Robinhood Is Still Severely Limiting Trading, Customers Can Only Buy One Share of GameStop (cnbc.com) 77
Restrictions on Robinhood traders got tighter throughout the day on Friday, only allowing clients to buy a single share of GameStop. CNBC reports: The stock trading app also expanded its list of restricted stocks from 13 earlier in the day to 50. The restricted list tells clients how many shares and options contracts they can buy pertaining to a particular security. Robinhood customers can only buy one share and up to five options contracts of GameStop; however, if a customer already owns one or more share of GameStop, they are not able to buy any more shares.
Robinhood's restrictions could take the wind out of point-and-click traders trying to jack up the price of GameStop. Robinhood, however, will not sell any client's shares of GameStop that are already over the one-share limit from a previous position. The stock, which closed up 67%, was off its highs of the session as the new more severe limits were implemented. Earlier in the day, clients could buy five shares of GameStop. On Thursday, Robinhood said the restrictions would be eased on Friday. "However, the restrictions got tighter throughout the trading day, as the list of limited securities grew and the number of shares clients could buy shrunk for certain stocks," reports CNBC.
Robinhood's restrictions could take the wind out of point-and-click traders trying to jack up the price of GameStop. Robinhood, however, will not sell any client's shares of GameStop that are already over the one-share limit from a previous position. The stock, which closed up 67%, was off its highs of the session as the new more severe limits were implemented. Earlier in the day, clients could buy five shares of GameStop. On Thursday, Robinhood said the restrictions would be eased on Friday. "However, the restrictions got tighter throughout the trading day, as the list of limited securities grew and the number of shares clients could buy shrunk for certain stocks," reports CNBC.
Slashdot. News for Investors. Tips that Matter (Score:1)
While I personally find this whole saga utterly fascinating, I don't think we need half a dozen stories about it every day now.
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Yeah, when they start running up AMD, call me.
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Well no, this is open source finnancial analysis and stock evaluation and including the pattern analysis of active illegal stock manipulation by major corporate players.
What Robinhood did, wow, like mega naughty. They pretty much commited corporate suicide, PUBLIC ACTIVE MANIPULATION OF STOCK PRICE, by forcing transactions upon their customes to manipulate the shair prices to benefit what is effectively their parent corproation. Now that is a BLATANT PUBLIC CRIMINAL ACT, the SEC by law, should pull the let
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Oh the Irony (Score:5, Informative)
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Melvin Capital Management is a short seller predicted to lose billions on GameStop ($GME) stock.
Melvin is owned by Citadel, a hedge fund. Citadel owns the Robinhood app.
Citadel preventing purchases of GME shares on Robinhood is stock market manipulation.
Big surprise, huh?
Re:Oh the Irony (Score:5, Informative)
That's not correct.
$39 million of Robinhood’s revenues from equities and options order flow came from Citadel Securities, a market maker sister firm of Citadel (but not the same company .. they file separately) who came to Melvin's rescue in the form of a $2.75 billion investment.
Citadel and Citadel Securities were started by the same person, but they are not the same company. How much independence they actually have of each other is up to speculation of course. But stating the same company both owns Melvin and Robinhood is really quite false.
Re:Oh the Irony (Score:5, Interesting)
That's not correct.
$39 million of Robinhood’s revenues from equities and options order flow came from Citadel Securities
That's not correct either. It's way more than that. You can see the revenue amounts from Robinhood's payment for order flow for Q1 2020 here, [robinhood.com] Q2 2020 here, [robinhood.com] Q3 2020 here, [robinhood.com] and Q4 2020 here. [robinhood.com]
But where Robinhood gets its revenue really doesn't say anything certain about it's ownership. I haven't been able to pin down Robinhood's ownership (though I haven't spent too much time looking). All I've found so far is a bunch of stories about the money they've raised from various investment banks, VC's etc. This source [forbes.com] says Robinhood's two founders only control 20% of the company.
Citadel and Citadel Securities were started by the same person, but they are not the same company.
Citadel and Citadel Securities are owned by the same company, Citadel LLC [wikipedia.org], which is majority owned by Kenneth C. Griffin [wikipedia.org]. Gabriel Plotkin who runs Melvin Capital [wikipedia.org] used to work for Citadel LLC. These guys are all in bed together, no matter how many pieces of paper say they're separate.
