, the paying customer isn't the users of its app, which they offer out for free. It's actual paying customers are HFT firms, and specifically Citadel, the same Citadel that on Monday bailed out Melvin Capital with a 3 billion dollar loan. Wouldn't surprise me one bit to find out Citadel called up Robinhood and sai…

Melvin Capital closed out their short positions, so what exactly does Citadel stand to gain here?

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

#693

Post by omgwtfbyobbq »

mgolawala wrote: post #605
vergessenmir wrote: post #365

Earlier quoted context omitted.

This is so true. It's all connected. It's probable that Reddit, Discord, RobinHood have all received calls to disrupt retail traders from political players or financial backers. There's no evidence of this, the truth is we'll never know, but how its most obvious reason. If only RobinHood would live up to its namesake. It is alarming that "soft" circuit breakers are being used to target retail traders on exchanges. I…

When Wall Street is making billions off of selling balloon interest mortgages with no income verification the position is "The consumer is an adult and can make decisions for themselves and read the fine print.... blah blah blah .. personal responsibility." When the people are causing Wall Street to lose billions on their absurdly large short position, suddenly they are concerned for the "amateur" investors. The "uns…

That's pretty much it.

I remember seeing something similar during Tesla's run up, where firms would force individual investors to sell their call options because the investor would have tax liability once their call options were profitable.

Course, it also had the effect of reducing the amount they would have made by forcing them to sell early.

Tails we win, heads you lose.

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

#694

Post by cjlars »

sparrc wrote: post #638
JumpCrisscross wrote: post #385

Earlier quoted context omitted.

> Can someone help me understand Robinhood's POV? Robinhood is a margin-lending options-trading broker. If a customer falls down on a trade, it is ultimately liable. If a retail customer loses money and makes a FINRA complaint that Robinhood induced them to buy through its gameified interface, it is liable. Risk and compliance likely made this call. Also, Robinhood makes its revenue from market makers. They are the c…

> If a customer falls down on a trade, it is ultimately liable.... Robinhood induced them to buy through its gameified interface Why would robinhood be any more liable than other online traders like Fidelity or etrade? > What I can guarantee is nobody shorting GameStop got Robinhood to pull the plug. How can you guarantee that? Robinhood likely routes most of it's trades through citadel, which has informed partners i…

They would have different risk profiles depending on what their clients are actually doing. RH probably has much greater net exposure than Fidelity since they have a greater share of meme investors in their customer base. Fidelity definitely has a less gameified interface as well.

Corporate risk controls are also not a hard science, different risk teams can and do come to different conclusions on the same issue.

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

#695

Post by darkwizard42 »

kart23 wrote: post #658
ulfw wrote: post #41

Someone remind me again how this is even legal? You can SELL but not BUY, thus automatically suppressing all stock values?!

Its a private company providing a service for FREE. YOU ARE THE PRODUCT. Just like twitter, they are allowed to control what happens on their platform, and they make no guarantee about reliability or free trade.

This is not even accurate in the smallest sense. This is a brokerage firm. It is heavily regulated by financial law.

They are not "allowed to control what happens on their platform." in the sense of Twitter. They have a fiduciary responsibility to their clients and the reliability of their platform is actually part of their ability to operate as a brokerage.

The service being free or not has NO impact on the rules they operate under as a brokerage.

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

#697

Post by BoorishBears »

hintymad wrote: post #652
JumpCrisscross wrote: post #385

Earlier quoted context omitted.

> Can someone help me understand Robinhood's POV? Robinhood is a margin-lending options-trading broker. If a customer falls down on a trade, it is ultimately liable. If a retail customer loses money and makes a FINRA complaint that Robinhood induced them to buy through its gameified interface, it is liable. Risk and compliance likely made this call. Also, Robinhood makes its revenue from market makers. They are the c…

So as a platform Robinhood wants to make money from trading options, but it will shut down the platform when it sees too much risk for itself? If so, would this damage the trust to Robinhood?

Yes but

a) most of the platforms are doing the same

b) it's hard to imagine that with half of RH currently holding GME they're not going to come out of this having gained more in users than they lose over trust issues

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

#698

Post by tomjakubowski »

vmception wrote: post #608
wyldfire wrote: post #26

Can someone help me understand Robinhood's POV? This just seems so outrageous that there must be some sane rationale that I'm not seeing. Why do Robinhood, Reddit, Discord, etc feel like they have to respond to this? Whether the investments being made are responsible or not, it doesn't seem like it should be their place to intervene. If the hedge funds over-shorted GME and WSB recognized that and traded against that…

Robinhood’s actual customer is Citadel. Citadel was funding the short sells, investing directly into Melvin Capital, for example. Robinhood did not act against its customers. Its users are their product, which it sells to Citadel. As you see now, this is way more than an edgy quip: when its free you are the product.

Which is invested in Melvin, Citadel (the hedge fund) or Citadel Securities (the market maker, and Robinhood's customer)?

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

#700

Post by JumpCrisscross »

sparrc wrote: post #638
JumpCrisscross wrote: post #385

Earlier quoted context omitted.

> Can someone help me understand Robinhood's POV? Robinhood is a margin-lending options-trading broker. If a customer falls down on a trade, it is ultimately liable. If a retail customer loses money and makes a FINRA complaint that Robinhood induced them to buy through its gameified interface, it is liable. Risk and compliance likely made this call. Also, Robinhood makes its revenue from market makers. They are the c…

> If a customer falls down on a trade, it is ultimately liable.... Robinhood induced them to buy through its gameified interface Why would robinhood be any more liable than other online traders like Fidelity or etrade? > What I can guarantee is nobody shorting GameStop got Robinhood to pull the plug. How can you guarantee that? Robinhood likely routes most of it's trades through citadel, which has informed partners i…

> Why would robinhood be any more liable than other online traders like Fidelity or etrade?

Every brokerage house ultimately vouches for their clients.

Robinhood has extra exposure because clients could claim its interface induced them to overtrade.

> Robinhood likely routes most of it's trades through citadel

Do we have a source for this?

Also, Citadel just made money bailing out Melvin Capital. The short squeeze let them buy assets at dimes on the dollar. Assets which do not include GameStop shorts.

> which has informed partners it will not be fulfilling GME or AMC or BB trades

Former market maker. When trading got crazy we'd take profits. When it got inexplicable, we'd pull the plug. If we didn't, risk would. In this case, there is the additional factor of political risk--you don't want to be making millions of dollars off GameStop at its peak when that's going to cost you tens of millions of legal fees in front of Congress.

A simple explanation for Robinhood's behavior might be that their customers, the market makers, backed away from paying for this order flow.

All this said, I'd be highly pissed if my broker did this to me. But Robinhood customers have known since the beginning they weren't the customer.

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