Robinhood explains why it placed restrictions on certain securities over the past week, says its clearinghouse-mandated deposit for equities increased tenfold
managed by obscure entities at the center of the stock market called clearinghouses — kicked in Thursday, forcing Robinhood to find emergency cash to continue to be able to trade.” $GME https://www.nytimes.com/... Mike Maples, Jr / @m2jr : We've “received questions.” Are you kidding me? This company's lack of integrity is an embarrassment. They should be held accountable for their BS antics. https://twitter.com/... Bill Gurley / @bgurley : RH risk-pushing policy decisions such as described below & aggressive use/encouragement of margin & encouragement of options trading ALL impact risk & resulting requirements from partners/regulators. Also +++ impacted user growth. Reward/risk correlated. Choices were made... https://twitter.com/... Tom Gara / @tomgara : This whole cycle was like a massively scaled up version of when everyone freaks out over a viral quote in a tweet that turns out to be extremely misleading, except this time the freak out encompassed national political leaders and cable news anchors https://twitter.com/... Mike Solana / @micsolana : thinking about all of the conspiracy theories, now firmly rooted and growing fast, that never would have existed had robinhood simply told the truth from the start https://twitter.com/... Zach Weinberg / @zachweinberg : Always interesting to see the real story come out (vs. the internet speed takes that are usually wrong). Speedy news without diligence feels like a huge tax on society. It's not good for us. https://twitter.com/... Kate Kelly / @katekelly : At its inception, @RobinhoodApp wanted democratize trading. But part of that is dealing w moneyed, established players. That really hits home when your cash margin demands rise tenfold. Our story, w @nathanielpopper, @MatthewPhillips, and @tarasbernard https://www.nytimes.com/... Nathaniel Popper / @nathanielpopper : New: The Silicon Valley Start-Up That Caused Wall Street Chaos How Robinhood opened the door to this week's market frenzy. w. @MatthewPhillips @katekelly and @tarasbernard https://www.nytimes.com/... John Lilly / @johnolilly : Really good and clear statement. Which should have gone out on Thursday. https://twitter.com/... Jordan Weissmann / @jhweissmann : Robinhood says it indeed halted trading because the clearinghouse it uses to clear trades demanded it put down hundreds of millions in deposits it couldn't afford. So, basically, the Redditors broke their broker. https://blog.robinhood.com/... Charles Forelle / @charlesforelle : Short version: Robinhood has to put cash on deposit with its clearinghouse every day. How much depends on how volatile are the stocks that its customers are trading and whether on balance they are buying more than selling. This week, it couldn't put up enough cash. https://twitter.com/... Kate Kelly / @katekelly : Important development: @RobinhoodApp acknowledges it limited trading in @gamestop, AMC, and others on Thursday because its clearing requirements were so large: https://blog.robinhood.com/... Christopher Baer / @christopherbaer : Ppl are focusing on what the DTCC capital calc is for $GME. But the real question is how was this not forseen? It sounds like they brought some clearing activity in-house, they know they have trader herd behavior, earlier experience with $CCL & Kodak, margin & options levers... https://twitter.com/... @frances_coppola : Clear explanation of how cash collateral calls from the clearinghouse forced Robinhood to suspend buy orders in the stocks targeted by WSB traders. https://twitter.com/... Lance Ulanoff / @lanceulanoff : What those Robinhood temporary trade restrictions were really all about https://twitter.com/... https://twitter.com/... Mike Murphy / @mcwm : so it was a liquidity issue https://twitter.com/... Tom Warren / @tomwarren : “It was not because we wanted to stop people from buying these stocks. We did this because the required amount we had to deposit with the clearinghouse was so large—with individual volatile securities accounting for hundreds of millions of dollars in deposit requirements.” -RH https://twitter.com/... Henry Blodget / @hblodget : Finally, as the mania of conspiracy theories fades, the truth begins to emerge... https://twitter.com/... @ivanthek : Here's my 2¢ on this: 1) The firm seems too small for the size and activities of its clientele. 