Rylinks wrote: ↑
Thu Jan 28, 2021 11:37 pm
Ashenai wrote: ↑
Thu Jan 28, 2021 11:12 pm
I really don't know what's going on! But I can easily imagine valid reasons for RH doing what it did. Apparently it had to borrow several hundred million dollars
before/as it was doing these things, which seems to confirm what I said about excessive collateral.
Robin Hood is not, like, a portal into the magical Stock Shop where you can browse the shelves and buy stock. It's a broker, a middleman, and it does a lot of work behind the scenes to make the somewhat arcane process of settling stock purchases easy and invisible to the buyer. And while I just don't know enough about their collateral obligations to say anything definite, it seems very likely that Robin Hood simply did not have enough funds to complete all the trades that people wanted it to do, under these frankly unprecedented market conditions.
no matter how unprecedented the market conditions or how onerous the SEC requirements, selling people's positions on the bottom tick of the trading day is worthy of all the scorn they're getting
Sure. If you're a broker, you better be brokering. If you fail at completing people's trades, they won't trust you, you'll lose business. There might be regulatory implications, it's quite possible the SEC will breathe down RH's neck for this. This is all a given, and there's nothing wrong with any of it. RH was caught with its pants down and they're rightfully being criticized/shunned for it.
What I'm saying is that it looks like this might be all that happened
. No conspiracy, no clandestine Wall Street meetings with fat rich old men chewing on cigars and saying things like "youse'd best halt the trading, see? gnyaaah." Just the market taking off after traders did a Weird Move, and RH wasn't prepared for the Weird Move, and the traders weren't expecting RH not being prepared for the Weird Move.
Maybe RH should have been prepared! Or maybe the move was too weird, and it was unreasonable to expect any brokerage to cope with the resulting collateral obligations. I don't know
, but I'm very tired of the stupidest voices always being the loudest.