Robinhood temporarily stops buying some securities as deposit requirement increases ten-fold
NEW YORK (US) – Online broker Robinhood announced that it has placed temporary buying curbs on a small number of securities as clearing house-mandated deposit requirements for equities increased ten times.
“….the required amount we had to deposit with the clearing house was so large – with individual volatile securities accounting for hundreds of millions of dollars in deposit requirements – that we had to take steps to limit buying in those volatile securities to ensure we could comfortably meet our requirements,” Robinhood said in a blog post late on Friday.
The new generation small-time traders are big fans of Robinhood’s fee-free and simple-to-use app. The restrictions placed on Thursday invited a heavy backlash from high-profile politicians and celebrities.
Retail investors using Robinhood and other apps were responsible for the Reddit rally that made shares of GameStop Corp and other companies tom-tomed on social media platforms including Reddit, go up.