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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

#261

Post by IgorPartola »

astrange wrote: post #221
IgorPartola wrote: post #198

Earlier quoted context omitted.

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 th…

> Then why are they in this business if they don’t have the collateral? The grocery store doesn't deserve to go out of business if they run out of paper towels sometimes. > but if I am bringing cash to a transaction, why is it suddenly restricted? They can't use your cash as collateral due to preexisting rules (part of new regulations after 2008). They have to use their own, and in this case it wasn't infinite.

They aren’t a grocery store. If they were out of GME stock to buy nobody would hold it against them. That wasn’t the case.

I clearly don’t understand the regulations around this. It seems to me that when stock is volatile is exactly when I should be buying and selling and if my broker can’t make that happen it’s a problem, no? And it’s also a problem that their inability to trade that stock affects the price. So what is the correct solution here?

Re: It’s Time for Real Time Settlement

#262

Post by mattnewton »

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…

I also don’t think short selling as it is currently practiced is a net social good, but I don’t know anything about it’s importance in the agricultural sector. What does short selling provide there?

Re: It’s Time for Real Time Settlement

#263

Post by TopInvestor »

kasey_junk wrote: post #164
TopInvestor wrote: post #143

Earlier quoted context omitted.

The general recommendation is never use limit orders - do not reveal your intention to the other side.

This is terrible advice. if your slippage risk is such that you aren’t protected by NBBO you have absolutely no business on a retail broker of any sort. Meanwhile limit orders minimizes the most likely risk a retail trader has to overcome. Either you don’t understand the advice you were given, you were duped or you are trying to be duplicitous. In any case, terrible advice to be repeating in the context of retail tra…

I don’t give any advice. I was probing to see the reaction . It is amusing to look at postings glorifying the pundits advice. They are not your friend.

Have you actually placed a limit orders? Do you practice this advice with your own $’s? Do you know how much taxes you pay for a trade considered day trading? If the limit order is executed same day it is considered day trading. What is the point then?

Why retail investors are penalted for that but hedge funds are not? Are you retail trader or on the other side of the table? If so why you are giving advice to retail investors? The motivations? When I used to follow the pundits “advice” they were always wrong - limited orders were immediately executed. These “fluctuations “ causing execution of limit orders are never reported in the historical data . I used to purchase historical data for thousand $’s and never found these fluctuations in the official dat I saw on the screen. Meaning you can never rely on historical data for analysis. If you had the same experience you would know. Learning from practice I’ve different way of making $’s.

Re: It’s Time for Real Time Settlement

#264

Post by swampthing »

Traster wrote: post #222
swampthing wrote: post #202

Earlier quoted context omitted.

"nearly goes under because it over extended itself" is not really accurate. They took the steps necessary to prevent that from happening, by blocking the behavior that would have led to that. Unfortunately, those steps, in combination with poor communication on Robinhood's part, and emotion, ignorance, and paranoia on the part of the general public, has led to a PR crisis for them.

They didn't block behaviour that would lead to that. They disabled their core product and raised $3.4 billion in a week to cover their fuck up. Most likely, the founders of RH found themselve significantly diluted by this event and if they hadn't been able to raise more capital they likely would've gone bankrupt even if they disabled everything. That's pretty much the definition of over-extending yourself.

Where are you reading that they would have gone bankrupt even with the trading restrictions they put in place?

Re: It’s Time for Real Time Settlement

#265

Post by gher-shyu3i »

u10 wrote: post #250
danhak wrote: post #243

Earlier quoted context omitted.

If investors believe shares of these companies are a ripoff, they can sell any holdings and / or abstain from buying. Just like they can do in nearly every other type of market. If a used car salesman is trying to rip me off, I walk away from the deal. I don't need to be able to short his inventory! And the supply / demand dynamics of the used car market will trend toward equilibrium without any such shorting.

ok, but what incentives does anyone have to actually look at potentially fraudulent situations, especially if the stock is ripping, as in the case of Valeant Pharmaceuticals? In fact the incentives are so perverse that it pays _not_ to state your research on why the company is not worth what it is. Even the time value spent on research is non trivial. Your example would make more sense if the car they were selling a…

Sorry, but fixing one wrong with another is not the way. Are you honestly saying that stock shorting is the only incentive someone has to look at fraud? I don't buy that one bit.

Re: It’s Time for Real Time Settlement

#266

Post by u10 »

danhak wrote: post #257
u10 wrote: post #250

Earlier quoted context omitted.

ok, but what incentives does anyone have to actually look at potentially fraudulent situations, especially if the stock is ripping, as in the case of Valeant Pharmaceuticals? In fact the incentives are so perverse that it pays _not_ to state your research on why the company is not worth what it is. Even the time value spent on research is non trivial. Your example would make more sense if the car they were selling a…

The incentive already exists in the form of long investors doing their due diligence.

How does that make any sense? If the stock was growing 15% year over year without any indication that there are any issue, why would any investor want to provide any information or do any research on why that isn't the case? If an investor knew that there was fraud going on they would probably keep it to themselves and simply invest in the company anyways, because the financial incentive is there.

Re: It’s Time for Real Time Settlement

#267

Post by IgorPartola »

tptacek wrote: post #256
IgorPartola wrote: post #254

Earlier quoted context omitted.

Ok but the idea that you can’t buy stock at a time when it is most advantageous to buy it seems like a flaw in the system. So what is the solution then?

Using brokerages that are sufficiently capitalized to clear the trades you want to make. You might have to pay fees to do that. Having other people assume credit risks on your behalf usually costs some money.

That’s fair, but again if I am not trading on a margin and using my own money, where exactly does their capital come into play?

Re: It’s Time for Real Time Settlement

#268

Post by TopInvestor »

dragonwriter wrote: post #177
TopInvestor wrote: post #143

Earlier quoted context omitted.

The general recommendation is never use limit orders - do not reveal your intention to the other side.

I've seen recommendations to never use market orders; I've never seen one against limit orders.

Just try with your own $ and you will learn from practice. Good luck following recommendations. Practice is the best teacher. Now - do you have thousands $’s to learn from your mistakes?

Re: It’s Time for Real Time Settlement

#269

Post by u10 »

gher-shyu3i wrote: post #265
u10 wrote: post #250

Earlier quoted context omitted.

ok, but what incentives does anyone have to actually look at potentially fraudulent situations, especially if the stock is ripping, as in the case of Valeant Pharmaceuticals? In fact the incentives are so perverse that it pays _not_ to state your research on why the company is not worth what it is. Even the time value spent on research is non trivial. Your example would make more sense if the car they were selling a…

Sorry, but fixing one wrong with another is not the way. Are you honestly saying that stock shorting is the only incentive someone has to look at fraud? I don't buy that one bit.

What incentive would an investor have to claim that a company is fraudulent if there is no financial upside to it? Altruism? That's just naive.

Sure, you could point towards regulators but we know that the advantage will always be with the regulated.

Re: It’s Time for Real Time Settlement

#270

Post by swampthing »

Traster wrote: post #245

So this is like Facebook releasing a statement saying "It's time we were all nicer to each other" right? That genocide we were helping? You guys should figure that out. Hey guys, you know how you run a successful business clearing trades, and we just had to dilute our share in our company 50% because we fucked up our collateral calcuations? Well, we've got an idea. You redesign your entire business so that we don't n…

Where are you reading that they messed up their collateral calculations?
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