Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

nytimes.com

Post reply on HN
Print view View original

431–440 of 479 posts

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

#431

Post by floxy »

lukeramsden wrote: post #407
IG_Semmelweiss wrote: post #352

Earlier quoted context omitted.

even if you self clear , you are still a broker clearer and you end up touching the DTCC. This is exactly what Robinhood is doing too. This twitter user explains, although it gets quite technical: https://mobile.twitter.com/wallstcynic/status/13550134381546... Look at the tweet at 7:41PM EST. " But if RH takes in 500m of new money and 300m buys GME, then at minimum they are looking at posting 30m+ from just that expo…

Last I heard, the DTCC have raised collateral requirements on GME from 1-3% to 100%. Seriously. That's the real reason clearing houses stopped accepting new orders on GME from brokers.

Is there a way for a regular person to see the current DTCC collateral requirements for a particular stock?

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

#432

Post by burmer »

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…

Yeah, lying is probably on the lower end of bad things HSBC has done... https://www.reuters.com/article/us-hsbc-usa-idUSKBN1E50YA

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

#433

Post by beagle3 »

sidibe wrote: post #393
beagle3 wrote: post #161

Earlier quoted context omitted.

Except, as SI/Float was at 139%, there was a guaranteed sucker to buy it off them at basically any price - unlike in a Ponzi scheme where you never know if there’s going to be another sucker.

Well the original shorts claim to have already closed their position and as it went up I think people are probably jumping on that side of the bet as well. Short interest doesn't mean it's going to go up forever this thing is just moving up on ponzi energy not short math

CNBC reported Melvin Capital closed the shorts, and then it turned out they didn’t.

This is very likely criminal market manipulation, but I’d be surprised if it ends up with more than a slap on the wrist to anyone.

And ... at the time I wrote that, si/float was still more than 100%, so - no, they most definitely not. (Am on phone now, will check later)

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

#434

Post by beagle3 »

MrMan wrote: post #279
beagle3 wrote: post #237

Earlier quoted context omitted.

Seems like the 100% line was crossed in Jun 2019 - and it does indeed mean that going long since that point, at almost any price was fundamentally sound investment and not ponzi; It is a pyramid, but the base layer of “suckers”, those that end up taking the losses in a standard ponzi/pyramid are already determined ; they are the most finance literate people in the market, and they did it willingly. WSB is just adding…

Investment ? Not sure about that

As much as that term can apply to buying stocks, it does.

Whether buying stocks should be considered investment or gambling - is an entirely different distinction.

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

#435

Post by shadowgovt »

zoobab wrote: post #323
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 watched the CEO on CNN tonight, and while I found him pretty difficult to watch, this is a very difficult position to be in. If you admit on TV that your company is experiencing liquidity issues -- even if temporary in nature such as with clearing custodianship requirements -- you run the risk of triggering a greater panic through customer withdrawals/redemptions." A Bankrun!

The key difference is that Robinhood isn't a bank. Bank runs are bad because banks are assumed to be massively liquid---in the average case, if you walk in and provide the proper ID, they can hand you the cash you're asking for. If they can't, one of their primary value propositions is at risk and people start demanding their money out because the bank isn't able to provide the services of a bank.

This is not (and is not expected to be) true of stock brokerage. Nobody generally has an expectation of moment-to-moment liquidity (or even closure of deals), even in a stock with significant availability. However, a brokerage deciding independently "You're not allowed to buy this one stock" is unusual, and can cause people to start backing towards the exits.

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

#437

Post by exporectomy »

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…

How could they trigger a "run"? Surely they have the money to repay every single customer what's in their account and you're not implying they're doing a Mt.Gox? Some customers may leave, but that won't hurt the remaining customers, will it?

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

#438

Post by toomuchtodo »

floxy wrote: post #431
lukeramsden wrote: post #407

Earlier quoted context omitted.

Last I heard, the DTCC have raised collateral requirements on GME from 1-3% to 100%. Seriously. That's the real reason clearing houses stopped accepting new orders on GME from brokers.

Is there a way for a regular person to see the current DTCC collateral requirements for a particular stock?

I believe this is only available in the Collateral Monitor dashboard that institutions that must post collateral have access to.

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

#439

Post by mempko »

015a wrote: post #412
krupan wrote: post #394

Earlier quoted context omitted.

“But, the deeper issue is the US financial system and its molasses speed of moving money around.” Sorry, I’m going to be That Guy here and point out that when people accuse Bitcoin of having slow transactions, this is what they should be comparing against, not Visa card transactions. Actual settled transactions. Bitcoin takes 10 minutes. US financial system takes days.

I do think, if more people knew the extent to which the US financial system is a house of cards, cryptocurrency would be even more popular. Not necessarily concerning fundamentals, as the US is still fundamentally strong. Primarily concerning the edges of the system and the institutions we interface with every day. I know Robinhood, and other firms, are trying to downplay what happened yesterday (and is continuing to…

Except you misunderstand one important part in the system, and that is credit drives the wheel of growth. Cryptocurrencies, while transactions settle much faster, are designed around a "hard-money" ideology. You know what's worse than inflation? Deflation. Now, there are pushes for credit in the cryptocurrency world, but as of now, it doesn't seem widespread.

Of course credit systems have their own problems, like debt growing so large that it's impossible to pay back. But usually a nice reset does wonders.

Since credit systems and money is created by governments, they have the power to do such resets and have done so in the past many times in the last 5000+ years.

If the credit systems collapse into a cryptocurrency hard money world, there will be a new emergence of desperate people, slavery, and war.

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

#440

Post by nrmitchi »

franklampard wrote: post #430
nrmitchi wrote: post #426

Earlier quoted context omitted.

> No, not all Robinhood accounts are margin accounts, I don't think I said that; I said that Robinhood papers over the differences in a way such that the end user doesn't explicitly interact in a hugely different way, and it's not explicitly clear what kind of account you have . I did imply that new accounts are all technically margin accounts. The link you provided seems to prove that? > When you sign up for a new a…

I will not argue with you about what Robinhood did to any of the margin accounts, if people borrowed money to trade stocks and Robinhood think that's risky, they have the right to close positions as part of standard risk management. But I am against what they did to the cash accounts (and margin accounts not borrowing money to trade). It seems that you think it's a small portion of all of the accounts, which I disagr…

I'm not spending the time to watch some Youtube video you're posting, especially if you don't link to a specific timestamp/context. I highly suspect that the link you're saying is that a broker would be responsible to cover loses on trades they made if the clearing house does not; not that the brokerage is required to accept unlimited risk just because someone wants them too.

> But that is Robinhood's liquidity issue and not does justify Robinhood disabling cash accounts from buying stocks.

Robinhood having a liquidity issue 100% justifies them not offering services that they may not be able to actually cover. Because the alternative is way, way worse. You want Robinhood to just... make up money that they owe people but don't actually have? I'm fairly confident that financial institutions can't just make up numbers in order to manipulate their way into compliance.

I very much dislike Robinhood as a company, but what you're suggesting doesn't make sense.

Post reply on HN