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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

#121

Post by wtf_is_up »

nprz wrote: post #112
imcoconut wrote: post #72

This is robinhood's fault. He's not wrong that instant (or same day) settlement would be better than T+2, but there were plenty of other brokers that did not restrict trading. This was a liquidity issue for robinhood. This is a risk you run being a "cool startup that moves fast and breaks things" in the arena of securities trading. Additionally, Some of the bugs they've experienced are absurd in the context of a brok…

Zero commission trade is actually bullshit anyway. You end up losing more from inferior execution time than you would if you just paid the $5 per trade. Robin Hood also lied to users about this and ended up paying a $65 million fine[0]. [0] https://www.sec.gov/news/press-release/2020-321

How is this possible when I use limit orders? (not a robinhood user btw, but pretend I am)

Re: It’s Time for Real Time Settlement

#122

Post by JumpCrisscross »

Miner49er wrote: post #111
JumpCrisscross wrote: post #105

Earlier quoted context omitted.

> they raised deposit requirements potentially more than was standard What is your source for this? DTCC collateral requirements are calculated using, more or less, a fixed, predictable formula. And the DTCC isn't the ultimate creditor in these arrangements. They are drawing on lines of credit from banks, who are ultimately taking the credit risk of the collateral being insufficient for settlement.

Not completely, they have the right to add charges. Take a look at this tweet: https://mobile.twitter.com/KralcTrebor/status/13551753956420... It seems that they used this right by the fact that Robinhood was able to negotiate their deposit [0]. The DTCC demanded $3 billion. Robinhood negotiated down to $1.4 billion. If done by the formula, how is this possible? [0]: https://www.cnbc.com/2021/02/01/elon-musk-on-clubh…

> The DTCC demanded $3 billion. Robinhood negotiated down to $1.4 billion. If done by the formula, how is this possible?

Netting out trades.

Re: It’s Time for Real Time Settlement

#123

Post by JohnJamesRambo »

stouset wrote: post #109
paxys wrote: post #91

Earlier quoted context omitted.

> Why choose robinhood when the alternatives include some of the most well capitalized institutions in the world The biggest reason is that none of those world class institutions can actually build a functioning smartphone app

Vanguard’s app works fine for me. Sure it’s not gamified or meme-ready but maybe “investing your life savings” as a category shouldn’t be?

They need a Game Over screen for when you are liquidated.

Re: It’s Time for Real Time Settlement

#124

Post by biswaroop »

paxys wrote: post #91
imcoconut wrote: post #72

This is robinhood's fault. He's not wrong that instant (or same day) settlement would be better than T+2, but there were plenty of other brokers that did not restrict trading. This was a liquidity issue for robinhood. This is a risk you run being a "cool startup that moves fast and breaks things" in the arena of securities trading. Additionally, Some of the bugs they've experienced are absurd in the context of a brok…

> Why choose robinhood when the alternatives include some of the most well capitalized institutions in the world The biggest reason is that none of those world class institutions can actually build a functioning smartphone app

I've used Fidelity for many years: the app is excellent.

Re: It’s Time for Real Time Settlement

#125

Post by Forge36 »

JumpCrisscross wrote: post #120

Real time equities settlement and clearing is a terrible idea. It sounds great. But it breaks a lot of good stuff. I'm surprised the CEO of a brokerage is advocating for it. (The article is a bit loose with the terms settlement and clearing. Again, surprising from the CEO of a company that almost got taken out by internal clearing failures.) If you only think about the American stock market from the perspective of a…

In the U.S. the Federal Reserve is already planning to support it. Thread discussing it from a few days ago.: https://news.ycombinator.com/item?id=25982987

Re: It’s Time for Real Time Settlement

#126

Post by whimsicalism »

dharmab wrote: post #95
paxys wrote: post #91

Earlier quoted context omitted.

> Why choose robinhood when the alternatives include some of the most well capitalized institutions in the world The biggest reason is that none of those world class institutions can actually build a functioning smartphone app

I've been mostly happy with the Charles Schwab app. They also don't charge any fees.

