121–130 of 270 posts
Just open an account on some real broker website like DEGIRO that does not engage in to pay for order flow like RobinHood and Trade Republic do. I can still buy GME if I want to there, although I am not doing it.
How do they make money? And why does it matter who executes your transaction as a retail investor.
The RH apologists are going on long winded explanations about clearing houses (and to some extent there’s elements of “it’s too complex for your little brain”). But even to the extent it’s true, if I put in 5k from my checkings into RH and buy stock, why does Rh need all this liquidity to get orders filled? I understand turning margin accounts off, but that’s it . Past that, at best robinhoods business model is highl…
When you transfer money in, Robinhood doesn’t actually get that money until a couple days later. They allow you to buy stock immediately, but that happens (transparently) on margin. Robinhood is loaning you the money to make it happen.
Likewise, when you buy or sell a stock, the trade doesn’t settle for t+2 days. Robinhood again transparently loans you the money while waiting for the stock trade to settle.
If Robinhood exceeds the SEC-mandated limits for margin they can extend, or their creditors decide it’s too risky to continue loaning them the money, the whole show grinds to a halt. They chose to press the pause button on the primary meme stocks driving them toward this cliff. I imagine the only alternative was to hit the pause button on the entire platform until the credit issue was resolved, but it’s much harder to get additional credit when your service has ground to a halt.
Robinhood decided to halt trading on a number of stocks due to uncommon volatility, just for a day, so they can assess the matter. [0]
And as is common practice in the trading world... when a market is closed, you are still allowed to close your position.
Which means that you are allowed to sell, and not buy.
(If robinhood allowed for true shorting then people could still technically buy by closing their short positions as well.)
It's not some huge conspiracy to keep the price down for the little guy.
It's actually a fairly common practice in financial exchanges around the world.
[0] https://blog.robinhood.com/news/2021/1/28/an-update-on-marke...
Earlier quoted context omitted.
Ask yourself: why didn't they just freeze trading these securities instead of forcing liquidations across retail brokerages and putting everyone in sell only mode? They're covering for the market makers and shorts who are on the hook for all the options bought and shares shorted. Institutions could enough to ameliorate their pain while the only option given to everyone else was sell. They should have instead stopped…
So you're arguing that, instead of just disabling buying, they should have disabled buying and selling? That would expose them to far more substantial and direct liability than disabling new positions.
It's been a while since I did this, but last time I transferred shares from one brokerage to another, it took several days. It seems to me that if you are holding GME, the last possible thing you want is being stuck in a position for a while. For this particular case, it might be a better choice is to liquidate your position, cash out and just open another brokerage account. I know this is the total opposite of what…
People who opt to transfer shares are going to be locked out of trading them for days, maybe weeks.
When the GME stock comes crashing down (it will), you don’t want to be locked out of selling. Despite what the memes are saying, you won’t come out on top by holding the stock forever (while everyone else sells)
Earlier quoted context omitted.
I think with Robinhood Instant you can by stock before the bank transfer has cleared, so they need cash on hand to fill the orders. The rising demand x rising order amount means they probably blew out their liquidity allowance. With new accounts starting with Instant capability, they are all on margin until the transfer clears.
> their liquidity allowance. But only on specific stocks they selected? They still had liquidity for other stocks?
The clearing house needs enough money from you to be able to go buy those shares in the open market 2 days from now if you vanish overnight tomorrow. If the stock is going up or down 2% a day, it's a lot easier to predict how much they would need than if it's going up or down 200% a day.
How does one of these transfers of stock work from a technical perspective? Is it all just paper transfers that are physically sent in the mail, or is there some kind of digital backing that can be transferred like crypto?
> Nobody owns stock. What you own is an entitlement to stock held for you by your broker. But your broker doesn't own the stock either. What your broker owns is an entitlement to stock held for it by Cede & Co., which is a nominee of the Depository Trust Company, which is a company that is in the business of owning everyone's stock for them. This system sounds convoluted but actually makes it easy to keep track of things: If I sell stock to you, I don't have to courier over a paper share certificate, or call up the company and have it change its shareholder register. Our brokers just change some electronic entries at their DTC accounts and everything is cool.
That simplifies things a bit, but basically yes, no paper transfers ever. There's a warehouse somewhere with all the paper certificates in it, they all technically belong to Cede & Co, and when (say) dividends are paid out, they all go to Cede & Co, who transfers the correct amounts to the various brokerages, who transfer the correct amount to their customers.
There's a hilarious story (by Matt Levine, from which that quote is from) about some of the quirks in the system here: https://www.bloomberg.com/opinion/articles/2015-07-14/banks-...
(Although it should be noted, it works fine for an absurdly large volume of transactions; the story is interesting because it is unusual, not because it reveals any deep flaws in the system.)
It's been a while since I did this, but last time I transferred shares from one brokerage to another, it took several days. It seems to me that if you are holding GME, the last possible thing you want is being stuck in a position for a while. For this particular case, it might be a better choice is to liquidate your position, cash out and just open another brokerage account. I know this is the total opposite of what…
They aren't in it for the money exactly... https://www.reddit.com/r/wallstreetbets/comments/l6omry/an_o... Further, at the moment there are still 62m outstanding short positions (with 71m yesterday). However, there was only 50m (likely revolving) trading volume today on GME. Honestly, it looks like the redditors are going to successfully cause a squeeze.
I've read that you shouldn't do this because it will tie things up for a while. Liquidating the stock and moving your assets apparently is more immediate. Can someone confirm?