Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop • Hacker News Board

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

#951

Post by tornato7 » Thu, Jan 28, 2021, 9:37 PM UTC

matttb wrote: post #824

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…

> I don't think this was Robinhood's choice. They sure made it sound like it was their choice. https://blog.robinhood.com/news/2021/1/28/keeping-customers-...

Exactly, while WeBull firmly pointed the finger at their market makers, Robinhood is treating it's customers like children and telling us they're banning trades for our own good while secretly collaborating with Wall Street in the background. They are a disgrace to the name "Robinhood."

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

#952

Post by ineedasername » Thu, Jan 28, 2021, 9:37 PM UTC

This significantly constrains demand while at the same time it pressures people to put their supply in the market (sell it off). So they're lowering demand and increasing supply, which is sure to drive the price down and make people lose money.

Likely to the benefit of institutional investors-- the same ones that lost money on the squeeze-- to make money on shorts they places at the top.

Doesn't smell right. It might even just (relatively innocently) be from soft pressure from the SEC to limit a perceived market manipulation, but it will still induce losses in positions that users might have sold at higher prices.

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

#953

Post by tornato7 » Thu, Jan 28, 2021, 9:39 PM UTC

mgolawala wrote: post #727

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…

Exactly this. They know there will be lawsuits and they know there might be SEC fines, but they are betting that those two will total up to be less than the billions it would cost them to cover a short position at $500-$600 per share. The question I have is, can this be prosecuted criminally and can those in charge be threatened with actual jail time from this?

But I don't think they are expecting the backlash that this had received. As a Robinhood user I am making it clear that this is not okay by withdrawing all of my funds and cancelling my Gold account, and I hope others will do the same.

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

#954

Post by cwkoss » Thu, Jan 28, 2021, 9:39 PM UTC

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?

It is unprecedented for buying to be stopped for retail investors while still allowing buying from institutional investors.

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

#955

Post by [deleted] » Thu, Jan 28, 2021, 9:39 PM UTC

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

#956

Post by throwawaylolx » Thu, Jan 28, 2021, 9:40 PM UTC

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…

>Citadel, and other trade executors, are refusing to buy shares for retail traders.

Any evidence on this? RH said the opposite:

>To be clear, this was a risk-management decision, and was not made on the direction of the market makers we route to. We’re beginning to open up trading for some of these securities in a responsible manner.

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

#957

Post by game_the0ry » Thu, Jan 28, 2021, 9:40 PM UTC

game_the0ry wrote: post #717

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…

Wow. Just wow. As RH user myself, I did not have a clue I was actually doing business (indirectly) with Citadel. I'll be closing my RH account soon. For now, I'll be holding the line on GME.

Additionally, I speculate that Citadel/RH/IBKR and any other brokers that stopped buys on GME/AMC had sign-off from regulators (SEC etc.) where the fines they will surely incur would be limited to non-existent.

Not only hedge funds and brokers colluding against the retail investors, but the government as well. Yeah...sounds about right.

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

#958

Post by onlyrealcuzzo » Thu, Jan 28, 2021, 9:42 PM UTC

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…

> This is definitely illegal. But Citadel is betting that the resulting SEC fines from this illegal manipulation will be less than the loss they would get if they didn't suppress the price.

It's not really a bet when they're 50% certain they can get away with no fine, 99% certain the SEC fine will be 100% of the profit.

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

#959

Post by huhnmonster » Thu, Jan 28, 2021, 9:51 PM UTC

ivalm wrote: post #923

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 then buys the shares on the market, and sells them to Robinhood for a slight markup This would be front running and is fundamentally not how citadel or other MM function.

I guess I understand where you are coming from, but they way I understand it is that RH submits a bulk order for a stock and gets a quote from the MM, which the MM thinks is appropriate. The MM then adjusts its own portfolio accordingly, buying/selling the underlying stock at its own pace.

So, more or less as described, but the order is a little different, right?

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

#960

Post by IceHegel » Thu, Jan 28, 2021, 9:51 PM UTC

Robinhood is being deceptive.

They say this move is to protect their customers, in fact it's to protect themselves. As others have pointed out, Robinhood lends margin to some accounts and if those accounts cannot pay for losses purchased on margin, Robinhood is responsible. This is a real risk, and they should have made the margin requirement 100% for GME or cash only as other brokers did. They did not have to limit buys to de-risk their own portfolio.