2) If margin requirements on volatile stocks was 100% and customers had the cash in their accounts, I wonder if outside funding need would've disappeared. 3) Operational risk is real. https://twitter.com/... Dare Obasanjo / @carnage4life : Robinhood's CEO was asked point blank on CNBC if they paused trades in $GME & $AMC because of a liquidity problem and he said no. They dropped a blog post at 11PM last night saying their deposit requirements went up 10x (aka a liquidity problem) Bad look https://blog.robinhood.com/... Ouriel Ohayon / @ourielohayon : Good explanation but it comes down to one issue. Centralized finance rails is not fit to serve well open finance. Settlement day+2 in 2021 is unimaginable in the age of real time internet. Robinhood (and others) should and must do a better job at disclosing those risks earlier https://twitter.com/... Pierce Johnston / @piercejohnston : Robinhood CEO yesterday: we had plenty of money to cover the deposit requirements Robinhood today: we didn't have enough money to cover the deposit requirements https://twitter.com/... Sheel Mohnot / @pitdesi : The Robinhood response is a good explanation of what happened. It is ~40 hours late, bad PR. They should have sent out an email with a TL;DR and linked to this article for a longer explanation. Their deposit requirements went up 10X due to the volatility https://blog.robinhood.com/... Lou Whiteman / @louwhiteman : Captain of the Titanic: “We've received questions about why your feet are wet...” https://twitter.com/... Ouriel Ohayon / @ourielohayon : Tl;dr: trading Day+2 has caused used us massive liquidity risks and we had to pause certain stocks. https://twitter.com/... Bill Gurley / @bgurley : Does the amount of margin your customers are using (and you are allowing) directly impact the mandated deposit levels? https://twitter.com/... @barbariancap : I think this is the only actual number in this post “our clearinghouse-mandated deposit requirements related to equities increased ten-fold” https://twitter.com/... @jason : This is an exceptionally well written explanation of what happened this week. 👏 @RobinhoodApp 👏 There is no conspiracy Robinhood wants you to trade, but they have requirements being the #1 app while GameStop $gme became the #1 nationwide story is unprecedented—and hard! https://twitter.com/... Brooke Hammerling / @brooke : And THIS is a masterclass in how not to communicate as a company. Maybe 2 days ago it would have been fine but at 11PM ET on a Friday night to drop this? And to be glib and not address the seriousness of the last 2 days? NOPE. https://blog.robinhood.com/... @qtrresearch : New Robinhood blog just out says clearing houses raised deposit requirements for them 10x this week and that individual securities accounted for “hundreds of millions” in deposit requirements https://blog.robinhood.com/... https://twitter.com/... Amir Efrati / @amir : In other words you're saying this could happen again, right? https://blog.robinhood.com/... https://twitter.com/... @joshelman : But slowing down for a sec - if you have been part of the speculation, questions, or impacted by the market this week, worth reading: https://blog.robinhood.com/... Reed Galen / @reedgalen : Robinhood acting more like the Sheriff of Nottingham. https://twitter.com/... Eric / @wheatpond : upcoming RH IPO: a brokerage app that doesn't let you trade stocks 🤨 https://twitter.com/...
The explanation identifies clearinghouse collateral requirements—not outside pressure—as the operational constraint. That matters because Robinhood had already expanded its restrictions to more than 50 securities, making the clearing process a direct limit on what its customers could buy.
First-order effects
Robinhood customers face constrained purchases in affected securities while the broker supplies substantially more cash collateral to keep equity trading available.
Robinhood’s financing and liquidity management become immediate operational priorities after the tenfold increase in its required clearinghouse deposit.
Second-order effects
Public and investor criticism of Robinhood’s restrictions and changing explanation raises the reputational cost of relying on aggressive trading access during volatile periods.
Clearinghouse requirements turn sudden demand in stocks such as GME and AMC into a funding test for retail brokers, linking customer trading limits to each broker’s available cash and credit.
Third-order effects
If such volatility-driven deposit spikes recur, retail trading platforms will need to treat clearing capacity as a core product constraint rather than a back-office function.
