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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

#191

Post by JumpCrisscross »

u678u wrote: post #185

So new entrant joins industry, ruins pricing by giving product away for free, nearly goes under because it over extended itself, and then blames the rules. Yeah I'm sure everyone else wants to do what RH says.

> new entrant joins industry, ruins pricing by giving product away for free, nearly goes under because it over extended itself, and then blames the rules

Credit where it's due: ripping off the commission band-aid was overdue, and Robinhood single handedly caused it. And abridging T+2 is probably a good idea. (Though real-time settlement and clearing is probably not.)

What's missing in their communications is the mea culpa. We got into this to make big changes. We made them. One thing we overlooked was this weird bit of the financial system. Here is why we missed it, here is why it is obscure, and here are our tabula rasa suggestions on how it could be improved.

Re: It’s Time for Real Time Settlement

#192

Post by psychlops »

clarkmoody wrote: post #163

Side note: cryptocurrency exchanges perform brokerage, settlement, and clearing continuously and in real-time.

Came here to say this. Crypto exchanges have led the way in real-time clearing and in 24 hour trading.

Both of which are better for the consumer.

Re: It’s Time for Real Time Settlement

#193

Post by paxys »

adjkant wrote: post #127
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

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 prefe…

You don't need a good UI experience the same way my dad doesn't need a "fancy website thing" because he can easily call his stock broker to make the trade. But if these companies don't evolve they are going to keep losing younger millennials and beyond to Robinhood as time goes on.

Re: It’s Time for Real Time Settlement

#194

Post by tomp »

JumpCrisscross wrote: post #122
Miner49er wrote: post #111

Earlier quoted context omitted.

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.

Which is such a basic idea that it’s impossible that they didn’t come up with it themselves and had to be schooled by Vlad.

It’s like the “smart guy” having an insightful moment in a sci-fi movie: “I got it, we’ll use gravity assist!” Astrophysics 101.

Re: It’s Time for Real Time Settlement

#195

Post by gher-shyu3i »

kasey_junk wrote: post #189
gher-shyu3i wrote: post #165

Earlier quoted context omitted.

> Not Treasuries. Cash The way it should be. The quicker we do away with interest bearing and yielding assets, the better. It's the cause of the vast majority of the economic mess we're in today. We've literally known about this issue for thousands of years, interest and usury have been prohibited in Islam, Christianity, and Judaism. We still think we're smart and not going to be bitten by the dangers of interest, ye…

I had an interesting conversation with someone who took the view that all short positions were ursary. They had well thought out & logically reasoned from their premises arguments to back that up. I was really glad to hear their position. It filled me with dread because it would destroy our current agricultural industry. And as much as I recognize the problems with it, “a large percentage of the population starving r…

> who took the view that all short positions were ursary

It's more than usury. There is usury involved because "lending" the stock is done with interest. However, the problems don't stop there.

Stock shorters, as you point out, actively bet against a company or industry or economic structure in general, it's their benefit to see a company collapse or not do well. This isn't how a stable society should be set up.

Furthermore, stock shorting exposes three parties to risk: the original owner, the shorter, and the new owner. There is risk being created in the market that does not justify the value that comes out of it. Let alone the fact that it's possible to short more than 100% of the total stocks, on what planet is this even acceptable? In a normal stock trade, risk is transferred from one party to another equally.

The conclusion is that shorting is a heavily immoral, predatory, and dangerous practice. It's quite ironic that when ** hits the fan, the government has to step in to limit certain trades or practices that we've known all along to be dangerous (e.g. they lower interest or ban shorting).

Re: It’s Time for Real Time Settlement

#196

Post by satellite2 »

clarkmoody wrote: post #163

Side note: cryptocurrency exchanges perform brokerage, settlement, and clearing continuously and in real-time.

I'm going to simplify a bit, but there is a big difference in clearing crypto vs cash.

Clearing crypto doesn't require debt because your broker directly sends the TX on chain.

Doing the same with cash would require sending trucks of cash to their various clients banks throughout the day and would be prohibitely expensive.

That's why clearing was invented. I.e. having the bigger banks lending to the smaller and allowing to delay the actual exchange. (And hopefully never having to actually move cash since balance fluctuations between banks tends to be cyclical)

Re: It’s Time for Real Time Settlement

#197

Post by kasey_junk »

totalZero wrote: post #187
kasey_junk wrote: post #171

Earlier quoted context omitted.

Lol. You cannot judge your order execution quality as a retail customer. It takes the SEC years of investigation to do that. Its certainly not something retail brokers compete on. Robinhood lied and should be punished but they were penalized for doing so before other brokers had gone to $0. It remains to be seen what happens at the other brokers now that they are free.

> Lol. You cannot judge your order execution quality as a retail customer. If you've traded the same listed securities frequently on various platforms, you certainly can. In terms of speed, PFOF systems can hang on to limit orders that are marketable (ie they cross NBBO), technically not printing them outside the confines but taking their sweet time to make a decision about whether to cross the order or post it to an…

You can make a lot of money proving that.

Nanex made a bit of a cottage industry whistleblowing on that sort complaint.

Re: It’s Time for Real Time Settlement

#198

Post by IgorPartola »

astrange wrote: post #80
IgorPartola wrote: post #69

Earlier quoted context omitted.

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 situa…

They didn't do anything wrong, they are not allowed to restrict sales, and they were forced to restrict buys because you can't get $3 billion collateral overnight.

Then why are they in this business if they don’t have the collateral? If I have the money in my RH account to buy the stock, why can’t I buy it? I understand restricting buying on margin because obviously that’s affected by volatility, but if I am bringing cash to a transaction, why is it suddenly restricted?

I don’t really have a horse in this race, I am just trying to understand how it’s ok for them to put their thumb on the scale in this way and then say that they didn’t have enough collateral and someone that is retail investors’ problem.

Re: It’s Time for Real Time Settlement

#199

Post by totalZero »

tmnstr85 wrote: post #76

When you're getting your face rearranged in one corner of the boxing ring, very often the body tries to naturally move to another corner. Settlement cycles and market censorship are two separate things. It's on robinhood to make sure they can meet the same liquidity standards that banks have been "stress tested" for ever since 2008. Keep in mind that it wasn't 3 years ago where T+2 was just a dream. Real time settlem…

> Keep in mind that it wasn't 3 years ago where T+2 was just a dream.

Uh, what? We were already on T+2 three years ago (which was Feb 2018 by my calculations).

https://www.sec.gov/news/press-release/2017-68-0

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