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A picture of a short squeeze in progress...

specsaregood

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specsaregood

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Even google has gotten into the protect the douchebags game.

https://www.theverge.com/2021/1/28/22255245/google-deleting-bad-robinhood-reviews-play-store

Google is actively removing negative reviews of the Robinhood app from the Google Play Store, the company confirmed to The Verge. After some disgruntled Robinhood users organized campaigns to give the app a one-star review on Google’s Play Store and Apple’s App Store — and succeeded in review-bombing it all the way down to a one-star rating — the company has now deleted enough reviews to bring it back up to nearly four stars
 

the_shootist

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this might be the funniest headline ive ever read.
1611888693120.png
 

Zed

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Re: Robinhood.

You probably need to read the fine print in the TOS agreement. They are probably within that agreement (I dunno!?) , given the situation and the fact that they allow fractional share ownership they might need to liquidate some positions to manage risk. So they may be selling out fractional positions due to the volatility and the inability to manage the risk without losses.

I can't see why they'd need to sell up fully owned positions.

I can see why they'd stop new margined longs and why they'd liquidate margined longs, the volatility makes it a massive risk.

Given the different nature of their brokerage you'd need to see all the data.
 

ZZZZZ

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All these bonehead Congresscritters who have done nothing for decades all of a sudden want some national TV facetime to aid their next election campaign.
 

Ensoniq

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This guy is so wrong my head hurts

It’s not a market wide collapse
Companies aren’t worthless, the dollar is
The fed is stealing from us by inflation
Saying Tesla isn’t worth a trillion doesn’t include the devaluation of the dollar in the assertion
 

Uglytruth

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What time does all TSHTF on Friday? Is it at open or close?
 

Buck

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ABC123

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Gamestop is MUCH MUCH BIGGER than most
people understand. If the vigilantes keep buying
and refuse to sell their shares it could take down
ALL OF IT…the entire financial system.
This is a MUST read…this is not some little game
These kids might have the big banks by the balls
and they know it


1611896096958.png
 

DodgebyDave

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Hollyweird has several movies about "gaming the system".......then.......locks up all of the autistic brats all summer telling them to watch movies.

After which.......the SJW/BLM/CCP narrative falls apart in spectacular fashion, Trump is re-elected in a landslide......

They are in meltdown. The CCP thought they could engineer a civilian vs military conflict........

And then the whole deal has gone sideways with the stock markets!

Note this one detail. Chiquita Kruschev carrying water for the globalists. Who Knew!

Go, kids!
 

Uglytruth

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Scorpio

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there are some things that can happen,

gamestop could be 'gamed' to issue more shares in a 'preferred auction' or something similar, and those shares would dilute outstanding and provide the 'buy' to those 'sells' that exist,

they can allow them to 'mark to market' and exit the positions, declaring them null and void

now sure, these don't exist currently, but so what right?

etc.

post 258 is interesting, and of course their actions may require some inappropriate reactions, but they write the rules, so they will do what it takes

one stock like this isn't bringing down the whole market as some claim, drying up all the liquidity for the whole market, etc.

that is just silly talk
 

<SLV>

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Looks like it may have started in SLV.
 

D-FENZ

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one stock like this isn't bringing down the whole market as some claim, drying up all the liquidity for the whole market, etc.

that is just silly talk
Unless of course it kicks up a board revealing a bunch of maggots doing their maggotry under it.

For some reason it feels to me like it may be only the first domino to fall in an epic row of dominoes that ends up toppling a colossal house of cards. I have no charts, graphs or fresh empirical data to post as evidence, just a strong, personal sense of foreboding. And it would go way beyond the markets. Brings to mind the seemingly random assassination of Archduke Franz Ferdinand that triggered a series of events that eventually kicked off WW1.

God knows I've been wrong before and there's probably nothing to it, but it sure feels to me like the S is about to HTF- and soon.
M2C
 

DodgebyDave

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You don't go into a scam without an exit strategy.

