41–50 of 445 posts
This is probably generally true but that investment behavior is not what drove their clearinghouse failure. I wish they would quit it with the fluffy rhetoric. Why doesn’t Robinhood understand that we want straight answers from them.
Out of curiosity, are there any reasons to prefer slower settlement? (Since this seems like a no-brainer, but clearly hasn’t happened already)
I'd say the first reason is staring us right into the face, it disincentivizes actors on the market from engaging in exactly the kind of nonsense that is divorced from fundamentals we've seen over the last few weeks playing out on Robinhood.
Earlier quoted context omitted.
Robinhood got called up at 3am with an extortion demand for $3 billion due that morning, unless they shut off Buy orders of GME. The collateral call had nothing to do with Robinhood’s ability to pay for the orders it was placing. The problem was the GME short sellers were insolvent at the prices the stock was trading at, and contagion from the hedges failing would have left the clearinghouse looking at billions in lo…
Sorry, what? I can't tell if you're serious. Robinhood didn't get extorted, their clearinghouse told them they needed more capital to secure further $GME trades, because the volatility has been off the charts. Vlad even states this in the article! > Clearinghouse deposit requirements skyrocketed overnight ... > The clearinghouse deposit requirements are designed to mitigate risk
If we're going to be all "free market" about how only the strong survive, RH should be eliminated.
[0] https://www.reddit.com/r/wallstreetbets/comments/fcoaev/and_...
Wouldn't real-time settlement have completely destroyed RH last week? How would they have funded trading?
And even same day settlement after close of markets plus instant bank transfers would have completely avoided all this.
I commented as such the other day. I really want this to spur a move to real time bank transfers instead of ACH.
Earlier quoted context omitted.
Sorry, what? I can't tell if you're serious. Robinhood didn't get extorted, their clearinghouse told them they needed more capital to secure further $GME trades, because the volatility has been off the charts. Vlad even states this in the article! > Clearinghouse deposit requirements skyrocketed overnight ... > The clearinghouse deposit requirements are designed to mitigate risk
I think the point is, the effect of that sudden change was the screwing over of retail investors at the expense of funds and firms that weren't locked out. And that RH should have seen this coming if it were all "by the book". And how the hell can those fees go up so instantly? If we're going to be all "free market" about how only the strong survive, RH should be eliminated.
"How do clearinghouses determine how much is required?
It’s pretty technical, but the process basically works as follows: clearinghouses look at a firm’s customer holdings as a portfolio. They use a volatility multiplier, looking at specific stocks, to quantify their risk. The clearinghouse may assign significant additional charges based on how much of one stock a firm’s customers hold. If a firm’s customers have more buy than sell orders, and the securities they’re buying are more volatile, the deposit requirement will be higher. Clearinghouses can also require additional deposits if certain thresholds are met."
https://www.streetinsider.com/Corporate+News/Robinhood+Blame...
[1]: https://www.theverge.com/2021/1/27/22253251/discord-bans-the...
[2]: https://www.newsweek.com/facebook-robinhood-stock-traders-gr...