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1) All accounts were banned from buying these shares, even ones whose accounts had cleared funds.

2) If margin requirements were the problem, why not inform the user that due to the unusual circumstances, the increased margin cost would be passed onto the buyer?



Margin is a red herring. Robinhood cannot use client money to meet its clearing fund deposit requirements. Whether the buys and sells came from margin or not doesn't matter.


And most importantly, why was only buying of meme stocks disabled? This argument doesnt hold up to any scrutiny


Because those are the ones that push up the required collateral with the settling firms. The meme stocks are buy-heavy and highly volatile. Stocks that are less volatile and have matched buy-sell rates don't. Halting buys of meme stocks meant that RH needs less collateral with settling firms. Halting other buys doesn't change a thing.


Robinhood has also halted 50 other stocks including arbitrary ones like AMD. https://investorplace.com/2021/01/robinhood-bans-reddit-stoc...

There must be more to their internal situation they aren’t telling us because they probably just imploded their IPO


The same outrage (or worse) would occur if they halted sells. Could you imagine if the price tanked and people couldn't exit their position? It is a lose-lose situation. And I think a lot of people would consider a full block to be worse.


Yeah I guess that makes sense. Maybe the takeaway is to not use meme brokers to buy meme stocks


They can’t halt sales because brokers aren’t allowed to halt sales.


And most importantly, why was only buying of meme stocks disabled?

You gave yourself the answer. The collateral is connected to the volatility. The meme stocks saw their price volatility increase massively, therefore the DTCC collateral demand was raised from 3% (low-volatility) to a whooping 100% collateral.


It does appeal to the "oh they're still a startup" mentality, perfect for the HN crowd




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