Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop • Hacker News Board

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#491

Post by zxcvbn4038 » Thu, Jan 28, 2021, 4:16 PM UTC

bagacrap wrote: post #203

zxcvbn4038 wrote: post #84

This is interesting, can individual brokerages refuse to trade individual securities or to only allow them to be sold. Unless the SEC authorized these actions I think it arguably makes the brokerages liable for losses and is arguably market manipulation. Transferring securities positions between brokers is relatively costly and time consuming - takes at least a day and there is usually a $40-70 fee - so is a temporar…

what losses can you prove? It's not like you were blocked from selling at the high, the high was blocked from being reached. And this applies whether you have a rh account or not.

Opportunity loss. When I worked IT in brokerages we always had to reimburse traders for missed opportunity from technology issues -- which was abused, whenever trades went against them they would claim their UI was unresponsive and we'd have a programmer scour the logs with millisecond timestamps to prove the UI did respond and how quickly, then cross reference with the tradebook to see if its a trade that would likely be executed immediately or not etc. Often times the resolution is that the trader clicked trade at this timestamp, the order was sent at this timestamp, the exchange acknowledged at this timestamp, but you tried to buy 10000 shares at X price and only Y were available, so the trade did not execute immediately or not at all.

Edit: Class action lawsuit was just filed for loss of opportunity - https://news.ycombinator.com/item?id=25945052

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#492

Post by sudosysgen » Thu, Jan 28, 2021, 4:16 PM UTC

mFixman wrote: post #111

speeder wrote: post #9

This sort of stuff will put people more and more on edge, there is the deplatforming going on, people asserted their power financially, and now getting that removed too, the powers that rule USA don't realize that soon the only tool left to common people is violence? Even more with some irresponsible newspapers blaming the whole thing on GamerGate and Alt-Right, effectively pushing away people that previously could b…

> some irresponsible newspapers blaming the whole thing on GamerGate and Alt-Right [...] What?

To be entirely fair to the FT, WSB did originally have some connection to 4chan's /biz/.

It doesn't really anymore, but it's an understandable mistake imo

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#493

Post by andrewmunsell » Thu, Jan 28, 2021, 4:16 PM UTC

cactus2093 wrote: post #489

wyldfire wrote: post #26

Can someone help me understand Robinhood's POV? This just seems so outrageous that there must be some sane rationale that I'm not seeing. Why do Robinhood, Reddit, Discord, etc feel like they have to respond to this? Whether the investments being made are responsible or not, it doesn't seem like it should be their place to intervene. If the hedge funds over-shorted GME and WSB recognized that and traded against that…

One possible legitimate reason is the risk to Robinhood themselves. They allow margin trading and I think anybody would agree that buying GME at these crazy prices on margin is incredibly risky. If the traders can't pay, Robinhood or their bank/insurers are on the hook. Also even though the narrative here is Robinhood traders vs hedge funds, surely there are also a lot of shorts on Robinhood too, so there's more marg…

> Or maybe the upstream market makers are forcing their hand.

I'm not a lawyer, but to me, that seems like it would be very very illegal.

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#494

Post by CryptoBanker » Thu, Jan 28, 2021, 4:16 PM UTC

sltkr wrote: post #330

rswail wrote: post #159

As I understand it, the hedge funds had naked shorts. That's illegal. If they did, what is happening to them serves them right. Even if they didn't, a "short squeeze" is perfectly legal. If the short sellers think the stock is overpriced, and there's others that think its underpriced, then both sides are placing their bets and will deal with the result, either by making or losing a lot of money. This is not a "pump a…

> If the short sellers think the stock is overpriced, and there's others that think its underpriced, then both sides are placing their bets and will deal with the result, either by making or losing a lot of money. I don't think it's really a case of people disagreeing on the real value of GameStop stock. Framing it like this ignores important facts. This stock was trading around $4 in August, around $20 in the beginn…

A stock is worth what people are willing to pay for it...

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#495

Post by kart23 » Thu, Jan 28, 2021, 4:16 PM UTC

Spinnaker_ wrote: post #433

JumpCrisscross wrote: post #385

Earlier quoted context omitted.

