Robinhood narrows trade restrictions list to 8 companies, including GameStop
Online brokerage Robinhood has cut down the list of its restricted stocks, from as many as 50 on Friday to eight starting Monday. Trade in short-squeeze names like GameStop has been limited due to last week’s explosive rallies.
Companies that still face limitations include GameStop, AMC Entertainment Holdings, Blackberry, and others, Robinhood said, noting that the limits may be “subject to change throughout the day.”
Opening new positions in those securities is limited, according to its website, which lists the maximum number of shares and options contracts each user can hold. For those whose current holdings already exceed the limits, their positions won’t be sold or closed. At the moment, customers can only buy one share of GameStop’s stock and five options contracts.
The millennial-favored stock trading app said on Friday it had put buying restrictions in place after its clearinghouse deposit requirements for equities increased last week. “It was not because we wanted to stop people from buying these stocks,” Robinhood said.Also on rt.com Occupy Wall Street 2.0: ‘This time, activists intend to DESTROY the system from within’ – Max Keiser explains GameStop frenzy
The trading app, which is popular among retail investors who fostered the rise of GameStop stock, has been under fire for its decision to restrict trading of high-flying stocks that surged after being touted on social media.
On Sunday, US Senator Elizabeth Warren called for a broader review by the Securities and Exchange Commission on recent trading swings. She said a broker-dealer like Robinhood that invites a lot of individual investors needs to operate “under some basic rules.”
“You can’t do that in the middle of a trading cycle,” Warren told CNN about Robinhood’s trading limits. “It’s not about protecting people from making bad trades. It’s about keeping the playing field level.”
A speculative buying frenzy swept Wall Street last week due to a wave of stay-at-home traders who used social media, in this case Reddit’s WallStreetBets forum, to coordinate massive short squeezes. Shares of GameStop, a struggling brick-and-mortar video game retailer, catapulted 400 percent in the past week, closing out January with a 1,625 percent rally. The stock of American basic cable television channel AMC surged 277 percent last week, while headphone maker Koss soared more than 1,800 percent higher.
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