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It’s Time for Real Time Settlement

blog.robinhood.com

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Re: It’s Time for Real Time Settlement

#61

Post by paxys »

kelnos wrote: post #20
justlurkin12 wrote: post #18

Earlier quoted context omitted.

Real time securities wouldn't need brokerages to front collateral while the trades settle by the virtue of no settling period. They would only have to deal with customer capital used to buy the stock.

Wasn't a big part of this issue fueled by RH fronting the money for trades when the customer was transferring money into their account from a bank over ACH? Making ACH instant (which I believe is in the works) would solve that, not T+0 for settlement. (I don't have a good feel for what was the bigger driver of RH's issues though: overextension because of slow ACH or slow trade settlement.)

No, that was negligible. Robinhood actually fronts the least money out of all major brokers (something like $1000). And if that was the case the easy solution would be to block trades if your account didn't have the sufficient settled balance.

Re: It’s Time for Real Time Settlement

#62

Post by sjburt »

srcreigh wrote: post #50

I'm not entirely buying this T+2 narrative. It does not explain why Discord [1] and Facebook [2] were censoring WSB last week. [1]: https://www.theverge.com/2021/1/27/22253251/discord-bans-the... [2]: https://www.newsweek.com/facebook-robinhood-stock-traders-gr...

I think because both the discord server and the facebook pages were cesspools of sexist/racist content, that during the GME frenzy they got even worse, and the services knew that they would face increased media scrutiny with all of the increased attention. The hit pieces practically write themselves.

Re: It’s Time for Real Time Settlement

#63

Post by swampthing »

ummonk wrote: post #60
paxys wrote: post #54

Earlier quoted context omitted.

The whole episode has been a case study for how not to handle PR. Robinhood lost the public narrative every step of the way, and all their statements were late, lacking in detail and even contradictory. Remember the now-famous "we don't have a cash flow problem" statement from their CEO, right before they had to borrow a billion dollars to stay in business?

Right, and it is noteworthy to compare the PR from Webull in response to similar issues. RobinHood’s PR problems are entirely self-inflicted.

Agreed. It's sad/shocking to see a China-run company out-execute a homegrown, well-funded US startup on public relations with the US market.

Re: It’s Time for Real Time Settlement

#64

Post by [deleted] »

unethical_ban wrote: post #43
ZephyrBlu wrote: post #31

Earlier quoted context omitted.

Sorry, what? I can't tell if you're serious. Robinhood didn't get extorted, their clearinghouse told them they needed more capital to secure further $GME trades, because the volatility has been off the charts. Vlad even states this in the article! > Clearinghouse deposit requirements skyrocketed overnight ... > The clearinghouse deposit requirements are designed to mitigate risk

I think the point is, the effect of that sudden change was the screwing over of retail investors at the expense of funds and firms that weren't locked out. And that RH should have seen this coming if it were all "by the book". And how the hell can those fees go up so instantly? If we're going to be all "free market" about how only the strong survive, RH should be eliminated.

[deleted]

Re: It’s Time for Real Time Settlement

#65

Post by freeone3000 »

dan-robertson wrote: post #19
ssivark wrote: post #8

Out of curiosity, are there any reasons to prefer slower settlement? (Since this seems like a no-brainer, but clearly hasn’t happened already)

Some ability to net—that is to buy at one price, sell at another, and only settle the difference—is probably desirable

Sure, but end of day settlement (like is practiced on TSX!) has all of the reasonable benefits of T+2 settlement, while still taking place in an understandable time frame.

Re: It’s Time for Real Time Settlement

#66

Post by bobthebuilders »

swampthing wrote: post #59
srcreigh wrote: post #50

I'm not entirely buying this T+2 narrative. It does not explain why Discord [1] and Facebook [2] were censoring WSB last week. [1]: https://www.theverge.com/2021/1/27/22253251/discord-bans-the... [2]: https://www.newsweek.com/facebook-robinhood-stock-traders-gr...

Does there have to be one single explanation for 3 separate events?

Occam's razor. The fact that someone said take down WSB is way simpler than any alternative.

Re: It’s Time for Real Time Settlement

#67

Post by Miner49er »

Barrin92 wrote: post #56
Miner49er wrote: post #42

Earlier quoted context omitted.

Was that not just the market correcting itself? The stock was extremely over shorted, and the price rose to shake out the shorts. I think short squeezes need to be allowed to happen properly. If we don't want that, we would need to limit short selling.

the market is probably very soon going to return Gamestop to its actually reasonable evaluation, so the market didn't change. What changed was Citadel (who is actually Robinhood's customer, not the retail investors) and Silver Lake making a bunch of money off retail investors while a lot of people who bought in at the top are going to be fleeced. No value was created in this process or valuable information exchanged.…

I don't agree. GME will end up higher once it settles, because there's less long positions now, since there is less short positions.

Re: It’s Time for Real Time Settlement

#68

Post by aeyes »

kolbe wrote: post #36
300bps wrote: post #11

US Equities recently changed from T+3 to T+2: https://www.sec.gov/news/press-release/2017-68-0 There are many types of securities that are already settling at T+0.

It blew my mind when they went from T+3 to T+2. I couldn't fathom why they would go about changing it, but not go to overnight settlement. Government, though.

You might be surprised how much of the modern world is running on CSV files on FTPs.

Re: It’s Time for Real Time Settlement

#69

Post by IgorPartola »

kzrdude wrote: post #32

Robin hood has been called so many strange names and then gets no recognition when they want to strike at the root of the problem.

The simple issue that I saw with RH is that they restricted the ability to buy stocks like GME but not the ability to sell. It’s one thing to freeze the stock in place. It’s an entirely different thing to basically create a situation where your actions drive the price down while only letting investors sell. I will be honest I don’t entirely grasp the situation, but this seems to me like it was not just a bad PR situation but rather that they actually did something wrong.

Re: It’s Time for Real Time Settlement

#70

Post by dbt00 »

bobthebuilders wrote: post #66
swampthing wrote: post #59

Earlier quoted context omitted.

Does there have to be one single explanation for 3 separate events?

Occam's razor. The fact that someone said take down WSB is way simpler than any alternative.

"Someone" said it and all these people listened? You're going to need more evidence than that.
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