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Robinhood and Didi to Kick Off a Hot IPO Summer

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Re: Robinhood and Didi to Kick Off a Hot IPO Summer

#51

Post by mandmandam »

codetrotter wrote: post #44
mandmandam wrote: post #38

Earlier quoted context omitted.

You must have missed the 420 memos where clearly bizarre fuckery around "meme stocks" was supported by Robinhood suspending trading of them, resulting in a mass migration from RH to Fidelity and others. You probably shouldn't talk condescendingly about things you clearly are so behind on.

> You probably shouldn't talk condescendingly about things you clearly are so behind on. Which part of my comment seemed condescending to you? For the record, no part of it was intended to be.

Fair enough - though I'd suggest you differentiate between meme stocks (those hyped on social media) and meme stocks that were targeted for destruction by SHFs and are now facing a multi-billion short squeeze. There's a lot of range between those two definitions.

Re: Robinhood and Didi to Kick Off a Hot IPO Summer

#52

Post by flefto »

jw1224 wrote: post #19
vkou wrote: post #10

Earlier quoted context omitted.

Nonsense. Clearing houses don't lose anything during a short squeeze, as long as funds committed to a trade actually clear. They aren't the ones on the hook for a short exploding. They raise their collateral requirements during a period of high volatility. As it turns out, when you run a zero-fee brokerage, you don't just have a couple of extra billions of dollars lying around that you can put up as collateral on a m…

> The only people allowed to naked short are market makers The SEC made naked short selling illegal after the 2008 financial crisis. Market makers are not allowed to naked short. > Clearing houses don't lose anything during a short squeeze, as long as funds committed to a trade actually clear Exactly my point — as long as funds clear , which they were at risk of not doing, thus putting clearing houses like the DTCC o…

On the day in question, Robinhood posted to say this is what it was doing, and it explicitly stated that it was doing so to protect its customers from volatility. It absolutely said nothing at all about doing it because of regulatory or other requirements.

Robinhood has since deleted that post from its site.

And no matter how you cut the cake, if you put your money into Robinhood then you risk losing it when Robinhood changes the rules.

That’s the message people need to hear.

Re: Robinhood and Didi to Kick Off a Hot IPO Summer

#53

Post by gruez »

JumpCrisscross wrote: post #3
elevenoh wrote: post #2

FYI for those interested: you can get exposure to Robinhood's post-IPO market cap outcome right now via FTX.com pre-IPO futures. This is something I'm pleasantly surprised by in 2021: Deposit crypto. Transact pre-ipo futures, stock futures, commodities like lumber etc. 24/7 with solid-liquidity.

> you can get exposure to Robinhood's post-IPO market cap Ish. Creating derivatives around private assets is hard. Anyone who bought FTX swaps in e.g. Coinbase pre-IPO lost money on bad pricing alone. It’s for these reasons that their product is not compliant with decades-old U.S. securities law. Unfortunately, it’s free to roam in younger jurisdictions. Disclaimer: I work in the private markets. I used to make marke…

>Anyone who bought FTX swaps in e.g. Coinbase pre-IPO lost money on bad pricing alone.

Is this when they're buying, or when they're selling?

Re: Robinhood and Didi to Kick Off a Hot IPO Summer

#55

Post by JumpCrisscross »

gruez wrote: post #53
JumpCrisscross wrote: post #3

Earlier quoted context omitted.

> you can get exposure to Robinhood's post-IPO market cap Ish. Creating derivatives around private assets is hard. Anyone who bought FTX swaps in e.g. Coinbase pre-IPO lost money on bad pricing alone. It’s for these reasons that their product is not compliant with decades-old U.S. securities law. Unfortunately, it’s free to roam in younger jurisdictions. Disclaimer: I work in the private markets. I used to make marke…

>Anyone who bought FTX swaps in e.g. Coinbase pre-IPO lost money on bad pricing alone. Is this when they're buying, or when they're selling?

> Is this when they're buying, or when they're selling?

FTX isn't a trading venue for shares. They create tokens representing the shares [1].

When they sell a token representing Coinbase stock at 3x what the stock is trading on private stock venues, and a bit more compared with where it IPO'd, that gain isn't necessarily going to other FTX customers. It's going to their captive broker-dealer, a German-regulated (i.e. virtually unregulated) entity.

Given Coinbase shareholders weren't allowed to transfer shares on unapproved platforms, there were zero authorized Coinbase sellers on FTX. The winnings went to the house.

[1] https://help.ftx.com/hc/en-us/articles/360051229472-Tokenize...

Re: Robinhood and Didi to Kick Off a Hot IPO Summer

#56

Post by kasey_junk »

jw1224 wrote: post #49
kasey_junk wrote: post #48

Earlier quoted context omitted.