In order for the sting to work you gotta get everybody out and paid without getting scuffed
 

gringott

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Around the web I see a lot of comments about how the racist white homophobic insurrectionist reddit crowd are going to get their asses handed to them, a life lesson.
I can only assume the people posting this are old school "investors". They don't get it.
The majority of the crowd, I believe, are young people with nothing to lose. The majority aren't buying $100k positions, they are buying $100 positions. They don't have decades long IRAs and 401ks, they barely have jobs or don't have jobs. They were looking to jab the system in the eye, and they found some leaders. Like it or not, it seems this is a grass roots uprising.

More power to the people. Destroy the hedge funds. Take down the entire stock market. Let's see who survives in the end when you have to work for a living.

I saw that video of the pipeline worker who just lost his job, snap, due to a dead man walking signing a piece of paper with no legal or legislative process at all. He did not look prepared to start coding. It was extremely disturbing. He was very sad and confused. Trust me, that will turn this man in the end to a very angry person. He did nothing wrong. The fake POTUS did.
 

Voodoo

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Voodoo

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A crash Has ti Happen. The fact that lowly GameStop is what brings down the FED...Hahahahaha

Plus we can blame it on the current Democrat regime. Score
 
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gringott

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Keep in mind the numbers. We are hundreds of millions strong. They are a tiny minority. Let's all go down in a financial "suicide bomber" attack on the group that financed the coup.

Hard to arrest somebody for buying a stock.
 

Voodoo

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Kevin Oleary just destroyed Sorkin and whomever the super douche Secretary guest was. I've always liked Kevin.
 

Ensoniq

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This is another example of if you don’t hold it you don’t own it

It might be quaint but you are still allowed to hold the physical share certificate. I do for some of my positions.

The brokers all get you to opt in to them holding you shares or virtual shares for speed of trade but tough to sell your shares against your will if they are in your safe
 

DodgebyDave

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I wouldn't strut around like somebody won just yet. this is still a fluid battlefield and all that has happened so far is a few fleas have bothered a big dog.................

how can we help in the screw?
 

gringott

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Yesterday, after getting out of the market with tradIRA, I moved a grand up to my reg brokerage account.
My intention is to "get behind" any attempt to take down the hedge funds, at $100 increments.
I am calling it a "donation to the cause" and consider it gone.
If I can do even 1 mm of damage, it will be worth it.
 

Scorpio

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I wouldn't strut around like somebody won just yet. this is still a fluid battlefield and all that has happened so far is a few fleas have bothered a big dog.................

how can we help in the screw?

quoted for truth,

and keep doing what we do, remain true, let them play in areas we know nothing of,
our stuff is just fine and will be yet another thorn, another hole to plug

right now they are capping slv at 25.60, and it is trying to break to the up after a good runup,
but would prefer a break, then add, and put more pressure on

the idea is to attack them on multiple fronts,

JMO
 

solarion

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The silver market is a funny animal. Bankster pricing(spot) is currently 27.66. Paper silver(SLV) is two bucks under spot...currently at 25.62 in pre-market. Then there's physical which is another two bucks over spot. Well that's one way to rig a commodity "market".

29.55 for generic rounds or 25.62 for a share of bankster fake silver. +15.33% premium if you want to hodl "your" commodity.
 

gringott

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The silver market is a funny animal. Bankster pricing(spot) is currently 27.66. Paper silver(SLV) is two bucks under spot...currently at 25.62 in pre-market. Then there's physical which is another two bucks over spot. Well that's one way to rig a commodity "market".

29.55 for generic rounds or 25.62 for a share of bankster fake silver. +15.33% premium if you want to hodl "your" commodity.

