The TSLA Market / Economy

Between the time the trade is executed and settled (takes 2 days), RH has a liability to the clearing house that settles the trade. Typically, a broker has a similar amount of unsettled buys and sells, so they their net liability is minimal. With everyone on Robinhood buying they now have a big liability to the clearing house. The clearing house requires the broker to post some money as collateral for this liability. It also sounds like the clearing house is requiring a higher percent of collateral for GME and other volatile stocks.

Robinhood is not allowed to use client funds as collateral (SEC rules to protect the client so until they get the stock, their money is safe). Thus, Robinhood needs to use a lot of its own money as collateral for the clearing house - even though they have not lost any money.

God I would love to hear what Game Stop executives are saying / doing right now. Has to be the most surreal and ridiculous work environment ever.

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How much can they profit off this before it comes crashing back down to $10/share eventually?

As you explain it, it seems like a very temporary problem. Since the trades clear every two days, they just need to borrow the amount it takes to withstand the heavy volume one time. They shouldn’t need ever increasing amounts of money unless volume of trading goes up even higher. I’m not sure how much higher it can really go, given that it was (I think) the highest volume traded stock for some of this time.

So I guess the lose whatever interest they have to pay on the borrowed money (it doesn’t sound like the borrowed money itself is at risk). I have no idea on the scale here, but it doesn’t seem that significant.

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Do the terms of service allow Robinhood to just arbitrarily restrict trading on certain equities? Do the companies involved have a suit because Robinhood is directly affecting their market cap?

What keeps a brokerage, or all brokerages, just deciding they don’t like a company and we’re going ot stop trading it, sorry?

Don’t think there is any law that says they have to offer all the stocks, no.

For example some brokerages won’t let you buy levered ETFs.

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The battle over $320 :joy:

Just add it to the “this is fucked up” list.

So how does the shorts thing work, do the hedgefunds owe more the higher the stock is when their positions close?

Also it’s only some of their positions that close today right? So GME needs to keep this up for awhile to fully wipe them out?

Does anybody know a publicly traded firm that manufactures guillotines?

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I think its more of a contract dispute. If they were totally silent on the restrictions in their agreement with investors then its all about reasonable expectations etc. If their contract fine print said they could restrict the securities on their platform at their discretion and with no notice then the investors will have to vote with their feet I think.

Why? I don’t think all brokerages allow trading in like unlisted penny stocks either? The remedy if you don’t like it is to find a better broker.

Well, I think if the firm doesn’t trade in a group of equities it makes perfect sense, but to just decide to limit specific equities that they trade in seems a bit fucked up.

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That’s a little different. Trading on exchanges vs OTC is fundamentally different, its perfectly reasonable that a broker would do one but not both. Demanding all brokers do both would be like demanding all Italian restaurants also serve sushi.

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I don’t see why it’s “fucked up”. I mean it seems super Mickey Mouse but it’s not causing the harm that people imagine here.

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Time for another woefully inaccurate prediction - close >320 and this turd is going to absolutely moon AH

I mean, he’s exactly right.

https://twitter.com/chamath/status/1355186473339736068?s=21

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This really ought to be obvious when the service is free.