These Are The Shadowy New York Financial Institutions That Forced Robinhood To Restrict Trading In Certain Stocks, by Michael Snyder

Wall Street’s trading platforms are not free actors in deciding whether or not restrict trading in a stock. From Michael Snyder at themostimportantnews.com:

We are being told that retail traders needed to be brought under control “for their own good”, but it was the reckless short selling of the big hedge funds that actually set the stage of last week’s chaos.

Why doesn’t anyone ever talk about restricting their exceedingly foolish trading strategies?

Thanks to relentless buying by “the Reddit Army”, several major hedge funds got absolutely slaughtered last week, and that group included Melvin Capital

Melvin Capital, a premier Wall Street hedge fund entangled in the frenzy over GameStop (GME), lost 53% in January, a source familiar with the matter told CNN Business.

Melvin, a major short-seller of GameStop, bet that the company’s shares would drop. But, on January 11, GameStop announced new board members who could help it with digital sales. That set off a fury on Reddit, namely subreddit WallStreetBets, which catapulted GameStop’s stock more than 1,600%.

Of course the small fish are not supposed to beat up the big fish like that, and the billionaires at the big hedge funds undoubtedly reached out to their powerful friends for help.

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3 responses to “These Are The Shadowy New York Financial Institutions That Forced Robinhood To Restrict Trading In Certain Stocks, by Michael Snyder

  1. What deposit requirements? I thought the FED regulated the stock margin requirements? If the stock is going up after a purchase, which is what presumably occurred here, where would the call come from for additional funds? Unless robinhood was doing something else with their client’s money. Can someone please enlighten?

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  2. MASH

    It takes two days to clear a stock trade. During that time a clearinghouse has an open obligation to both parties. Say I buy highly volatile XYZ stock at a high price after it has risen astronomically in hopes that it will go higher still. The clearinghouse has two days worth of exposure to possible adverse price movements the other way through whatever brokerage firm I executed my trade. If I’m part of a large group making the same trade through the same brokerage, the clearing house is looking at a big potential loss if the price should move adversely, a large number of buyers no longer want the trade to settle, and they cannot pay. The sellers on the other side of the trade will of course want their money. So the clearinghouse asks the brokerage to put up money as security against such a move.

    There can be more nefarious explanations for what’s going with Robinhood, the DTC, and GameStop now. However, under the circumstances and with Gamestop’s volatility, DTC asking Robinhood to put up money to protect itself is understandable and prudent, and may not be nefarious. I don’t claim to know either way, but there is a non-nefarious explanation.

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  3. Thank you

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