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@Stockcar86
Doubt it.
That would be completely illegal.
Too obvious. -
@Frank further reading following my original post indicates that they do sell the data to high frequency traders (this was published back in June)
https://blockworks.co/robinhood-sells-your-data-but-does-that-matter/
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@Frank As I said earlier there were times when the stock exchange suspended trading due to volatility.. That happens automatically if the prices move out of range. It stops brokers from matching prices so that would stop all trading. But that is only momentary. During that time everybody would be affected but it would be for purchases and sales.
I’m not sure I believe that the entire market could sell but not buy. If you place a buy order you haven’t bought anything, all you’ve done is place a request. If you place a sell order all you’ve done is offer your shares for sale at a price. Trading is matched, by definition. It requires a buyer and a seller to agree to trade.
it is possible for an individual broker to only take sell orders, but that’s not the entire market, just their customers. If they do that it’s still about collateralisation (of the broker, by the way, not of the buyer, that’s irrelevant, it’s the broker’s account at the intermediary clearinghouse that needs to be collateralised). from the perspective of the clearinghouse sales aren’t subject to collateral requirements for the simple reason that it is purchases which fail for lack of cash. Sales fail for lack of stock. It doesn’t make sense to hold up the settlement of sales for one of these brokers because that’s what brings in the sale proceeds that they need to keep themselves liquid.
Funding of trades at clearinghouses is a difficult thing to get right. It’s pretty esoteric but the systems have to take into account something called chaining. If all your purchases settle first you need huge amounts of cash on hand to pay for them. That’s seperate from collateral which you have to leave in an account untouched. If you are settling sales in amongst your purchases you only need to fund the net of purchases minus sales. So institutions will try to coordinate their trading instructions with their funding movements. Intraday cash is expensive so they all try and do this “just in time”.
The point of the collateral is if one of your purchases falls through because you don’t have enough cash that would potentially cause problems for the broker who expected to sell you the shares. They might then have insufficient cash to complete a purchase at their end (for a completely unrelated stock) and you can end up with a knock-on effects that create a logjam that can’t clear until someone lodges some cash. The collateral is there to act as a guarantee that the purchase costs are in fact covered so that momentary insufficient funds doesn’t cause a systemic problem.
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@Stockcar86 It’s not only not illegal, it’s pretty much an industry. They call it PFOF - Payment For Order Flow. I’m sure there are brokers who don’t do it but I can’t think of any offhand. They justify it by claiming it offsets costs and keeps fees low, but we all know it is supplementary income for a lot of them. For Robinhood, who don’t charge fees, how do you think they earn money?
It’s honestly amusing that a bunch of people who probably have no issue with tech companies selling their data are outraged that this tech company is selling their data. As the adage goes, if you don’t have to pay for the product...
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Haven't read through all of this thread so it may have already been noted but an overwhelming majority of investments in hedge funds these days is from pension funds.
So in reality, the people these guys were fucking over the most, was in most likelihood their parents / grandparents.
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@MajorRage said in r/wallstreetbets, GameStop, and institutional investors:
Haven't read through all of this thread so it may have already been noted but an overwhelming majority of investments in hedge funds these days is from pension funds.
So in reality, the people these guys were fucking over the most, was in most likelihood their parents / grandparents.
Its not even just that, though I agree that's a thing. But this stock is now down to $90 from $400. How many retail investors got burned on the way down after buying late on reddit advice?
I'm not passing judgement on the overall process, but I definitely take offence at them aiming the narrative to be some democratic stand for the little guys. Seems massively hypocritical to me
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@voodoo said in r/wallstreetbets, GameStop, and institutional investors:
Its not even just that, though I agree that's a thing. But this stock is now down to $90 from $400. How many retail investors got burned on the way down after buying late on reddit advice?
Sorry, but everybody who bought on reddit, deserves to lose their investment & any broker who pushed on it, deserves to lose their license.
I'm not passing judgement on the overall process, but I definitely take offence at them aiming the narrative to be some democratic stand for the little guys. Seems massively hypocritical to me
Absolutely. Grandstanding about the brilliance of this on social media by many a born-again lefty is sickening. The little guys (reddit) fucked over their parents basically. The mega rich HF manager is one link in an extensively long chain. It's the same thought process that see's the same idiotic fuckwits calling for years long lockdown in London as the only people that get burnt are pret & landlords. Short sighted stupidity at it's very best.
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@MajorRage just on the 1st point, I think its a little harsh. Lots of little folk would have got swept up in that movement, thinking they were sticking it to the man. And they would have been burned. Should they know better? Yeah, probably. But some of these guys bought in $200 on the promise that it "would go to $1000!" and take out the bad guys along the way.
Naive? For sure
Bad people? I dont think so.
I hope there aren't too many sad stories of small value retail investors losing their shirts on this
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@voodoo said in r/wallstreetbets, GameStop, and institutional investors:
Its not even just that, though I agree that's a thing. But this stock is now down to $90 from $400. How many retail investors got burned on the way down after buying late on reddit advice?
A fool and their money are easily parted.
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That particular subreddit is mainly for the laughs of loss porn. It also has professional-quality analysis, but those posts are much rarer than someone sinking $100 of entertainment money on what amounts to a lottery of a terrible stock/share and then everyone having a laugh at it when it almost inevitably loses money. If people are putting in more than they can afford to lose expecting a return, that's a financial literacy problem that is much wider than a particular share or subreddit, and Gamestop was just today's tulip for those people.
I'm not sure that the positives outweigh the negatives of speculative trading, especially over short intervals (like a day or two, or minutes or seconds), but it's a thing that exists currently, and is tough to regulate without causing other issues.
The Gamestop short squeeze was mostly a battle between hedge funds - the retail investors on Reddit had an impact, but I don't think it was as large as they think it was.
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3.5 to 4 million users on that sub reddit according to many sources. If you're going play with those self described "retards", then you better know what you're doing.
A welcome exposure on the practices of hedge funds and short selling/gambling, all within the rules of the game. May the internet nerds lift the veil on many more of our societal dysfunctions. That might just lead to some real equality rather than the lip service variety commonly spouted.
r/wallstreetbets, GameStop, and institutional investors