But stating the same company both owns Melvin and Robinhood is really quite false.
Probably, though I'm not 100% certain. AFAICT 80% of the ownership of Robinhood isn't known. Hell, I can't find anything that identifies the ownership of Melvin Capital either. But these guys are all on each other's Christmas/Hanukkah cards list. About anything is possible.
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Re:Oh the Irony (Score:4, Interesting)
When the rich control the robbing from them to give to the poor
One might wonder if they also control the Biden Administration after Citadel gave Janet Yellen $810,000.00 [redstate.com] in "speaking fees." and now she will not recuse herself.
Or to what extent they control Google, after Google deleted 100,000 negative reviews of the RobinHood Android App [redstate.com] to conceal customer disapproval.
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Why does "speaking fees" get scare quotes? Also, from what decision should Yellen recuse herself? As Secretary of the Treasury, she probably is not going to make decisions about any particular case. Politicians from AOC to Ted Cruz want this looked into, with the main difference being that Ted Cruz is married to a managing director of Goldman Sachs and is willing to overturn an election when he doesn't like the results. So Redstat.com dude, cast your lot with the party of AOC and hope for the best.
If Cita
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Exactly how sweet is Janet Yellens cock that you want to suck on it so slobberingly?
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I don't have any problem with public figures earning big speaking fees and I am surprised when the far-right joins the far left in their suspicion of money. Unless there is some well-known cannon of professional ethics that treats past speaking fees as a current conflict of interest, I am content to dismiss this gripe as an attempt to change the rules when the Dems are in power.
But what would Yellen even would recuse herself from? The SEC would probably do any investigation, and it is not part of the Treas
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What you think "any idiot knows" seems to be mostly projection. Yellen was not working for the Fed when she made those speeches, so what influence would they be buying? I don't think it is possible to bribe someone without public responsibilities and I don't see why any "end run" would need to be implemented when the could just hire her in the open.
Of course, they did hire her in the open to make speeches. Yellen/Clinton/whoever comes out, makes a speech, and lends a veneer of gravitas to a networking even
Re: Oh the Irony (Score:1)
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What sort of influence to people want Colin Powell to provide? https://www.celebrityspeakersb... [celebritys...bureau.com]
What sort of influence do you think GW Bush was exercising in 2014 to justify $150k speeches? https://abcnews.go.com/Politic... [go.com]
This is an entertainment and prestige fee. If you want to move the world with $200,000, you're better off with Cambridge Analytica and 20,000 shit-for-brains voters.
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We don't know what, if anything, she'll need to investigate (the SEC does not answer to SecTreas). But I'm perfectly happy with whatever new regulations get passed because Warren will have to have voted for them.
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Sorry cuntslut, I'm already getting FUCKED by the brokers!
They are really asking for it now (Score:4, Interesting)
What's the point of "opening" trading if you are limited to one share on your order?
The SEC has lots of rules that regulate how a brokerage can operate. I can't believe that this doesn't violate a number of them.
Re:They are really asking for it now (Score:5, Insightful)
Let's say you are a Robinhood customer and you buy 100 shares of Gamestop.
You pay Robinhood. The seller's broker debits the seller's account.
Then the price goes up. You sell and withdraw your money.
Five days later, the brokers attempt to settle the transaction. But it turns out that the shares don't actually exist because the seller was a naked shortie, and the broker on the other end of the transaction is insolvent because of all the other transactions that are failing to clear.
So what is Robinhood supposed to do to avoid this problem? They are going to stop or limit trading in shares known to be trading naked.
Naked shorts are illegal. But obviously, the SEC's mechanism for detecting and enforcing the law is inadequate.
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SEC looking like it's reputable self.
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If this is the case, why isn't the stock halted until the SEC can sort it out.
How do they "sort it out"?
Rollback the transactions? The illegal shorties would LOVE that, while honest buyers would get screwed.
Force the shorties to pay up? That doesn't work when they don't have the money.
a questionable legal agreement between robinhood and the clearing house
Clearinghouses work on the assumption that the two parties are solvent. They can't clear a transaction when they are not.