Plus sales tax for me. Local or interweb purchases. Hence I am not buying.
 

edsl48

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Cash-Strapped Robinhood Scrambles To Raise $1 Billion From The Rich
After years of carefully building its brand and reputation, Robinhood, the stock-trading app that helped invent the no-fee commission, is on the verge of collapse as it faces a mortal threat for any financial company: a bank - or in this case a brokerage run - as thousands of its core users threatened to abandon the platform after RH halted trades in shares of Gamestop, AMC and other shares that had become part of a Reddit-inspired populist revolt against the hedge fund community.
Immediately, the move sparked a wave of rumors which verged on (what some might call) conspiracy: Dependent on HFT market-makers like Citadel for most of its revenue, Robinhood was cutting off the bulls who were bidding Gamestop and a handful of other popular hedge fund shorts into the stratosphere in service to its "masters".
Robinhood wasn't the first mover: As we pointed out the other day, TDAmeritrade was the first to make the "unprecedented" move. As we suspected, it was almost immediately followed by the rest of the major day-trading brokerages.
However, as the day progressed the situation became clearer, Robinhood was in trouble.
After the market close on Thursday, Robinhood co-founder and CEO Vlad Tenev was on CNBC being grilled by Andrew Ross Sorkin about whether the firm was selling out the customers and core users who made it a success. Tenev swore that he and the firm had acted "preemptively" (in cutting off certain trades and cashed out some customers' positions), attempting to make clear that the firm didn't really need any liquidity.
As Dave Portnoy cracked jokes on twitter about the "irony" of a company called Robinhood stealing from the poor to give more to the rich, Tenev was telling Andrew Ross Sorkin that "we absolutely did not do this at the direction of any market maker...the reason we did it was because Robinhood is a brokerage firm, we have lots of financial requirements including SEC met-capital requirements."
With RH's reputation - not to mention its multibillion-dollar IPO which insiders still insist is slated for the first half of 2021 - hanging in the balance, Bloomberg reported Friday morning that Robinhood and its fellow discount brokerages were forced by the DTCC - the cooperatively owned clearinghouse that aims to prevent market meltdowns by ensuring that complex derivatives trades don't take down the entire market - to put up more capital as collateral, a demand that - as Tenev said yesterday - the firm could not ignore (lest it draw the wrath of the federal government).
"Look, it is not negotiable for us to comply with our financial requirements and our clearinghouse deposits," Tenev added, somewhat more bluntly, in an interview with Bloomberg.​
"We have to do that."
Of course, to put up the required money, Robinhood first had to find it, and so the firm was forced to go, hat in hand, to the biggest banks in America asking for a loan, which - as we reported last night - it readily secured.
The firm reportedly drew on a line of credit from six banks amounting to between $500 million and $600 million to meet higher margin, or lending, requirements from its central clearing facility for stock trades, known as the Depository Trust & Clearing Corporation.

However, as NYTimes reports, Robinhood still needed more cash quickly to ensure that it didn’t have to place further limits on customer trading, said two people briefed on the situation who insisted on remaining anonymous because the negotiations were confidential.
Robinhood, which is privately held, contacted several of its investors, including the venture capital firms Sequoia Capital and Ribbit Capital, who came together on Thursday night to offer the emergency funding, five people involved in the negotiations said.
Which prompted this mockery from us...

