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Robinhood, in Need of Cash, Raises $1B from Its Investors

nytimes.com

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Re: Robinhood, in Need of Cash, Raises $1B from Its Investors

#311

Post by Armisael16 »

tonfa wrote: post #62
amscanne wrote: post #54

Earlier quoted context omitted.

Retail investors lost millions because of an inability to buy?

I guess the theory from some people is that if they could have kept buying then the stock would go up (and trigger the squeeze). Not sure I buy it (esp with the amount of call options that are just going to magnify the move up but also the move down).

At the very least the price wouldn’t’ve have dropped 70%. That was an attack by institutional investors who sold relatively small amounts of stock at very low values. Normally retail users would’ve snapped it up cheap, but they can’t do that when their trading platform makes it impossible to buy.

Re: Robinhood, in Need of Cash, Raises $1B from Its Investors

#312

Post by rtkwe »

michaelt wrote: post #266
ajsharp wrote: post #24

"To continue operating, it drew on a line of credit from six banks amounting to between $500 million and $600 million to meet higher margin, or lending, requirements from its central clearing facility for stock trades, known as the Depository Trust & Clearing Corporation." Non-zero chance had they not haulted trading on those symbols they would've been insolvent by close of trading today, depending on the size of the…

> Non-zero chance had they not haulted trading on those symbols they would've been insolvent by close of trading today, depending on the size of their credit line. Perhaps you can help me understand something. In the absence of margin trading, if I deposit $100 of cash at my brokerage, then I order my broker to buy $100 worth of Stock A, how does credit and the possibility of bankruptcy enter into the transaction at…

They have to have a certain amount to cover the value of all the stocks held by their clients so when 50% of their account holders have a stock that suddenly gains 2-20x value things get tight. In your analogy the price of the milk is relatively stable in the case of gamestop the value of the milk is fluctuating wildly between the time you sent the kid, when he got to the store, when he picked up the milk, etc etc. except the kid is legally required to deliver the milk or make you whole.

Re: Robinhood, in Need of Cash, Raises $1B from Its Investors

#313

Post by IG_Semmelweiss »

michaelt wrote: post #266
ajsharp wrote: post #24

"To continue operating, it drew on a line of credit from six banks amounting to between $500 million and $600 million to meet higher margin, or lending, requirements from its central clearing facility for stock trades, known as the Depository Trust & Clearing Corporation." Non-zero chance had they not haulted trading on those symbols they would've been insolvent by close of trading today, depending on the size of the…

> Non-zero chance had they not haulted trading on those symbols they would've been insolvent by close of trading today, depending on the size of their credit line. Perhaps you can help me understand something. In the absence of margin trading, if I deposit $100 of cash at my brokerage, then I order my broker to buy $100 worth of Stock A, how does credit and the possibility of bankruptcy enter into the transaction at…

The real reason is as follows:

You cannot use customer funds to cover dtcc collateral terms.

Your milk example does not work, because you are not settling up the milk buy 2 days after. You settle your milk purchase on the spot.

Re: Robinhood, in Need of Cash, Raises $1B from Its Investors

#314

Post by IG_Semmelweiss »

nojito wrote: post #305
michaelt wrote: post #266

Earlier quoted context omitted.

> Non-zero chance had they not haulted trading on those symbols they would've been insolvent by close of trading today, depending on the size of their credit line. Perhaps you can help me understand something. In the absence of margin trading, if I deposit $100 of cash at my brokerage, then I order my broker to buy $100 worth of Stock A, how does credit and the possibility of bankruptcy enter into the transaction at…

Trades aren't immediate they take T+2 to clear. During that time frame, Robinhood has to put up collateral.

Correct. And more to the point, RH cannot use customer funds to cover that timeframe.

It must be its own funds. And the requirement of funds to be covering (collateral) can change on them with very little warning

Re: Robinhood, in Need of Cash, Raises $1B from Its Investors

#315

Post by Miner49er »

cced wrote: post #242

I don’t understand how all of a sudden the shift was made onto the insolvency of RH and that the discussion is less about the original conditions that led up to this. I just finished watching a video from Louis Rossmann [1] as well as one from Bruce Fenton [2]. In his video, Rossmann covers the technicalities and systems behind actually __making__ a trade with an app like RH. The videos were very informative and I le…

I need to watch your videos and learn more, but to continue your train of thought:

If the clearinghouses didn't put these requirements on RH, or ask brokers to stop buying of these shares, I assume they themselves are at risk of going under? (As you said, who's supposed to front those 5000% returns?) If that happens, would it not lead to a cascading failure of both clearinghouses and brokers going under? The end result being a major market crash?

