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@Frank seems any huge spike in bad reviews triggers a pause on things. To protect from people brigading (rightly or wrongly) on a business. But the advice has been for people to wait a few days then re-post their review, or that their review will get reinstated. The shadow banning of reviews is legit feral though, that shit needs to be stopped 100%.
I sure hope that whoever was applying pressure on Robin Hood to limit trading is willing to prop them up - they will be a long time, if ever, recovering from this piece of history. -
@Paekakboyz said in r/wallstreetbets, GameStop, and institutional investors:
I sure hope that whoever was applying pressure on Robin Hood to limit trading is willing to prop them up - they will be a long time, if ever, recovering from this piece of history.
That seems to stem from a misunderstanding of the requirements Robinhood has to meet under the Dodd-Frank Act.
This is a good (if lengthy for Twitter) read:
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@antipodean
Do you know if shorts were allowed to continue to short the stock on the day buying was banned?If the thread you linked is accurate, seems there is a systemic disadvantage to the little guy in this situation.
I hope the market can be allowed to work properly and short sellers become more cautious about (in Gamestops's case) being allowed to be 140% short its stock. I hope these heavily shorted companies continue to be targeted by the Reddit crew and no doubt funds going long the mania.
The short's goal with these loss making companies is to make financing more dilutive when capital is raised through selling shares. Thus, hoping to cause a death spiral financing situation whereby it becomes more and more dilutive and price lowering each time another round of financing is done, whereby the shorts increase their position further to drive the price down further.
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It's not over yet from what I've been reading. WSB expected a drop then apparently another surge is going to hit. Lots of hedge fund/large scale trading rather than the WSB crew + other minor players that was brining the price down.
Plus I've seen a fair bit of 'of course not you muppets' about MSM and commentators saying there is no way GME shares were worth $400. That's not the point with this shorts scenario. It's about the over extended shorts and the impact that will have over the next period.
... I think! I am white belt newb in this arena, but there is heaps of really accessible info and this shit is fascinating. Seemingly dirty as anything, particularly the big players influencing things, but so interesting.
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@Frank Was buying banned? The exchange’s systems kicked in when volatility exceeded the range and I understand that happened several times. But they are automated, as is the resumption in trading usually a few minutes later, and it’s not uncommon. If there was an announcement due that would create that volatility usually the company would ask the exchange to suspend trading in advance.
The brokers who implemented restrictions seem to have been those that specialise in retail, Schwab, Ameritrade as well as Robinhood, and that’s to enable them to refinance, which they are required to do. Do you have info that all brokers did this?
There’s another aspect to this, and that’s that market manipulation is illegal and if the brokers reasonably believed it was happening the regulators would have expected them not to assist. They have a legal responsibility to report market abuse. The EU, UK FCA and SEC all have rules about it. I’d be really surprised if the compliance guys at the brokers didn’t get very nervous when they realised this was coordinated.
Edit: just to be clear, the refinancing is something that would have been imposed by whichever clearing house the brokers are using (I presume it is DTC). They will have been told to lodge more collateral because the stock is volatile and appears to be overvalued, so that makes the risk of default high. The Dodd-Frank act that was supposed to mitigate systemic risk is behind the collateralisation requirements so it would be ironic if that’s what caused the restrictions.
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@JC
You know more than me.
Couple of questions.- Was shorting banned on that day they banned buying?
- Why was buying banned for those not going into margin to buy it? I don't understand why margin could not be banned but allow plain vanilla purchases where you cannot lose more than 100%.
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@Frank Unless I missed something I don’t think anything was banned, the brokers just stopped taking trades. I think there is a bit of an issue with how people perceive the market operating. When you place a trade with your broker you could be forgiven for thinking it all happens instantaneously but in reality most trades will take 2 days to settle and there is a bunch of organisations involved in making it happen. Central to all this is a few organisations called clearing houses. They operate in between buyers and sellers to provide stability by making sure that defaults don’t happen. Part of that is requiring all the participants to lodge cash as collateral which will be forfeit if they default on a trade. If their systems detect that there is trading happening on a participant’s account that has higher risk they will issue a call for more collateral to be lodged. That’s a real time process and they won’t take trades from you until the position is correctly collateralised. The brokers have no choice, they have to lodge cash and if they don’t have it they have to borrow it. Or they can’t get their deals settled. Of course they can push the cost back onto their customers, and in this case I don’t think many of the Redditors were expecting that.
It’s not exactly banning anything. It’s realising you can’t take deals that you’re unable to settle.
Bear in mind that this is an issue for a specific broker, not the market. Another broker who is better collateralised, or has access to liquidity to adjust their position, won’t have to stop trading. Even the ones who suspended trading managed to access credit impressively quickly.
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