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HSBC bans customers from buying Bitcoin-backer MicroStrategy shares

reuters.com

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Re: HSBC bans customers from buying Bitcoin-backer MicroStrategy shares

#31

Post by wmf »

CryptoPunk wrote: post #11

My bet is that they are afraid of regulators fining them. The multi-billion dollar fines they received over the last few years constitutes a significant portion of their profits and has probably made them hyper-vigilant. One of the unintended consequences of the Total Information Awareness / financial mass-surveillance AML/KYC movement is banks derisking at the expense of marginalized people and industries: https://w…

It seems like it's somebody's job to decide if MicroStrategy can lever up on Bitcoin but it shouldn't be individual brokers' jobs. Banks/brokers need to be neutral infrastructure. Their responsibility for AML should be to report suspicious behavior and no more; let regulators or law enforcement enforce the laws.

Re: HSBC bans customers from buying Bitcoin-backer MicroStrategy shares

#32

Post by perl4ever »

ptero wrote: post #13
niceairport wrote: post #12

Earlier quoted context omitted.

Maybe they have issues with people taking on a margin that they cannot afford? Cryptocurrencies being as volatile as they are shorting them on a margin can result in high losses that HSBC prefers not to be involved with? Just a guess.

Not impossible, but IMO highly unlikely: stocks, especially smaller ones can be way more volatile than any currency with over 1T market value. And you can still buy those on margin.

>you can still buy those on margin

That is absolutely not the case in a categorical sense.

Brokers can and do apply different margin requirements on a stock by stock or customer by customer basis. There's nothing out of the ordinary about a security not being marginable or having increased requirements due to risk assessment.

For example, here is a list of stocks at one broker with particular margin requirements, and it says it "changes frequently":

https://invest.ameritrade.com/cgi-bin/apps/u/MarginReq

Given that there are hundreds starting with "A", I'd assume the entire list is in the thousands, of securities that have individual margin requirements.

I think in fact the ticker GBTC which is a trust that owns Bitcoin isn't marginable.

Re: HSBC bans customers from buying Bitcoin-backer MicroStrategy shares

#33

Post by robjan »

gruez wrote: post #23
niceairport wrote: post #12

Earlier quoted context omitted.

Maybe they have issues with people taking on a margin that they cannot afford? Cryptocurrencies being as volatile as they are shorting them on a margin can result in high losses that HSBC prefers not to be involved with? Just a guess.

I'm pretty sure bitcoin has less volatility than some of the meme stocks (eg. GME or AMC).

Meme stocks cannot be traded on margin by any sensible broker

Re: HSBC bans customers from buying Bitcoin-backer MicroStrategy shares

#34

Post by mullingitover »

rawtxapp wrote: post #19

Next up, they'll have to ban Tesla, Square, Coinbase, Riot, etc. Where will they draw the line? Pretty much the whole market has exposure to Bitcoin through SP500->Tesla at this point.

Tesla has a market cap of 673.80B at the moment. Their BTC holdings are barely a rounding error.

Re: HSBC bans customers from buying Bitcoin-backer MicroStrategy shares

#35

Post by riffraff »

Someone1234 wrote: post #4

> “HSBC has no appetite for direct exposure to virtual currencies and limited appetite to facilitate products or securities that derive their value from VCs (virtual currencies),” HSBC said in a statement. But you wouldn't be? This is a product literally called "InvestDirect" where private individuals are buying stocks and assuming all the risk. If you don't want to offer margin on virtual currency products, more pow…

this seems to clearly fall under "facilitate" tho.

Re: HSBC bans customers from buying Bitcoin-backer MicroStrategy shares

#37

Post by mike_d »

mullingitover wrote: post #34
rawtxapp wrote: post #19

Next up, they'll have to ban Tesla, Square, Coinbase, Riot, etc. Where will they draw the line? Pretty much the whole market has exposure to Bitcoin through SP500->Tesla at this point.

Tesla has a market cap of 673.80B at the moment. Their BTC holdings are barely a rounding error.

Which is a problem in itself.

Tesla with a 2% market share in the US, is valued more than Toyota, Volkswagen, Daimler, General Motors, and BMW combined (40% of the domestic market).

Toyota makes about $2,500 profit for every car sold. Tesla would need to make $50,000 per unit sold on average, or basically 100% profit on a Model 3, to justify the market cap.

Re: HSBC bans customers from buying Bitcoin-backer MicroStrategy shares

#38

Post by klodolph »

ptero wrote: post #13
niceairport wrote: post #12

Earlier quoted context omitted.

Maybe they have issues with people taking on a margin that they cannot afford? Cryptocurrencies being as volatile as they are shorting them on a margin can result in high losses that HSBC prefers not to be involved with? Just a guess.

Not impossible, but IMO highly unlikely: stocks, especially smaller ones can be way more volatile than any currency with over 1T market value. And you can still buy those on margin.

Doesn't the market volume have a multiplicative effect, though? In other words, it's not just volatility, it's volatility x volume. Or something like that.

Re: HSBC bans customers from buying Bitcoin-backer MicroStrategy shares

#40

Post by revel »

Someone1234 wrote: post #4

> “HSBC has no appetite for direct exposure to virtual currencies and limited appetite to facilitate products or securities that derive their value from VCs (virtual currencies),” HSBC said in a statement. But you wouldn't be? This is a product literally called "InvestDirect" where private individuals are buying stocks and assuming all the risk. If you don't want to offer margin on virtual currency products, more pow…

They already have a version of Net Neutrality for brokers: reg NMS.

HSBC are well within their rights to refuse to accept bad orders. HSBC are exposed to specific regulatory risk not shared by US banks. Having a ton of customers go bust because a regulatory change nuked some meme stocks seems undesirable to me. If you don't like it you can always find another broker.

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