The episode points toward a market in which clearing infrastructure can fragment access to liquidity: customers may see different trading availability across brokers during stress.
The trend: Retail brokerage is becoming more visibly constrained by the capital and clearing infrastructure required to support high-volatility customer trading.
Robinhood says clearinghouse deposit requirements on certain stocks rose tenfold, resulting in “hundreds of millions” of extra dollars required. https://blog.robinhood.com/...
This plus raising a billion dollars at a discount seems to indicate Robinhood was not in great shape this week https://blog.robinhood.com/... https://twitter.com/...
Remember how I said their explanation made sense and the issues came from them not being transparent and letting people come up with their own theories? Yeah https://twitter.com/...
RH risk-pushing policy decisions such as described below & aggressive use/encouragement of margin & encouragement of options trading ALL impact risk & resulting requirements from partners/regulators. Also +++ impacted user growth. Reward/risk correlated. Choices were made... http…
The problem is /people don't want the truth. They NEED an enemy Our own lawmakers (the ones who make the laws) went on the attack saying laws were broken! But the truth is- @RobinhoodApp didn't have the money to support their wildly popular business NOT good But not an evil plot …
This whole cycle was like a massively scaled up version of when everyone freaks out over a viral quote in a tweet that turns out to be extremely misleading, except this time the freak out encompassed national political leaders and cable news anchors https://twitter.com/...
thinking about all of the conspiracy theories, now firmly rooted and growing fast, that never would have existed had robinhood simply told the truth from the start https://twitter.com/...
Reads familiar: “...the finncl system's risk reduction mechanisms — managed by obscure entities at the center of the stock market called clearinghouses — kicked in Thursday, forcing Robinhood to find emergency cash to continue to be able to trade.” $GME https://www.nytimes.com/..…
At its inception, @RobinhoodApp wanted democratize trading. But part of that is dealing w moneyed, established players. That really hits home when your cash margin demands rise tenfold. Our story, w @nathanielpopper, @MatthewPhillips, and @tarasbernard https://www.nytimes.com/...
Always interesting to see the real story come out (vs. the internet speed takes that are usually wrong). Speedy news without diligence feels like a huge tax on society. It's not good for us. https://twitter.com/...
We've “received questions.” Are you kidding me? This company's lack of integrity is an embarrassment. They should be held accountable for their BS antics. https://twitter.com/...
New: The Silicon Valley Start-Up That Caused Wall Street Chaos How Robinhood opened the door to this week's market frenzy. w. @MatthewPhillips @katekelly and @tarasbernard https://www.nytimes.com/...
Robinhood says it indeed halted trading because the clearinghouse it uses to clear trades demanded it put down hundreds of millions in deposits it couldn't afford. So, basically, the Redditors broke their broker. https://blog.robinhood.com/...
Short version: Robinhood has to put cash on deposit with its clearinghouse every day. How much depends on how volatile are the stocks that its customers are trading and whether on balance they are buying more than selling. This week, it couldn't put up enough cash. https://twitte…
Important development: @RobinhoodApp acknowledges it limited trading in @gamestop, AMC, and others on Thursday because its clearing requirements were so large: https://blog.robinhood.com/...
Ppl are focusing on what the DTCC capital calc is for $GME. But the real question is how was this not forseen? It sounds like they brought some clearing activity in-house, they know they have trader herd behavior, earlier experience with $CCL & Kodak, margin & options levers... h…
Clear explanation of how cash collateral calls from the clearinghouse forced Robinhood to suspend buy orders in the stocks targeted by WSB traders. https://twitter.com/...
