Robinhood Curbs Trading in GameStop, Drawing Condemnation From Alexandria Ocasio-Cortez and Ted Cruz

Several retail stockbrokers increased restrictions on the ability of individuals to trade certain stocks, drawing condemnation from an unlikely combination of lawmakers.

The trading app Robinhood said it would limit the ability of traders to buy the kinds of securities that have sparked an enormous rally in shares of GameStop, AMC and a number of other companies. The app had previously limited traders’ ability to borrow money to purchase shares.

Representative Alexandria Ocasio-Cortez, the progressive icon who represents parts of New York, called Robinhood’s move “unacceptable.”

“We now need to know more about Robinhood’s decision to block retail investors from purchasing stock while hedge funds are freely able to trade the stock as they see fit,” she wrote on Twitter. “As a member of the Financial Services Committee, I’d support a hearing if necessary.”

Senator Ted Cruz, the Texas Republican who often is a foil of Ms. Ocasio-Cortez and who helped lead the push against certification of the presidential election results, replied: “Fully agree.”

Robinhood has attracted millions of millennials to trade on its platform, largely by eliminating trading fees and making stock trading as easy as ordering food online. But on Thursday many of those customers flooded Google’s Play Store with angry, one-star reviews about the restrictions, tanking its average rating to 1 star out of 5.

“Manipulating the market in favour of Wall St. Completely undemocratic, the exact opposite of their motto,” wrote one reviewer. “Well, steal from the rich and give to the poor, unless you try to take from the rich directly, in which case the app won’t work anymore. Enjoy your hypocrisy,” wrote another user.

The app had a 4.8 out of 5 rating on Apple’s app store. Robinhood did not immediately respond to a request for comment.

Several other popular trading platforms, like Charles Schwab and TD Ameritrade, had already curbed trading activities in certain stocks, including GameStop, the video game retailer at the heart of the frenzy, and AMC Entertainment Holdings, the movie theater chain.

“We continuously monitor the markets and make changes where necessary,” Robinhood said in a statement. “In light of recent volatility, we are restricting transactions for certain securities to position closing only, including $AAL, $AMC, $BB, $BBBY, $CTRM, $EXPR, $GME, $KOSS, $NAKD, $NOK, $SNDL, $TR, and $TRVG.”

Robinhood also raised margin requirements for certain securities, which means investors need to keep more of their own money in their accounts when placing trades using borrowed funds from the firm.

Another service that offers free and low-cost trades to casual traders, Interactive Brokers, said Thursday that it had put guardrails around several of the same securities: option trading has been put into “liquidation only” on AMC, Blackberry Limited, Express, GameStop and Koss due to “extraordinary volatility in the markets.”

“We do not believe this situation will subside until the exchanges and regulators halt or put certain symbols into liquidation only,” Interactive Brokers said in a statement. “We will continue to monitor market conditions and may add or remove symbols as may be warranted.”

Webull, another trading app, said customers would only be able to liquidate positions they had in GameStop, AMC and Koss, a headphone manufacturer, before lifting the restrictions in the afternoon.

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Robinhood Curbs Trading in GameStop, Drawing Condemnation From Alexandria Ocasio-Cortez and Ted Cruz

Several retail stockbrokers increased restrictions on the ability of individuals to trade certain stocks, drawing condemnation from an unlikely combination of lawmakers.

The trading app Robinhood said it would limit the ability of traders to buy the kinds of securities that have sparked an enormous rally in shares of GameStop, AMC and a number of other companies. The app had previously limited traders’ ability to borrow money to purchase shares.

Representative Alexandria Ocasio-Cortez, the progressive icon who represents parts of New York, called Robinhood’s move “unacceptable.”

“We now need to know more about Robinhood’s decision to block retail investors from purchasing stock while hedge funds are freely able to trade the stock as they see fit,” she wrote on Twitter. “As a member of the Financial Services Committee, I’d support a hearing if necessary.”

Senator Ted Cruz, the Texas Republican who often is a foil of Ms. Ocasio-Cortez and who helped lead the push against certification of the presidential election results, replied: “Fully agree.”

Robinhood has attracted millions of millennials to trade on its platform, largely by eliminating trading fees and making stock trading as easy as ordering food online. But on Thursday many of those customers flooded Google’s Play Store with angry, one-star reviews about the restrictions, tanking its average rating to 1 star out of 5.

“Manipulating the market in favour of Wall St. Completely undemocratic, the exact opposite of their motto,” wrote one reviewer. “Well, steal from the rich and give to the poor, unless you try to take from the rich directly, in which case the app won’t work anymore. Enjoy your hypocrisy,” wrote another user.

The app had a 4.8 out of 5 rating on Apple’s app store. Robinhood did not immediately respond to a request for comment.

Several other popular trading platforms, like Charles Schwab and TD Ameritrade, had already curbed trading activities in certain stocks, including GameStop, the video game retailer at the heart of the frenzy, and AMC Entertainment Holdings, the movie theater chain.

“We continuously monitor the markets and make changes where necessary,” Robinhood said in a statement. “In light of recent volatility, we are restricting transactions for certain securities to position closing only, including $AAL, $AMC, $BB, $BBBY, $CTRM, $EXPR, $GME, $KOSS, $NAKD, $NOK, $SNDL, $TR, and $TRVG.”

Robinhood also raised margin requirements for certain securities, which means investors need to keep more of their own money in their accounts when placing trades using borrowed funds from the firm.

Another service that offers free and low-cost trades to casual traders, Interactive Brokers, said Thursday that it had put guardrails around several of the same securities: option trading has been put into “liquidation only” on AMC, Blackberry Limited, Express, GameStop and Koss due to “extraordinary volatility in the markets.”

“We do not believe this situation will subside until the exchanges and regulators halt or put certain symbols into liquidation only,” Interactive Brokers said in a statement. “We will continue to monitor market conditions and may add or remove symbols as may be warranted.”

Webull, another trading app, said customers would only be able to liquidate positions they had in GameStop, AMC and Koss, a headphone manufacturer, before lifting the restrictions in the afternoon.

Source link

The post Robinhood Curbs Trading in GameStop, Drawing Condemnation From Alexandria Ocasio-Cortez and Ted Cruz appeared first on TechFans.