RH self clears: https://blog.robinhood.com/news/2018/10/9/introducing-cleari... Before that they used Apex. This commenter seems disastrously uninformed about something they have very strident beliefs about.

I just re-read my comment and saying Citadel was Robinhood’s prime brokerage was definitely an error (too late to edit the comment now). I should’ve said market-maker. Nonetheless, all the conflicts-of-interest between Citadel, Robinhood, and Melvin still stand. Citadel own Melvin, Citadel are market-makers for Robinhood, Citadel are members of the DTCC, Robinhood users cost Melvin billions, Citadel are footing the b…

Worth noting that Robinhood is a member of the DTCC directly. As is Computershare.

You don’t need the connection to Citadel. If any member of DTCC blows up DTCC holds the bag. But all that means is all members of DTCC hold the bag, including the members holding the non-settled long positions because all public equities in the US trade through DTCC or one of its members.

Re: Robinhood and Didi to Kick Off a Hot IPO Summer

#57

Post by rokobobo »

flefto wrote: post #52
jw1224 wrote: post #19

Earlier quoted context omitted.

> The only people allowed to naked short are market makers The SEC made naked short selling illegal after the 2008 financial crisis. Market makers are not allowed to naked short. > Clearing houses don't lose anything during a short squeeze, as long as funds committed to a trade actually clear Exactly my point — as long as funds clear , which they were at risk of not doing, thus putting clearing houses like the DTCC o…

On the day in question, Robinhood posted to say this is what it was doing, and it explicitly stated that it was doing so to protect its customers from volatility. It absolutely said nothing at all about doing it because of regulatory or other requirements. Robinhood has since deleted that post from its site. And no matter how you cut the cake, if you put your money into Robinhood then you risk losing it when Robinhoo…

It seems that the commenters in this thread have at least two views on what you call “changing the rules.” The fact of the matter is, no one guarantees you 100% uptime access to the markets. I think this episode should be a lesson for everyone, RH sympathizers and haters alike, that it probably makes a lot of sense to have well-funded accounts at at least 2 brokerages, if you plan to be an active trader.

Re: Robinhood and Didi to Kick Off a Hot IPO Summer

#58

Post by vkou »

tl wrote: post #37
vkou wrote: post #7

Earlier quoted context omitted.

Just a reminder that Robinhood didn't prevent this. Automatic increases to clearing house collateral requirements prevented this. If Robinhood allowed those trades to go through, they'd have been cut off from the clearing houses, and none of their customers would have been able to perform any trades. Unfortunately, due to the low level of public understanding of how stock trades actually settle, the conspiracy narrat…

Robinhood implemented restrictions before any other platform though they were not the only ones to do so, held restrictions longer than any of their competitors, used restrictions (sell only) in a way that was unique to Robinhood and falsely made public claims (later to be retracted) that they had chosen to do some or all of this "for the public good." I would not trust them with a single dollar.

That's because Robinhood had the bulk of the retail mania, and were thus the most affected brokerage.

Other retail brokerages, that were less popular with the WSB crowd never even stopped purchases of GME, because GME is was a small fraction of their trade volume - and thus, their collateral obligations did not grow much.

You are correct for not wanting to use them to trade, for two reasons.

1. If you are actively trading, you are almost certainly throwing away money. Don't actively trade. Just buy an index fund and forget about it.

2. If you are actively trading, and you are a serious, informed individual (which already excludes the overwhelming majority of people who were buying GME), and you want 24/7 uptime, you shouldn't use a discount zero-fee brokerage that's popular on WSB. They won't be able to guarantee that uptime when WSB decides to take one side of a huge trade.

Re: Robinhood and Didi to Kick Off a Hot IPO Summer

#59

Post by vkou »

Miner49er wrote: post #30
Traster wrote: post #18

Earlier quoted context omitted.

That's not evidence that RH was: > supporting the short selling hedge funds Just to be clear: Robinhood claims that they prevented buying certain stocks because of increase collateral requirements by DTCC due to high volatility. Do you have any evidence that's untrue. Let's establish that before we move on to the claim that Citadel front-runs retail flow.

From my understanding, the reason the DTCC raised collaterals so heavily was mostly due to the risk on the short side. So they were protecting the hedge funds by protecting themselves, and it carried on to Robinhood. So Robinhood didn't really have a choice, but they still were protecting the shorts in the end.

And that's what happens when you play financial games you don't understand.

If your strategy for driving a short squeeze, or a pump-and-dump does not take into account counterparty risk, you are going to get taken to the cleaners. When you making money causes the brokerage you are using to be unable to execute that trade, this is 100% your fault.

As the saying goes, don't invest in financial instruments you don't understand. Entering a long position in a volatile, high-volume stock through a discount brokerage was a financial instrument that most of /wsb did not understand, and it blew up in its face.

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