The solution is to move to near-instant transactions, seconds rather than days. That would remove uncertainty and make naked shorting much more difficult.
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Now if the hedge funds are buying back stocks and defaulting on their buy orders I still don't see how that effects a cash purchaser going through a retail broker as the cash is there for this case and only those selling short would be problematic for this transa
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the buying that is being limited shouldn't be a problem
You buy a stock. You pay your money. The seller receives the money.
Then the price goes up. Since it is a short squeeze, it may go WAY up. Let's say it goes up ten-fold.
So now you are happy. You made plenty of money.
Then a few days later, the transaction fails to clear.
So, yeah, Robinhood still has your original investment. But what about the ten-fold gain? That money never existed because there was no actual stock.
So who is left holding the bag? The seller? Nope, he's broke. The seller's broker?
Re:They are really asking for it now (Score:5, Informative)
Requiring all stock purchases to be held for even just 5 business days before selling would fix most problems, HFT, and day trading is stupid anyway. What is this a casino?
There appears to be a lot of holes in the system that we all are directed to use instead of the old fashioned savings accounts and when pension funds used to be held by the employer.
I only opened a brokerage account half a year ago as the fed+banks ruined interest rates on CDs and savings accounts. I am ahead, which was easy during the market recovery, however the more I learn the more I think this is all just run by a bunch of monkeys with some computers and duct tape.
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So then what is the point of the T+2 day settlement time
There is no point to it.
The transactions take days because many years ago messenger boys carried paper around and lots of clerks sat at desks with adding machines and rubber stamps.
Then we had decades of inertia. Hopefully, the current debacle will incentivize modernization.
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When you buy shares, the clearinghouse used by your broker has to pay a certain amount to some central entity right away (even before they get the cash from the broker for the transaction). Normally this is a few % of the total value of the trade.
But the central entity has changed the rules and decided that for trades involving certain stocks the clearinghouse has to pay a much higher percentage (as high as 100% in some cases).
If these clearinghouses continued to accept buy orders in these stocks they would
Re: They are really asking for it now (Score:2)
Dont halt just dont allow short selling (Score:2)
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If the transaction is "insolvent", then the insurer of the one shorting pays.
They also are insolvent?
Well, how lucky are you, cause there's this bank that insured _those_ guys for a market cap of $1 trillion, so you're covered. Except, well, you might never see any money at all because those who run the system will never let plebs like you actually win, ever.
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If the transaction is "insolvent", then the insurer of the one shorting pays.
Insurance against insolvency?
If that actually existed, why was the 2008 bailout funded by the taxpayers rather than insurance companies?
there's this bank that insured _those_ guys for a market cap of $1 trillion
What bank? Who are "_those_ guys"? What are you talking about?
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the SEC's mechanism for detecting and enforcing the law is inadequate.
More likely is that huge funds dont need to follow the law. I have no confidence in the law when the law only applies to the bottom 99.9%
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RH has real limitations on throughput - they need to sink $ up front when you order but a lot of ppl are transferring money into RH. So they're having to float those customers until the $ arrive from banks, and since their entire customer base isn't selling anything, they have no cash.
Normally, their clearance house extends them credit, but will not for GME and other meme stocks.
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Robbinhood was also incompetent about literal security. Back in 2019 they admitted to storing some passwords in cleartext [zdnet.com].
For a securities company they sure did seem to be clueless about security. /s
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Passwords, nothing. They had errors in their margin loaning algorithm that let people borrow $1,000,000 for every dollar they put in (in some extreme cases). As you can imagine, loaning $250,000,000 to a 20-something kid who works in retail that they then put on risky investments was... not smart.
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So just don't float the customers until the money actually arrives from the banks then.
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So just don't float the customers until the money actually arrives from the banks then.
If you pass on the clearing delay to your customers, they all leave for another broker, and you go out of business.
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I mean, it's worse than just "the money arrives from the banks". Let's say I want to sell 100% of my retirements funds and YOLO into GME. Well, those proceeds are also delayed. Unless the whole market shifted over, there's a lot of cash they'll need to float.