But more than $1BN in collateral to secure trading in shares that are by all accounts heavily liquid (for the moment, at least)? It's understandable, to say the least, that the public is suspicious. Tenev said the firm took the decision "proactively" due to the surge in popularity. "It pains us to have had to impose these restrictions," he added. But here is SilentCal (@KralcTrebor) with the best explanation of what happened that we have seen:
But more than $1BN in collateral to secure trading in shares that are by all accounts heavily liquid (for the moment, at least)? It's understandable, to say the least, that the public is suspicious. Tenev said the firm took the decision "proactively" due to the surge in popularity. "It pains us to have had to impose these restrictions," he added. But here is SilentCal (@KralcTrebor) with the best explanation of what happened that we have seen:
here's my best explanation of why @RobinhoodApp restricted trading in the short-squeeze stocks.​
Spoiler: the story isn't the Ken Griffen called Janet Yellen who instructed DTCC to raise margin on Robinhood to force them to shut down the speculative buying.
Here goes...​
Robinhood (RH) is a broker. They don't execute stock orders themselves. They sign up customers, route their orders to executing brokers, and keep track of who owns what. RH is also its own clearing broker, so they directly settle and custody their clients' securities.​
Yes, RH is paid by Citadel to handle executing some of its order flow. This isn't as nefarious as it sounds - Citadel Equity Securities is paying to execute retail orders because they aren't pernicious (like having 500x the size behind them).​
RH customers buy and sell stocks. Those trades don't settle (settle = closing, the exchange of cash for security) until T+2, two days later. Depending on the net of buys/sells, RH is on the hook to pay or receive that net cash. That's credit risk.
NSCC is the entity that takes that credit risk. It matches up the net buyers and sellers, post-trade, and handles the exchange of cash for security. To mitigate the credit risk that one of the clearing brokers fails, they demand the brokers post a clearing deposit with them.​
The NSCC is required to do this by SEC rule, tracing to Dodd-Frank. Here's the details: sec.gov/rules/sro/nscc…
Everyone posts, and if a broker fails, then NSCC takes any losses out of that broker's deposit, then some from NSCC, then from everyone else (the other brokers).​
This is a post-crisis idea encoded in Dodd-Frank that making everyone post collateral reduces the credit risk and systemic risk and such.​
So how does the NSCC clearing deposit get calculated?
It's basically Deposit = min( 99% 2d VaR + Gap Risk Measure, Deposit Floor Calc) + Mark-to-Market ... math and jargon!​
Let's use an example. Say Fidelity has clients who bought 2bn of stock and sold 1.5bn of stocks. First, net down buy/sell between customers in the same stock.​
Say that leaves 1bn buy and 0.5bn sell. Run some math to answer "that won't move more than X with 99% odds in the next 2 days." Let's say that's 3% of the net, so 3% * (1bn-0.5bn) = 0.15bn = 15m. That the 99% 2d VaR.​
Next, we ask "is any one stock net more than 30% of the net buy/sell" ... and if it is, then we take 10% of that amount and add it as the Gap Risk Measure. So if Fidelity customers bought 200m IBM, then add 20m to that 15m. That's Gap Risk Measure.​
Deposit Floor Calc is some thing that looks at the 1bn buy and the 0.5bn sell and does a small calc and adds them, so that if the first calc (99% 2d VaR + Gap Risk Measure) is small, then this floor will keep the overall from being tiny.​
Then, last, you add Mark-to-Market. Basically if your customers bought IBM at 140/shr and it goes to 110/shr before it settles for cash at 140/shr, the NSCC has 30/shr of credit exposure to the clearing broker and that amount gets added to the required collateral posted to NSCC.​
There are some other items, but that's the basic idea - full details are here: dtcc.com/-/media/Files/…
The NSCC sets the framework, but it is spelled out in Dodd-Frank that they have to do so by law.​
These deposits are held in the Clearing Fund at the NSCC.​
Financials are here: dtcc.com/legal/financia…
They had 10.5bn in the Clearing Fund as of Sep 30, 2020.​
This is the regime post-Dodd-Frank. NSCC updated it's rules in 2018 to improve the VaR calc and to add the Gap Risk Measure.​
How did this impact Robinhood?
Well, let's say Robinhood had $20bn of client assets starting 2021. Those customers used to trade $1bn/d say. What is the context for Clearing Deposit? Say 2 days it's a little unbalanced and it's 1.2bn buy and 0.8bn sell. Ok, that's probably around 12m, maybe 20m deposit.​
If they take in $600m of new deposits and say $400m wants to buy GME. Plus of their $20bn existing, say there is $400m of GME buys over the past 2d. Then the picture could look like 2.0bn buys and 1.0bn sells, which might normally be 30m deposit. But volatility went up. A bit.​
Now 99% 2d VaR is much higher. It should be 20x higher for their net portfolio, but the formula will smooth it out some. Maybe it's ~4x bigger. So just on VaR, they have to post 120m now. That they should have.
The Gap Risk Measure is what kills them.
If GME is over 30% of their net unsettled portfolio, then they are required to post 10% of all the GME buys. So if that's 800m, they have to post another 80m. And there is no limit to it. As long as their clients are up P&L, the mark-to-market covers it.​
But if RH takes in 500m of new money and 300m buys GME, then at minimum they are looking at posting 30m+ from just that exposure at NSCC. They cannot use client money - RH has to use their own resources to post. And if GME stock drops, RH has to post the loss pre-settlement.​
This would also explain why RH drew its credit lines and said vague things about clearing requirements. bloomberg.com/news/articles/…
The policy goal here is to avoid the central plumbing entities from taking credit risk. In reality, such regulations raise costs and create barriers to entry. It raises profits for entities like DTCC (which owns NSCC and is itself owned by Wall St)​
RH offered to open up stock market investing more broadly. They succeeded, clearly. But the regulations didn't change - there are still pro-Wall St, pro-incumbent rules and capital requirements. It's one of the most highly regulated industries in our nation.
So @AOC is right to ask how it can be that Robinhood stopped its clients from buying certain securities. And what she'll find is that the reason is that Dodd-Frank requires brokers like RH to post collateral to cover their clients' trading risk pre-settlement.​
And it isn't the Fed or SEC who sets the rules. It's the Wall St owned central clearing entity itself, DTCC, that makes its own rules. So when the retail masses decided to squeeze the short-sellers, in the middle of crushing them, it was govt regulations which tripped them up.
All of which leaves us wondering, with risk only having increased yesterday (from a VaR and thus capital perspective), regardless of who Robinhood borrowed the money from, or where it is now, it is 'we, the people' who are essentially the last line of defense against a complete financial implosion (and just like they were yesterday, will be sacrificed at the altar of Wall Street to ensure survival).
Given GME's 80%-plus surge this morning, once wonders how soon RH will be forced to 'choke' buying once again, and how many clients will abandon Tenev and his not so merry-men.