“It was not because we wanted to stop people from buying these stocks. We did this because the required amount we had to deposit with the clearinghouse was so large—with individual volatile securities accounting for hundreds of millions of dollars in deposit requirements.” -RH ht…
Here's my 2¢ on this: 1) The firm seems too small for the size and activities of its clientele. 2) If margin requirements on volatile stocks was 100% and customers had the cash in their accounts, I wonder if outside funding need would've disappeared. 3) Operational risk is real. …
Robinhood's CEO was asked point blank on CNBC if they paused trades in $GME & $AMC because of a liquidity problem and he said no. They dropped a blog post at 11PM last night saying their deposit requirements went up 10x (aka a liquidity problem) Bad look https://blog.robinhood.co…
Good explanation but it comes down to one issue. Centralized finance rails is not fit to serve well open finance. Settlement day+2 in 2021 is unimaginable in the age of real time internet. Robinhood (and others) should and must do a better job at disclosing those risks earlier ht…
Robinhood CEO yesterday: we had plenty of money to cover the deposit requirements Robinhood today: we didn't have enough money to cover the deposit requirements https://twitter.com/...
The Robinhood response is a good explanation of what happened. It is ~40 hours late, bad PR. They should have sent out an email with a TL;DR and linked to this article for a longer explanation. Their deposit requirements went up 10X due to the volatility https://blog.robinhood.co…
I think this is the only actual number in this post “our clearinghouse-mandated deposit requirements related to equities increased ten-fold” https://twitter.com/...
This is an exceptionally well written explanation of what happened this week. 👏 @RobinhoodApp 👏 There is no conspiracy Robinhood wants you to trade, but they have requirements being the #1 app while GameStop $gme became the #1 nationwide story is unprecedented—and hard! https://t…
And THIS is a masterclass in how not to communicate as a company. Maybe 2 days ago it would have been fine but at 11PM ET on a Friday night to drop this? And to be glib and not address the seriousness of the last 2 days? NOPE. https://blog.robinhood.com/...
New Robinhood blog just out says clearing houses raised deposit requirements for them 10x this week and that individual securities accounted for “hundreds of millions” in deposit requirements https://blog.robinhood.com/... https://twitter.com/...
But slowing down for a sec - if you have been part of the speculation, questions, or impacted by the market this week, worth reading: https://blog.robinhood.com/...
Between this statement from Robinhood https://blog.robinhood.com/... And this scoop from Bloomberg on them drawing down their credit lines https://www.bloomberg.com/... Becoming a little more clear what happened today.
Robinhood allowing trades again starting tomorrow: https://blog.robinhood.com/... To be clear, Robinhood is just one brokerage. This is an endemic problem across TD Ameritrade, Schwab, ETrade and more.
Does Robinhood know how it comes off to start their blog post with “This past year, we've seen the financial markets become a voice for the voiceless” and then go on to talk about how they've limited trading *definitely not* to save hedge funds? https://blog.robinhood.com/...
How a man known as “Roaring Kitty” helped fuel the frenzy around GameStop. His $53,000 investment in the company briefly reached $48 million in value. https://www.seattletimes.com/ ...
“After Thursday's market close, his E*Trade brokerage account, viewed by the Journal, held around $33 million, including GameStop stock, options and millions in cash.” https://twitter.com/...
A Reddit user known as “Roaring Kitty” has helped fuel the GameStop frenzy. At one point, his $53,000 investment in the company was worth $48 million. Keith Gill, a former financial educator for an insurance firm, is the man behind the username. https://www.nytimes.com/...
“IF HE'S STILL IN, I'M STILL IN,” over 100 different followers wrote about a Reddit user who helped fuel this week's frenzy in GameStop. https://www.nytimes.com/...
Reached by phone Thursday, Mr. Gill's mother Elaine confirmed that he was Roaring Kitty. “I'm proud,” she said, before hanging up. https://www.nytimes.com/...
Contrast and compare the RoaringKitty profiles by our two leading daily financial publications: NYT: Mr. Gill's mother, Elaine, confirmed in a brief phone call that her son was Roaring Kitty. “I'm proud,” she said, before hanging up. https://www.nytimes.com/...
When reached by phone, Keith Gill's mother, Elaine, confirmed that her son was Roaring Kitty. “I'm proud,” she said, before hanging up. https://www.nytimes.com/... https://twitter.com/...
