Robin Hood clarifies GameStop trading restrictions “Compulsory deposit increased by 10 times”
After limiting the ant trade… “I wasn’t trying to stop buying stock”
(New York = Yonhap News) Correspondent Kang Gun-taek = US online securities firm Robin Hood, who was hit hard by restricting individual investors from trading in GameStop stocks, began to clarify.
Robin Hood announced on a blog on the 30th (local time) that it has temporarily suspended the purchase of some stocks due to a 10-fold increase in mandatory stock deposits required by’Clearing House’.
The Clearing House is a financial institution established to reduce the risk of contract defaults in the process of executing transactions such as stocks and derivatives, and acts like a central storage repository for stocks.
It takes 2 days to complete the settlement process to complete a stock trading transaction. In the case of stocks that suddenly surged, there is a risk of a plunge again within that period, so there is a high possibility that one party will not be able to carry out the transaction within two days. Thus, Robin Hood and others explained that the mandatory deposits of securities companies are increasing.
“It’s not because we wanted to stop people from buying these stocks,” Robin Hood wrote on a blog. “The amount of obligations we have to deposit in Clearinghouse has grown so large that we’re trying to buy volatile stocks to meet our obligations. “We had to take action to restrict it.”
The stocks of GameStop, a chain-type video game retailer that became the battlefield of the’ant vs. short selling force’, rose 400% this week alone and more than 1,600% in January. Individual investors united through the online community raised prices by buying stocks that were targeted for short selling such as Gamestop and AMC.
However, as Robin Hood, the free stock app most frequently used by individual investors, stopped buying the stocks on the 28th, complaints were raised among investors that’they were betrayed by Robin Hood’.
Hedge funds can be bought and sold, but individual investors argued that it was unfair to have to sell.
When politicians from both the Democratic and Republican parties criticized Robin Hood at the same time, and the Securities and Exchange Commission (SEC) issued a rant to check the situation, it seems that Robin Hood was also trying to explain through a blog that it was an unavoidable measure.
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