https://www.zerohedge.com/markets/cash-strapped-robinhood-scrambles-raise-1-billion-rich
 
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solarion

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Plus sales tax for me. Local or interweb purchases. Hence I am not buying.
I can relate. No sales tax on bullion in my neck of the woods, but the premiums are annoying. Still, silver looks ridiculously cheap by historical standards and with a bunch of angry millennials claiming they'll squeeze JPM, it could rise pretty quickly.

To me it's largely a question of finding places outside the US dollar system to stuff funny munny. I've stacked farmland, PMs, ammo, cryptos, FRNs, etc. So then when there's more to stack I have to find places to put it to work and Ag still looks like the best value bet of all.
 

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Cash-Strapped Robinhood Scrambles To Raise $1 Billion From The Rich
After years of carefully building its brand and reputation, Robinhood, the stock-trading app that helped invent the no-fee commission, is on the verge of collapse as it faces a mortal threat for any financial company: a bank - or in this case a brokerage run - as thousands of its core users threatened to abandon the platform after RH halted trades in shares of Gamestop, AMC and other shares that had become part of a Reddit-inspired populist revolt against the hedge fund community.
Immediately, the move sparked a wave of rumors which verged on (what some might call) conspiracy: Dependent on HFT market-makers like Citadel for most of its revenue, Robinhood was cutting off the bulls who were bidding Gamestop and a handful of other popular hedge fund shorts into the stratosphere in service to its "masters".
Robinhood wasn't the first mover: As we pointed out the other day, TDAmeritrade was the first to make the "unprecedented" move. As we suspected, it was almost immediately followed by the rest of the major day-trading brokerages.
However, as the day progressed the situation became clearer, Robinhood was in trouble.
After the market close on Thursday, Robinhood co-founder and CEO Vlad Tenev was on CNBC being grilled by Andrew Ross Sorkin about whether the firm was selling out the customers and core users who made it a success. Tenev swore that he and the firm had acted "preemptively" (in cutting off certain trades and cashed out some customers' positions), attempting to make clear that the firm didn't really need any liquidity.
As Dave Portnoy cracked jokes on twitter about the "irony" of a company called Robinhood stealing from the poor to give more to the rich, Tenev was telling Andrew Ross Sorkin that "we absolutely did not do this at the direction of any market maker...the reason we did it was because Robinhood is a brokerage firm, we have lots of financial requirements including SEC met-capital requirements."
With RH's reputation - not to mention its multibillion-dollar IPO which insiders still insist is slated for the first half of 2021 - hanging in the balance, Bloomberg reported Friday morning that Robinhood and its fellow discount brokerages were forced by the DTCC - the cooperatively owned clearinghouse that aims to prevent market meltdowns by ensuring that complex derivatives trades don't take down the entire market - to put up more capital as collateral, a demand that - as Tenev said yesterday - the firm could not ignore (lest it draw the wrath of the federal government).
"Look, it is not negotiable for us to comply with our financial requirements and our clearinghouse deposits," Tenev added, somewhat more bluntly, in an interview with Bloomberg.​
"We have to do that."
Of course, to put up the required money, Robinhood first had to find it, and so the firm was forced to go, hat in hand, to the biggest banks in America asking for a loan, which - as we reported last night - it readily secured.
The firm reportedly drew on a line of credit from six banks amounting to between $500 million and $600 million to meet higher margin, or lending, requirements from its central clearing facility for stock trades, known as the Depository Trust & Clearing Corporation.