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It only makes sense then for the two banks to wait until the end of the day and say hey, we're good we don't have to exchange any actual cash here, onl
Re: They are really asking for it now (Score:2)
What's the point of "opening" trading if you are limited to one share on your order?
Optics. They were able to say they re-opened trading on the stock, with some restrictions.
And if the CEO gets hauled in front of a committee, that's what he'll say, and it was only a little while before it re-opened, what's the big deal?
The general public will have absolutely no idea of the seismic impact the delay had.
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It's slightly alive (Score:1)
The trading in these stocks is only mostly dead [youtube.com], and with the talk of money at the begining and making your enemies suffer that scene seems oddly appropriate.
If you're a Robinhood account holder... (Score:5, Insightful)
Re:If you're a Robinhood account holder... (Score:5, Insightful)
This seems like the beginning of the end of Robinhood in its current form. I'm sure they know that and made the decision to protect their 'actual' customers and not the product (their users) knowing that this will be the end of their productization of retail traders.
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Yup. This. I've "toyed' with Robinhood over the years.
I realized I had a $100 sitting there, allocated, doing nothing but propping them up. Whoops, my bad. So I pulled it out. We'll see if it get to my bank.
I have another set of shares in some crap medial company I thought would going somewhere. I should really just take the loss and sell them and get completely out. I you need to know when to walk away and when to run.
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Still waiting for them to explain... (Score:2)
Now, they're restricting other equities outside of the current "odd" ones - AMD, Starbucks, more. W
Re: Still waiting for them to explain... (Score:4, Insightful)
I think part of the problem is that trades aren't instantaneously settled. Let's suppose you open and fund a RH account, then do the following:
1. Buy 100 shares, using 99% of your funds.
2. Sell them an hour later for $1/share more than you paid.
3. Buy another 100 shares 2 hours later.
Technically, the shares bought in step 3 are bought on credit, because step 1 exhausted your funds, and the proceeds from step 2 won't actually exist until tomorrow. Likewise, if someone else buys the shares you sold in step 2 a moment later, the exchange is technically selling shares that haven't officially changed hands yet.
As I understand it, "market makers" complicate things more. When you buy or sell one share, it's "local" to a market maker within your own brokerage firm, who trades with other market makers using the exchange itself. Normally, market makers don't hold shares long... literally, milliseconds. But in theory, if a stock took a MASSIVE hit within a fraction of a second, the MM could take a hit on the shares that haven't changed hands yet. Think: "hot potato". Normally, market makers make & lose millions of dollars per second, but generally come out ahead by using algorithms to avoid stocks that are significantly more likely to instantaneously crash.
In a "Gamestop" scenario, the algorithms fall flat on their face. They're almost rolling dice at this point, and risk-averse market makers are limiting their own instantaneous exposure because they think the price is going to crash at any second.
A good analogy is to look at the videogame crash of 1982. There was a market of consumers wanting to buy consoles & games, and abundant wholesale inventory of consoles & games to sell them, but actual RETAILERS wouldn't TOUCH them with a dirty, radioactive pole.
You might say, "well, manufacturers could sell directly to consumers". Except, they couldn't. At least, not quickly. Eventually, mail order became increasingly available, but was profoundly dysfunctional, because all the logistics we take for granted with Amazon Prime NOW (overnight shipping, realtime inventory status, etc) were pure science-fiction-fantasy back then. So, inventory languished in warehouses, and frustrated sixth graders went from store to store trying to find someone with Colecovision (or Atari, or other) cartridges still in stock. If you found them, they were a pittance... but once they were gone, they were GONE (esp. from the perspective of a middle-school student halfway through summer vacation in a small town whose K-mart's videogame aisle now had toasters & blenders filling the shelves).
My point is, without enthusiastic market-makers providing liquidity, it falls to the brokerage firm to do it. In this case, Robinhood. They don't want to risk holding a hot potato when the value crashes, so they're limiting the velocity of trades to only what they're guaranteed to be able to trade within a few seconds or less.
At least, that's the "nice" explanation that assumes they're merely limiting their own instantaneous risk.
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Robinhood is serving their customers. (Score:3)
Remember, if the service is free, you arenâ(TM)t the customer. Youâ(TM)re the product.
