GameStop Corp. on Robinhood application on a laptop computer and a smartphone. Peoples.
Tiffany Hagler-Gear | Bloomberg Getty Images
Robinhood may have continued to limit trade to low-squeeze names like GameStop on Monday, having experienced explosive rallies and unprecedented volatility compared to the previous week.
Customers can only buy a portion of Gametop’s stock and five option contracts. However, the millennium-backed stock trading app cut its list of restricted stocks starting from eight on Monday to 50 on Friday.
“The table below shows the maximum share and option contracts you can raise your position,” Robinwood said in an updated Help Center message on Sunday. “These limits may be subject to change throughout the day.”
The eight names are GameStop, AMC Entertainment, BlackBerry, Koss, Express, Nokia, Genius Brands International and Naked Brand Group. Robinhood is also limiting the purchase of option contracts in those securities.
If traders already hold shares or contracts in excess of the limits listed above, their positions will not be sold or closed, but they will not be able to open new positions.
The move to expand the sanctions came before Robinhood that the Central Wall Street Clearinghouse last week mandated a tenfold increase in the firm’s deposit requirements to ensure gradual settlements. The clearinghouses want to protect investors and markets to ensure that the brokerage has the necessary funds for trade settlement, a process that takes two days.
The firm also increased the margin requirements, or the amount of money in the customer’s account, when they would be using it to take advantage of the security.
The popular trading platform exploited credit lines and last week raised $ 1 billion of new funds from investors to meet clearhouse requirements.
A speculative buying frenzy kicked off Wall Street last week as a new wave of stay-at-home merchants, in this case Reddit’s WallStreetBets forum, continued to use social media to coordinate the massive small squeeze. Shares of GameStop, a struggling brick-and-mortar video game retailer, skyrocketed 400% in the past week, closing with a 1,625% rally in January. AMC soared 277% last week, while Kos burst more than 1,800%.
Many on Wall Street were concerned that this retail frenzy would cause more pain for brokers like Robinhood and that small squeeze would force large hedge funds to sell other positions to raise cash, causing widespread market turmoil Will generate
Stock futures declined in early Sunday trading.
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