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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

#911

Post by macromaniac »

JumpCrisscross wrote: post #725
beachwood23 wrote: post #673

Earlier quoted context omitted.

I don't think this was Robinhood's choice. Robinhood doesn't actually execute any trades. They sell user's trade orders to Citadel, a trade executor. Citadel then buys the shares on the market, and sells them to Robinhood for a slight markup. It's how Robinhood offers trades for $0 fees. You pay pennies more per share, but don't have to spend $5 per trade. Citadel, and other trade executors, are refusing to buy share…

> Citadel also bailed out Melvin fund for their short position in GME. So, Citadel has an interest in not letting the price go up any further. Citadel bailed out Melvin Capital. Not its position. Melvin doesn't have a short position anymore. Melvin made a stupid bet. Citadel bailed them out. Private sector bailouts aren't free: Citadel got its pound of flesh. Even if they bought the entire portfolio, that portfolio n…

>Melvin doesn't have a short position anymore.

This makes no sense, if gme isn't shorted then why then break the law and restrict buying it?

And it does feel like they are restricting buys. Seems unlikely that all the trading platforms that rely on citadel coincidentally decided they wanted to hedge against volatility by restricting user buys.

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

#912

Post by piva00 »

dilippkumar wrote: post #842

Question: Why shouldn't everyone pull their money out of Robinhood asap? Thesis: Suppose a sufficiently large number of people believe that the market is going to crash one day. Robinhood has just shown us that it will consider locking up everyone's accounts and prevent a sell off while the rest of the market cleanly exits after cutting their losses. Robinhood investors will be left holding the bag once Robinhood reo…

I think because we are dealing with sentiments. There would be a price point that will trigger a run-off but it still seems to be sustained by the "fuck you" message and playing chicken.

The problem here is that game theory completely mess the incentives, everyone needs to play chicken (or buy out the ones selling) or everyone loses on potential profit. But if just a few people trigger a sell out, everyone loses.

It's a very strange Mexican stand-off and my take is that is held, for now, by anger and excitement to see what happens when the shorts have to cover. When the shorts start buying and driving the price up we will see how many are able to hold (and up to what point).

This is quite fascinating to me, game theory would predict this shouldn't have happened with so many different players with conflicting interests.

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

#913

Post by goodluckchuck »

adjkant wrote: post #589

Worth pointing out that nearly every major trading firm has blocked buying of Gamestop and AMC stock today. I really am hoping to see legal action against the entire industry for literal stock manipulation. This isn't limiting purchasing, it's full-on stopping and only allowing selling. That's insane.

I don't know how stocks work.

Could you explain how it's possible to stop buying and allow selling? In order to execute a sell order, there would have to be a corresponding buy order? Do they do this by allowing new buy / sell orders, but only if they're at a lower price?

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

#914

Post by LatteLazy »

jaxwerk wrote: post #870
LatteLazy wrote: post #167

Earlier quoted context omitted.

I think it's BS to stop people trading but... You can make a good argument that WSB are engaged in market manipulation. RobinHood don't want to be the broker for that for a whole myriad of reasons.

I would love to see a good argument there, because while that argument is easy to accept at face value, when I dig deeper at the concept of what market manipulation is, I fail to find behavior that the majority of WSB is engaging in that fits that criteria. Where are the fraudulent statements causing price pumps? None of the prominent due diligence the community has provided that started this run has been found to be…

I've no idea if it meets the legal definition of price manipulation (we'd have to review the finra records which aren't public). And even then, it might not be the SEC etcs opinion that they want this fight.

That said, WSB have been really clear that they're cornering the market to drive up the price. The fact they've done it by coordinating 1001 little retail accounts makes no difference. Short squeezes are always pretty dodgy. This one is openly a conspiracy to move a market.

Shorters got themselves in a dumb position. It seems to me someone is rigging the market to get them out of it. But that doesn't change the core action here: let's conspire to corner the market and force an artificially high price.

