Update: Robinhood has revealed note of the modifications, stating that “due to current volatility” it is “Robinhood restricts deals for particular securities to position closing just, consisting of $AMC, $BB, $BBBY, $EXPR, $GME, $KOSS, $NAKD and $NOK.” The company included that it has actually “raised margin requirements for specific securities.”
Robinhood, the popular consumer trading application, has restricted its users from making some popular financial investments and wagers, public reports indicate. Social media is awash with notes from individual Robinhood users indicating that some popular securities are now untradable, and the company reportedly sent out a note yesterday stating that it is “carrying out particular constraints for GME [GameStop] and AMC [the theater chain] options trading.”
TechCrunch has multiple e-mails in to the company requesting clarification concerning what trades, and securities are banned in aggregate, and the thinking behind the move, however we’ve yet to hear back at time of publication. User commentary so far concerning Robinhood’s choice has actually been swift, and unfavorable, however.
Robinhood’s choice comes after zero-cost trading platforms discovered themselves at the center of one of the general public market’s more bizarre sagas, in which a crowd of retail financiers bid shares of heavily-shorted securities higher in an attempt to break the trades of expert investors; specifically who is making the bets, and what portion of the brand-new wagers are from specific financiers and not larger pools of capital following the trade is not clear.
TechCrunch asked Robinhood
The other day, after noting that some conventional online brokers had actually limited some user access to specific securities, mentioning their volatility, TechCrunch asked Robinhood and a number of its peers if they were taking similar preventative measures.
One of the group added some security, however most mentioned their focus on long-lasting shareholding over day trading; a reasonable position but one at chances with the fact that a lot of free-trading apps generate income from customer trade volume. And options and other more unique trades create more revenue for neo-brokers than trades carried out in widely known stocks.
Robinhood’s newest move, then, will ding its incomes as it is no longer allowing for trading in some incredibly popular securities and other market-based wagers.
This is not the first time that neo-brokers have met tension in between their business design and user access to unique investments. After a Robinhood user devoted suicide after trading choices and not understanding among their trades, a catastrophe, Robinhood worked to make options trading more difficult to enter. That was definitely the right call, but likely not great for its revenue in the short-term, we envision, offered how rewarding those trades have actually traditionally shown for the business.
Choices volume is setting records. Trading volume is at historic highs. And at the time of writing, shares of GameStop are set to rally at the open yet again today. Let’s see what takes place.