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Is it them or it is the clearing houses (Score:5, Interesting)
I strongly suspect the clearing houses may have clamped down on this. They are supposed to protect buyers from (to them) is irrational or malicious purchases. The idea that people will buy in protest is completely new to them.
And that's the new aspect. This isn't all just market manipulation. A lot of it is genuine voting with dollars to stick it to a part of the system that needs it.
Yep, hedge funds don't use clearing houses and they don't have the same issues as other traders. Well, they should. We are way over due at looking at the role of high frequency trading and hedge funds in displacing retail and traditional investments and fixing the inequities. Capital gains taxes need reform. Now. Higher rates, more restrictions on what losses can count and how.
That being said, I doubt a lot any of the people that really made out on this will stick to this activist stance versus take the money and laugh.
Finally don't underestimate just how much these funds can absorb and how long they can stick it out as well.
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There's an options "hack". (Score:3)
I'm not sure if this actually works on RH and/or other brokers with restrictions, but some WSB people shared the trick of buying near-dated deep ITM calls and immediately exercising. Because the calls are so deep ITM, you pay very little premium, LOL. When this is pointed out, you kick yourself for not thinking of it because most of the time nobody pays attention to those options--but this is plainly not "most of the time".
Anti-Marketing Perfection (Score:1)
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Why, that's it's not cheaper, would you use (Score:3)
Robinhood instead of a real online broker with better tools that isn't going to prevent you from trading?
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Probably illegal, definitely bad for business (Score:2)
Robinhood recruited all of its investors by touting a "power to the people" campaign that opened stock investing to small investors at low cost. Now that some of the small investors have figured out how to make money within the rules that the hedge guys have used for years, Robinhood is turning off the tap and preventing their customers from buying stocks that are openly available in the market. If this is not illegal, it should be. They are a brokerage, not a regulatory agency. Certainly, Robinhood is g
Steal a Twinkie from Walgreen’s (Score:5, Insightful)
Steal a Twinkie from Walgreen’s, you’re charged under criminal law. Overcharge millions of customers, and it’s civil law ... actually it’s not even that ... it’s arbitration. Only one of these ever faces the possibility of being locked in a cage.
It’s a federal offense, a felony, to lie to insurance companies, banks, and credit bureaus. It is no offense whatsoever for them to lie to you. It’s a felony to steal their content. Civil if they steal yours, hope you can afford a lawyer. It’s a felony for you to receive stolen property, yet Apple does it all the time. A friend’s stolen phone found it’s way back to Apple, yet they wouldn’t give it to him. He called the Cupertino police. They laughed and said “you’ll need to take them to court.”
Apple didn’t need to take anyone to court when their prototype wound up in a civilian’s hands. The cops ransacked his house.
The myth that is freedom is slowly, but surely, unraveling.
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Fidelity and ETrade (Score:3)
I'm mostly a buy and hold investor but I was curious about the smoothness of execution yesterday (Thu 1/28 and today) given what I was reading about RB, Webull, IB etc.
I did some small limit trades on Fidelity and Etrade accounts that I have to test them out. Smooth, no warning about anything, just executed like I would expect.
I expected that from Fidelity but was impressed by Etrade too. I have a mostly idle account with them from a former job where they handled the options account. I ended up poking around Etrade. Some of their research and tools are decent. Fidelity is a monster making it a bit clumsy to find things but they have it all and seem rock solid. YMMV.
Goodbye 'free market' (Score:1)
RH together with the clearing houses are creating a *massively* inclined playing field to the disadvantage of small investors.
It's also manipulating the price of the affected securities downwards.
How on earth is this a 'free' market?
SLV (Score:2)
Good morning.
SLV is a very conservative investment. It is an ETF tracking the price of physical silver.
From https://www.ishares.com/us/pro... [ishares.com]: "Use to diversify your portfolio and help protect against inflation"
So, the RH users can now invest $10 in *one* single share of SLV, and otherwise may keep their paper dollars.
In other news, Argentina is drastically limiting the ability of their population to buy foreign currencies, resulting e.g. in an official and unofficial exchange rate for the dollar: https [bluedollar.net]