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

#915

Post by maxerickson »

goodluckchuck wrote: post #913
adjkant wrote: post #589

Worth pointing out that nearly every major trading firm has blocked buying of Gamestop and AMC stock today. I really am hoping to see legal action against the entire industry for literal stock manipulation. This isn't limiting purchasing, it's full-on stopping and only allowing selling. That's insane.

I don't know how stocks work. Could you explain how it's possible to stop buying and allow selling? In order to execute a sell order, there would have to be a corresponding buy order? Do they do this by allowing new buy / sell orders, but only if they're at a lower price?

There are different sorts of access to the markets. Some companies literally operate the market, others have direct access to trade on that market, others sell indirect access to other people.

The companies blocking buy orders are all in the indirect access business.

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

#916

Post by dang »

zarkov99 wrote: post #57

Sure. Robinhood got a call from someone very powerful in their circle, politely asking them to stop the amateur plebes from interfering with their professional market manipulation. We are taking about people commanding titanic amounts of capital and (indirect) regulatory power. Robinhood then had the choice, do we make enemies out of these people or do we just screw, er, I mean protect, our customers? Unburdened by a…

We detached this subthread from https://news.ycombinator.com/item?id=25941689.

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

#917

Post by dang »

honest_guy wrote: post #238
vlkr wrote: post #120

Earlier quoted context omitted.

Source?

Lol

Please don't post unsubstantive comments here. We're trying for something a bit different than internet default.

https://news.ycombinator.com/newsguidelines.html

https://hn.algolia.com/?dateRange=all&page=0&prefix=false&so...

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

#918

Post by [deleted] »

beachwood23 wrote: post #673
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…

I don't think this was Robinhood's choice. Robinhood doesn't actually execute any trades. They sell user's trade orders to Citadel, a trade executor. Citadel then buys the shares on the market, and sells them to Robinhood for a slight markup. It's how Robinhood offers trades for $0 fees. You pay pennies more per share, but don't have to spend $5 per trade. Citadel, and other trade executors, are refusing to buy share…

[deleted]

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

#919

Post by twinkletwinkle_ »

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…

You know the adage usually applied to Facebook, "If you're not paying for anything, you aren't the customer, you're the product" ? . Daytraders and WSBers and other small fish like you and me aren't Robinhood's customers. Robinhood's customers are Citadel and companies like them who pay Robinhood for order flow from the uninformed masses. Keeping that in mind, here is the simple answer to your question:

https://twitter.com/justinkan/status/1354853920762253315?s=2...

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

#920

Post by bigtunacan »

JumpCrisscross wrote: post #725
beachwood23 wrote: post #673

Earlier quoted context omitted.

I don't think this was Robinhood's choice. Robinhood doesn't actually execute any trades. They sell user's trade orders to Citadel, a trade executor. Citadel then buys the shares on the market, and sells them to Robinhood for a slight markup. It's how Robinhood offers trades for $0 fees. You pay pennies more per share, but don't have to spend $5 per trade. Citadel, and other trade executors, are refusing to buy share…

> Citadel also bailed out Melvin fund for their short position in GME. So, Citadel has an interest in not letting the price go up any further. Citadel bailed out Melvin Capital. Not its position. Melvin doesn't have a short position anymore. Melvin made a stupid bet. Citadel bailed them out. Private sector bailouts aren't free: Citadel got its pound of flesh. Even if they bought the entire portfolio, that portfolio n…

Citadel is blocking trades on these stocks where Melvin Capital holds shorts for any platform that uses them; Robinhood is just the most prominant among small retail traders.

Citadel "bailed out Melvin Capital" because Citadel essentially owns Melvin and so their loss is our loss sort of situation. Melvin Capital stated they had closed out their short position on GameStop, but those are huge losses to cover no one knows how true that is. There is a lot of rumor that Citadel/Melvin Capital re-bought short positions yesterday before Citadel restricted trades to manipulate the market. If this is true it is highly illegal, but this effectively allow Citadel/Melvin to make back their losses if they can force market prices down.

TL/DR, Citadel/Melvin are breaking the law, all the retail traders are getting fucked, but when this is done Citadel/Melvin ends up having more cash than ever.

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