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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

#371

Post by kmlx »

einpoklum wrote: post #245
kmlx wrote: post #199

Earlier quoted context omitted.

i've used: 1. revolut - these guys are complete jokers. closed after being asked to provide the proof of funding 3 times in 3 months. 2. hsbc/first direct - somewhat decent. but i only use it to top up my other accounts. i try to avoid them, as they're just too big. 3. starling - simple, no-nonsense banking from a startup. 4. revolut business - had my account closed down by the "bank" because they didn't want my busi…

Are these all platforms for investment in stocks? Or you talking about banking services generally?

all are banking, some offer trading/investments. i was replying to a monzo question, a banking startup.

for trading/investments it really depends on your situation and location.

(for example: some countries offer 0% taxes on capital gains for trading if done using special products, but not all available platforms will have them...)

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

#372

Post by posix_compliant »

IG_Semmelweiss wrote: post #313
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…

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.

So you’re saying the issue is “what if the grocery goes insolvent before it can hand you the milk, but after you’ve paid”?

I’m still not understanding how robinhood lost money in the first place.

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

#373

Post by Person5478 »

richrichardsson wrote: post #351
Person5478 wrote: post #349

Earlier quoted context omitted.

> except the kid is legally required to deliver the milk or make you whole. ... *milk*? The poor boy will have to pull on teats until he fills the pail, how terrible. /I'll show myself out.

Please do, this is not reddit.

Oh I forgot, we're all automatons with no sense of humor.

BLEEP BLOOP. BAD ROBOT WILL PUNISH SELF.

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

#375

Post by nend »

slfnflctd wrote: post #327
kryogen1c wrote: post #292

Earlier quoted context omitted.

actually im glad you said this. this is the core problem with this WSB/RH/GME event. a certain percentage of people in WSB only want to light a pile of their money on fire for the sole purpose of bankrupting some hedge funds. they expect no returns and only want to cause pain to people with more money than them that they dont like. another percentage of people (i think this group is much, much larger than the first)…

> left holding stock they bought for $100, $200, $300, or $400 a share (WSB was memeing share price was gonna go into the thousands) that is worth Many people said the same thing about TSLA before it stabilized at higher levels. I bought at under $40 and sold around $80 because I thought fundamentals mattered. Turns out they don't right now. Everyone talking about what GME is 'actually worth' is spouting bullshit. Th…

>I thought fundamentals mattered. Turns out they don't right now.

Fundamentals never matter "right now". Fundamentals are about long-term investing and growing money over time.

Day trading is about speculation, not investing. WallstreetBETS has nothing to do with market fundamentals or investing money. This is the point of the Keynes quote "The Markets Can Remain Irrational Longer Than You Can Remain Solvent" - Markets don't rely on the the "fundamentals" in the short term, only in the long term.

>Everyone talking about what GME is 'actually worth' is spouting bullshit.

That's because in the long term, GME's value hasn't changed. GameStop the company is just as valuable as it was a month, meaning it's basically worthless. Which means before too long the stock is going to crash and the majority of people who bought it are going to lose a lot of money, while the few who bought earlier will make out.

Whether it's the legal definition of "pump and dump" is pretty irrelevant, because in practice it's a pump and dump scheme, and is going to leave the majority of people involved with a lot of regrets.

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

#376

Post by xur17 »

jkestner wrote: post #362
rattray wrote: post #331

Earlier quoted context omitted.

> They have to have a certain amount to cover the value of all the stocks held by their clients Huh? I don't understand this. What do they have to hold and why?

It’s an SEC rule to guard against brokers going insolvent. Trades are not instant transactions so there’s a lot of credit being floated for days. Good thread explaining this, though still complex: https://mobile.twitter.com/KralcTrebor/status/13549526861652...

It feels like slow movement of money in our financial system causes a lot of these problems. Customer deposits take several days to settle (during which time Robinhood has to front the funds). Settlement of the stock trades / transfer of collateral to the DCC likely takes several days, etc.

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

#377

Post by exclusiv »

vkou wrote: post #53
exclusiv wrote: post #22

Earlier quoted context omitted.

They blocked regular buys though. If you have money in your RH account, this is a big problem.

As I understand it, even for executing regular buys, the settlement houses require RH to maintain a large deposit of dollars as collateral. This collateral requirement goes up when a stock becomes heavily traded, or more volatile. Because of the insane volume & volatility of GME, RH's cushion of collateral was exhausted (And they've now replenished it, by borrowing & raising money.) The reason that sells were permitt…

So this seems like a pretty easy way to stop a stock - change the collateral requirements.

From what I heard from the WeBull CEO, what you described sounds right. And he said the whole market could not function.

So in order for other stocks to trade (which have much lower requirements) they had to shut down several stocks.

So I'm sure the big shorts would know that if they get super screwed (price going higher and higher) this collateral requirement would cause this (and the stock to drop big like it did to $112 the other day)?

And this is basically all because of the risk that some hedge fund may not be able to pay (which causes collateral requirements to change)? Seems like the rules should change for these big shorts.

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

#378

Post by walleeee »

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.

Since finance itself is a socially convenient system of alignment fabrication, you might as well start subsistence farming.

It's turtles all the way down. You could say trust emerges when people agree to believe in a shared lie.

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

#379

Post by sumedh »

bombcar wrote: post #234
habosa wrote: post #213

Is it just me or is the involvement of VCs here really strange? If Robinhood was anything like a traditional broker (or bank/broker combination) Venture Capital firms would not have been anywhere on the list of places to get emergency money. Although I'm glad that RH has driven the price of trading down for everyone, this is one more reason why most people should keep their money with a more boring financial institut…

Most "real" brokerages can get access to billions if not trillions of cash for overnight/three days for settlement purposes. They say WallStreetBets is "4chan found a bloomberg terminal" - Robinhood is Silicon Valley masquerading as a real broker; perhaps even the Juicero thereof. I only have a small amount of play money there, and I continue to draw it down. TD Ameritrade and Vanguard serve as my real brokers. Side…

> I kinda wonder what Bogle would have to say about all this if he were still alive;

The next best thing is Warren Buffett, has he said anything on this?

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

#380

Post by stevesimmons »

uxcolumbo wrote: post #135
onion2k wrote: post #96

Earlier quoted context omitted.

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…

What about this bank? https://www.triodos.co.uk/

Triodos is fine, has an unusual sustainability ethos. They also have business accounts, though will only accept business with similar values.

For our personal and business banking in UK and NL, we chose:

* UK personal banking - Nationwide for primary current account, Tridos UK as secondary. Left HSBC because service was terrible and they kept on declining our card txns.

* UK business banking - Tried Tide but moved to Starling on discovering Tide didn't support joint account holders. With Starling also have a EUR account. It works seamlessly with the only disadvantage that transfers from the Starling EUR account to NL banks are overnight.

* NL personal banking - Triodos NL, after years with ABN Amro. Triodos is friendly, sustainability focus.

* NL business banking - Knab, which has been good so far. Wanted to use Triodos NL but there is a two month backlog approving new business customers.

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