Robinhood reduces stock market restrictions

Robinhood reduced its restrictions on trading 50 shares to eight companies on Sunday, including GameStop, Koss Corporation, AMC Entertainment Holdings, Express Inc., Naked Brands Group, Genius Brands International, BlackBerry Limited and Nokia Corp.

Titles now lifted include Tootise Roll, American Airlines, Starbucks, General Motors, Beyond Meat, Bed Bath & Beyond and Rolls Royce, among others.

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According to company support page, investors will be limited to 10 shares and 10 options contracts of AMC, 700 shares and 700 options contracts of BlackBerry, 20 shares and 20 options contracts of Express Inc., 1 share and 5 contacts of GameStop options, 600 shares and 600 option contracts of Genius Brands International, 2 shares of Koss Corp., 600 shares of Naked Brands Group and 2000 shares and 1000 options contracts of Nokia Corp.

Photo courtesy of Robinhood

The new restrictions, which are global limits for each security and not orderly limits, include stocks and options contracts that an investor already holds. These limits can be subject to change throughout the day.

Robninhood notes that investors who already hold more stocks or contracts than the limits listed above will not have their positions sold or closed. However, they will not be able to open more positions in the securities unless they sell enough of their holdings to be below the respective limit.

Investors will also not be able to open new fractional shares, but will be able to open new positions in whole shares within the limits indicated. Recurring investments for listed securities will also be ignored until the restrictions are lifted.

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The stock market restrictions were put in place as the mobile brokerage app faced a high volume of transactions over the past week. The high volatility was boosted by a speculative investing discussion board on Reddit called WallStreetBets. The Reddit user group has banded together to buy options to buy GameStop, which has pushed shares of the struggling retailer to unprecedented levels and hurt short sellers in the market. The group then targeted other heavily shorted stocks.

Robinhood co-founder Vladimir Tenev said in a Twitter feed Thursday that as a brokerage firm, the company has many financial requirements, including “SEC net capital obligations and clearing house deposits,” which fluctuate with market volatility and exist for “Protect investors and markets”.

“It wasn’t because we wanted to prevent people from buying these stocks,” Robinhood added in a blog post. “We did this because the required amount that we had to deposit with the clearinghouse was so large–with individual volatile securities representing hundreds of millions of dollars in deposit requirements–that we need to take steps to limit the purchase of these volatile securities to ensure that we can comfortably meet our demands. “

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The Securities and Exchange Commission said on Friday it was monitoring developments and “will act to protect retail investors when facts demonstrate abusive or manipulative business activity prohibited by federal securities laws.” Additionally, New York Attorney General Leticia James said she would launch her own review of market activity.

This decision also resulted in two separate lawsuits against the investment platform. The first lawsuit in the New York Southern District court alleges that Robinhood “willfully, willfully and knowingly” restricted certain securities transactions, including GameStop. The other filed in North Illinois District Court alleges the app tampered with its platform.

Additionally, Representative Alexandria Ocasio-Cortez raised the possibility of an investigation into the matter by the House Financial Services Committee, which has received bipartisan support from other lawmakers like Sen. Ted Cruz, R-Texas and Congressman Ro Khanna, D-Calif., as well as business leaders like Elon Musk, CEO of Tesla. Ocasio-Cortez added that the investigation should “not be limited to Robinhood only”.

Other competitors who previously restricted stocks included TD Ameritrade, Charles Schwabb, WeBull, E * TRADE and Interactive Brokers.

Senate Majority Leader Chuck Schumer, DN.Y., said in a tweet Sunday night that any SEC and Congressional investigation into decisions to restrict access to GameStop commerce “must take place sooner. possible”.

“We can’t have a stock market where palyers are also arbiter,” Schumer said.

GameStop shares have climbed 1,545% since January 12.