NEW: The Roaring Kitty Rally The story of the young day trader from Massachusetts who, over the course of some two years, helped turn GameStop into a global phenomenon from his basement office, the Kitty Room. W @Kellen_Browning https://www.nytimes.com/...
Hello Roaring Kitty ... “Fast-talking and cracking jokes in between analyzing stocks, Mr. Gill sipped beer, brandished cigars and told viewers he sometimes used a Magic 8-Ball to guide his investments.” https://www.nytimes.com/...
“I support these retail investors, their ability to make a statement.” Keith Gill, the man who led the GameStop mania, talks to the Journal. https://www.wsj.com/... via @WSJ
“Mr. Gill's obscene username on Reddit's WallStreetBets forum is supposed to reflect a belief in value investing—buying shares of companies that are inexpensive relative to the underlying business.” Guys this was value investing all along https://www.wsj.com/...
Michael Lewis in @nytmes (2001) on Jonathan Lebed: https://nytimes.com/... He's the precursor to DeepF**KingValue profiled today in @wsj: https://www.wsj.com/...
/u/DeepFuckingValue just posted his $GME gains (including $13M cash) and I'm struck by how this one Reddit user could create a viral exit from the stock by posting that they've sold which would then impact the whole market. How would Liz Warren fix this? https://www.reddit.com/..…
WSJ talks to Keith Gill who led the GameStop market rally. They also talk to his mom “The first thing that I had asked him when this craziness started was: is this illegal or anything dishonest? He said, 'No mom, it's not,'” recalled Ms. Gill https://www.wsj.com/...
The Redditor who started the GME trading frenzy (and made $50 million) spoke to the Wall Street Journal and unsurprisingly he looks like A GAMING GOD https://www.wsj.com/... https://twitter.com/...
The guy who started this whole Gamestop thing was a star cross country/track runner from MA and ran a 4:00 mile (after high school) https://www.wsj.com/...
The trader known as DeepF—ingValue on the WallStreetBets forum helped turn the investing world upside down. Turns out he's just a regular dude. A 34-year-old dad in Boston who used to work in marketing. “I didn't expect this.” $GME $AMC $BB https://www.wsj.com/...
This guy hits $33 million off of GameStop stock and his main dream is to build an indoor track/field house in his hometown. @JCUXCTF need to get one of these guys in the pipeline. https://twitter.com/...
In his first interview, the investor who helped direct the world's attention to GameStop tells us his motive was education and value investing, and that he might buy a house with his profits. “I didn't expect this.” https://www.wsj.com/...
Whatever you think of the WallStreetBets flash mobs, you have to read this story by my pals @GunjanJS and @JAVerlaine. https://www.wsj.com/... via @WSJ
There is no shortage of takes about what's going on with Gamestop (and other surging stocks), Robinhood and Reddit's r/wallstreetbets, many of them contradictory - at least on the face of them. But I think it's possible for most of these takes to be right. Here's how. 1/ https://…
Excellent @jwherrman on how the dynamics of Reddit fuel nihilism, first in TheDonald and later on WallStreetBets https://www.nytimes.com/... https://twitter.com/...
“to always seem like you might be joking, well beyond the point at which you should be taken seriously, is to guard yourself against accurate interpretation and evaluation.” This sentence is possibly the last 20 years in summary https://www.nytimes.com/...
“Among its unspoken rules was an expectation that users upvote pro-Trump content regardless of its quality, because doing so would make it visible to users elsewhere on the platform, or force Reddit to intervene, inviting” cynical cries of censorship. https://www.nytimes.com/...
regardless of whether reddit/wsb is behind the gme, another lesson should be about the mob rule. robinhood was all about democratization till the mob turned on them and no one else (you think only rh blocked trades? so did schwab and td) https://twitter.com/...
My favorite part of this story is the Roaring Kitty GameStop guy is a CFA See - the CFA is worth it! https://www.reuters.com/... https://twitter.com/...
here, @jwherrman gets at a defining dynamic of the last decade which is how things that are very real are also increasingly absurd and nihilistic (and it still scrambles a lot of brains) https://www.nytimes.com/...