The IB CEO seemed to be hinting at something like this on TV yesterday. It seems like there actually may be a lot at stake here, but I imagine that the clearinghouses and brokers will just shut it down again before any of that happens.

These means that the WSB narrative is sort of correct. It isn't direct collusion, but all these Wall St. firms are so reliant on each other that they'll always get each others back - if they don't they themselves are likely to go down.

EDIT: I just started watching the first video you linked and the CEO of WeBull is basically saying exactly what my comment does, so I guess I should've just watched that first.

Re: Robinhood, in Need of Cash, Raises $1B from Its Investors

#316

Post by victor106 »

peytn wrote: post #37
ajsharp wrote: post #24

"To continue operating, it drew on a line of credit from six banks amounting to between $500 million and $600 million to meet higher margin, or lending, requirements from its central clearing facility for stock trades, known as the Depository Trust & Clearing Corporation." Non-zero chance had they not haulted trading on those symbols they would've been insolvent by close of trading today, depending on the size of the…

I’m not keeping my money with a financial institution that lies to me. End of story. Transfer initiated on my cash, and I’ll deal with moving stocks in the morning.

Ditto. Shutting down my account. Enough is enough.

Robinhood has proven its intentions by its actions all the other things they say is just marketing and PR bullshit

Re: Robinhood, in Need of Cash, Raises $1B from Its Investors

#318

Post by feelix »

briefcomment wrote: post #289
feelix wrote: post #263

Earlier quoted context omitted.

you completely missed the point. the fact that the squeeze fails means that it fails to squeeze the shorts of the hedge fund, which is the one that will be coughing up billions to pay all the retailers. So yes, the retailers that are buying shares at higher prices will indeed lose actual real money if the short squeeze fails. And it will be due to what is likely to be market manipulation (ie screwing over its clients…

I think that’s GPs point.

it's not. Here's an example

Scenario 1: 1. Client buys share for $400 2. Hedge funds get short squeezed (because trading is not restricted by Robinhood) 3. Stock shoots up to $1000. Client made $600

Scenario 2: 1. Client buys share for $400 2. Robinhood restricts buying the shares (so the short squeeze doesn't happen) 3. Shares plunge to $50 because the short squeeze failed to happen (ie the hedge fund did not have to purchase the shares at higher prices, which is where the capital that the traders would share amongst themselves would come from) 4. Client lost $350

Re: Robinhood, in Need of Cash, Raises $1B from Its Investors

#319

Post by agumonkey »

onion2k wrote: post #96
peytn wrote: post #37

Earlier quoted context omitted.

I’m not keeping my money with a financial institution that lies to me. End of story. Transfer initiated on my cash, and I’ll deal with moving stocks in the morning.

I’m not keeping my money with a financial institution that lies to me. I know for a fact my bank lies. They've been fined hundreds of millions of dollars for money laundering (it's HSBC). A few years ago I looked in to moving to a more honest bank, but I couldn't find one that also met basic criteria like having access to cash points in the UK and having a half decent mobile banking app. Literally every major bank th…

> A few years ago I looked in to moving to a more honest bank, but I couldn't find one that also met basic criteria like having access to cash points in the UK and having a half decent mobile banking app. Literally every major bank that operates in the UK has stories of doing frankly awful things.

I sense a common theme coming.

Re: Robinhood, in Need of Cash, Raises $1B from Its Investors

#320

Post by mateuszf »

cced wrote: post #249
prohobo wrote: post #243

Earlier quoted context omitted.

To be honest, it doesn't really matter. This isn't about whether Robinhood technically must or must not do what they're doing, but that the system is setup in such a way that all these claims of "supporting the people" are fundamentally 100% bullshit. Robinhood tanked their credibility by letting the mask slip and people are on that like hyenas because of the irony. Really though, the focus on them is a distraction f…

> Really though, the focus on them is a distraction from the much larger slip by the entire financial system. Exactly. I also watched the recent CNBC interview with Chamath Palihapitiya [1]. I would like to it, but CNBC keeps taking it down. In any case, the host really doesn’t seem like he’s there to « get to the bottom of things or to understand » but to push the idea that the problem is anything other than the pre…

I have found the whole interview on Reddit - https://vimeo.com/505445024
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