US Congress “Why Violates Freedom of Private Market Transactions”
Platform “Measures to protect customers from financial risks”
Photo = Reuters
Controversy is arising when US securities trading platforms including Robin Hood have imposed restrictions on individual trading on stocks that recently ant investors such as GameStop and AMC Entertainment are fighting a’short sale war’ with hedge funds. In the US Congress, it was pointed out that these platforms violated the freedom of individual market transactions. On the other hand, each platform argues that it is’to protect individual customers from risk’.
According to Bloomberg News on the 28th (local time), US Senator Sherrod Brown, who is scheduled to serve as the new chairman of the US Senate Financial Committee, said that “Wall Street people only rhyme with rules when they lose money.” It has announced that it will hold a hearing on measures to restrict personal transactions to It is pointed out that the securities industry, which has not taken any action against the mass trading of hedge funds’ call and put options, immediately imposed restrictions on ant investors.
The same move came out in the House of Representatives. Congressman Maxine Waters, the chairman of the US House of Representatives Finance Committee, vowed to hold a hearing for the same reason. Congressman Alexandria Okaciocortes, a Democratic House Finance Committee member of the House of Representatives, said on his Twitter, “Hedge funds are free to trade stocks at will, but only individual investors can buy stocks. We need to take a closer look at Robin Hood’s decision.” wrote. Senator Ted Cruz, a leading Republican senator, tweeted “fully agree”.
Republican Senator Pat Tumi said, “It is very anxious that a stock exchange platform can suddenly block investment transactions. People should be able to freely make investment decisions at their own choosing.”
Bloomberg News reported, “In the US Congress, criticism of restrictions on private stock trading has been raised on a rare occasion,” and “Each lawmaker is expressing bipartisan anger against platforms that block private transactions.”
Earlier, U.S. stock exchanges and platforms such as Robin Hood, Charles Schwab, and TD AmeriTrade have imposed restrictions on trading on some stocks, including Gamestop and AMC. Robin Hood announced on the morning of the 28th that it would restrict trading on 13 stocks with increased volatility. These stocks prevented individual investors from buying more.
The day before, Charles Schwab and TD Ameritrade announced restrictions on credit transactions for GameStop and others. TD Ameritrade also announced that it would introduce restrictions on trading of soaring stocks, claiming that these stocks caused system load. TD Ameritrade described it as “measures to mitigate risks to the company and its customers.”
Photo = Reuters
In the recent US stock market, individual investors are intensively buying stocks short-sold by hedge funds such as Gamestop. It is known that hedge funds, which lost in this’short sale war’, suffered tremendous losses by being driven to margin calls (the loss increased and had to pay additional margin).
As criticism grew, Robin Hood eased some of the restrictions on trade in about half a day. Robin Hood announced that “we have made limited purchases for stocks that were previously restricted.”
Reporter Sun Han-gyeol [email protected]
Ⓒ Hankyung.com prohibits unauthorized reproduction and redistribution