> Can someone help me understand Robinhood's POV? Robinhood is a margin-lending options-trading broker. If a customer falls down on a trade, it is ultimately liable. If a retail customer loses money and makes a FINRA complaint that Robinhood induced them to buy through its gameified interface, it is liable. Risk and compliance likely made this call. Also, Robinhood makes its revenue from market makers. They are the c…

This is most likely the answer. They are taking on a lot of risk allowing this type of trading behavior. They likely don't have suitable risk infrastructure developed to feel like they have a handle on it, so they shut it down.

Why can't they just stop the people on margin from buying gme? That would be reasonable. But if it's your money, I don't see how it's risky for RH.

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#496

Post by CryptoBanker » Thu, Jan 28, 2021, 4:17 PM UTC

darepublic wrote: post #8

Not a fan of the Reddit wsb movement but not sure this is a justified move by Robinhood. You gotta let things play out by the rules of the game

This move by RH is changing the rules of the game

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#497

Post by clevernapkins » Thu, Jan 28, 2021, 4:17 PM UTC

coredog64 wrote: post #135

DyslexicAtheist wrote: post #106

Step 0: Citadel pays Robinhood for order flow. Citadel gets to see RH's orders a few milliseconds before they're filled. Citadel may choose to front-run some of those trades. Step 1: RH's customers and WallStreetBets start manipulating $GME. This is happening in the open. -- https://twitter.com/toxic/status/1353890766800621569

Dueling Twitter posts: https://twitter.com/matt_levine/status/1354129838806872073?s... I’m gonna go with Matt Levine over a Twitter rando, especially since the step 0 notes something that is explicitly illegal (front running)

Front running is illegal indeed. But it would be possible to use Robinhood's order flow data to detect momentum and decide to hold a position from that. Small difference but the effect is the same

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#498

Post by kaszanka » Thu, Jan 28, 2021, 4:18 PM UTC

chronolitus wrote: post #328

coredog64 wrote: post #108

Earlier quoted context omitted.

Read up on the story of the Piggly Wiggly short/corner.

a link for the lazy (twitter thread): https://twitter.com/dollarsanddata/status/135456107992655053...

And that time, the rules were also changed to protect the big guys. How convenient. The stock market is a farce.

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#499

Post by cactus2093 » Thu, Jan 28, 2021, 4:18 PM UTC

andrewmunsell wrote: post #493

cactus2093 wrote: post #489

Earlier quoted context omitted.

One possible legitimate reason is the risk to Robinhood themselves. They allow margin trading and I think anybody would agree that buying GME at these crazy prices on margin is incredibly risky. If the traders can't pay, Robinhood or their bank/insurers are on the hook. Also even though the narrative here is Robinhood traders vs hedge funds, surely there are also a lot of shorts on Robinhood too, so there's more marg…

> Or maybe the upstream market makers are forcing their hand. I'm not a lawyer, but to me, that seems like it would be very very illegal.

I agree, with how much regulation is there is in every other aspect of the markets, I am surprised there is not more explicit process around just shutting off trades they don't like.

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#500

Post by notahacker » Thu, Jan 28, 2021, 4:18 PM UTC

bko wrote: post #136

speeder wrote: post #9

This sort of stuff will put people more and more on edge, there is the deplatforming going on, people asserted their power financially, and now getting that removed too, the powers that rule USA don't realize that soon the only tool left to common people is violence? Even more with some irresponsible newspapers blaming the whole thing on GamerGate and Alt-Right, effectively pushing away people that previously could b…

> the powers that rule USA don't realize that soon the only tool left to common people is violence? Do you honestly believe this? Somehow we'll go from not being able to buy certain stocks to violence? Banning collecting rain water on your own property didn't do it. Abject failure of politicians keeping drinking water clean didn't do it? Not being able to buy cheese from unpasteurized milk didn't do it. Can't grow a…

And lets be honest, the overlap between retail investors trying to buy meme stocks and people who regarded Parler as their true voice isn't going to be that huge (and the relationship between AWS and Robinhood's compliance teams negligible). Anyone sufficiently motivated to see strong connections between the actions of AWS booting Parler and Robinhood restricting trades is going to be so accustomed to seeing everything through a fact-lite 'us vs the man' lens that it barely matters what corporations actually do. And those tempted by actual violence have had other causes to attach themselves to over the last 12 months anyway.

Also this isn't people 'asserting themselves financially', this is people mug punting on a stock that wealthier and more financially savvy people who got in early are happy to unload their stock to. There will end up being people quite relieved they didn't get to execute their plan to put their life savings into peak-price Gamestop.