I have not been. It seems to constantly forget my fingerprint.

Nor does it have a particularly nice UI, unlike Robinhood. That might be a plus (doesn't gamify it) but it is an inferior UI.

Re: It’s Time for Real Time Settlement

#127

Post by adjkant »

paxys wrote: post #91
imcoconut wrote: post #72

This is robinhood's fault. He's not wrong that instant (or same day) settlement would be better than T+2, but there were plenty of other brokers that did not restrict trading. This was a liquidity issue for robinhood. This is a risk you run being a "cool startup that moves fast and breaks things" in the arena of securities trading. Additionally, Some of the bugs they've experienced are absurd in the context of a brok…

> Why choose robinhood when the alternatives include some of the most well capitalized institutions in the world The biggest reason is that none of those world class institutions can actually build a functioning smartphone app

Merrill Edge is ugly but quite functional and featured on iOS. Same with Schwab. I don't need the "millennial" UI experience when moving thousands of dollars. And that's not to say it doesn't have value - I love it for many things. I'm a happy customer of Warby Parker, Brooklinen, Joybird, and Lemonade to note a few, all of which offer slick UI's and a bit of markup for a "just works, simply" experience. I much prefer ugly/clunky yet working correctly and not fucking me over randomly with bugs when it comes to major financial stakes.

Re: It’s Time for Real Time Settlement

#128

Post by humanlion87 »

imcoconut wrote: post #72

This is robinhood's fault. He's not wrong that instant (or same day) settlement would be better than T+2, but there were plenty of other brokers that did not restrict trading. This was a liquidity issue for robinhood. This is a risk you run being a "cool startup that moves fast and breaks things" in the arena of securities trading. Additionally, Some of the bugs they've experienced are absurd in the context of a brok…

If companies like Robinhood don't come along, how do you think disruption in the financial market will happen? If we always go back to the existing players, rate of innovation will be so slow (especially in the financial market). And it's obvious that startups will not have the same amount of assets that century old companies have. But JPMorgan or BofA did not earn their trillions overnight. In fact, we can even say they have screwed over more people than Robinhood has.

I am not trying to say what Robinhood did was correct or that they have not done any mistakes. I am just saying that I am glad that companies like Robinhood exist because otherwise the entrenched players would have never taken any steps to innovate.

Re: It’s Time for Real Time Settlement

#129

Post by hervature »

topspin wrote: post #103

What are the incentives? T+0 would enable the Robinhoods of the world. Are the big players and the regulators they've captured and the legislators they've paid for interested in enabling Robinhood et al. after the events of last week? DOA.

You think T+2 is a form of regulatory capture? Any type of regulation that makes it easier for retail to lose their money would be welcomed.

When things were delivered by horse, it was T+14, we are now down to T+2 for stocks and bonds (mostly anything related to private industry), T+1 for options and government stuff, and T+0 for futures. Everything is pointing at eventually everything being T+0.

I'll repeat, Robinhoods are welcome, especially if they do dumb things like this GME debacle. I expect the big players to lobby for relaxed margin requirements so that they can let retail lose their shirts like the 1930's while they profit by taking the smarter side of trades and insulate themselves by letting the Robinhoods fail in case of market failures.

Re: It’s Time for Real Time Settlement

#130

Post by kbar13 »

stouset wrote: post #109
paxys wrote: post #91

Earlier quoted context omitted.

> Why choose robinhood when the alternatives include some of the most well capitalized institutions in the world The biggest reason is that none of those world class institutions can actually build a functioning smartphone app

Vanguard’s app works fine for me. Sure it’s not gamified or meme-ready but maybe “investing your life savings” as a category shouldn’t be?

i have a vanguard account with most of my investments, with like 10% in robinhood for gambling.

the way i think about it is vanguard works fine (theres some bugs but not end of the world). but it is not optimized for timed trades. it works well enough for me to put in a big chunk of money on a recurring basis or liquidate funds for use elsewhere.

robinhood allows me to easily trade off of market emotion or do options trading.

they serve two very different markets. if i tried to trade options using vanguard i'd probably want to throw my phone against the wall.

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