However, as NYTimes reports, Robinhood still needed more cash quickly to ensure that it didn’t have to place further limits on customer trading, said two people briefed on the situation who insisted on remaining anonymous because the negotiations were confidential.
Robinhood, which is privately held, contacted several of its investors, including the venture capital firms Sequoia Capital and Ribbit Capital, who came together on Thursday night to offer the emergency funding, five people involved in the negotiations said.
Which prompted this mockery from us...

But more than $1BN in collateral to secure trading in shares that are by all accounts heavily liquid (for the moment, at least)? It's understandable, to say the least, that the public is suspicious. Tenev said the firm took the decision "proactively" due to the surge in popularity. "It pains us to have had to impose these restrictions," he added. But here is SilentCal (@KralcTrebor) with the best explanation of what happened that we have seen:
But more than $1BN in collateral to secure trading in shares that are by all accounts heavily liquid (for the moment, at least)? It's understandable, to say the least, that the public is suspicious. Tenev said the firm took the decision "proactively" due to the surge in popularity. "It pains us to have had to impose these restrictions," he added. But here is SilentCal (@KralcTrebor) with the best explanation of what happened that we have seen:
here's my best explanation of why @RobinhoodApp restricted trading in the short-squeeze stocks.​
Spoiler: the story isn't the Ken Griffen called Janet Yellen who instructed DTCC to raise margin on Robinhood to force them to shut down the speculative buying.
Here goes...​
Robinhood (RH) is a broker. They don't execute stock orders themselves. They sign up customers, route their orders to executing brokers, and keep track of who owns what. RH is also its own clearing broker, so they directly settle and custody their clients' securities.​
Yes, RH is paid by Citadel to handle executing some of its order flow. This isn't as nefarious as it sounds - Citadel Equity Securities is paying to execute retail orders because they aren't pernicious (like having 500x the size behind them).​
RH customers buy and sell stocks. Those trades don't settle (settle = closing, the exchange of cash for security) until T+2, two days later. Depending on the net of buys/sells, RH is on the hook to pay or receive that net cash. That's credit risk.
NSCC is the entity that takes that credit risk. It matches up the net buyers and sellers, post-trade, and handles the exchange of cash for security. To mitigate the credit risk that one of the clearing brokers fails, they demand the brokers post a clearing deposit with them.​
The NSCC is required to do this by SEC rule, tracing to Dodd-Frank. Here's the details: sec.gov/rules/sro/nscc…
Everyone posts, and if a broker fails, then NSCC takes any losses out of that broker's deposit, then some from NSCC, then from everyone else (the other brokers).​
This is a post-crisis idea encoded in Dodd-Frank that making everyone post collateral reduces the credit risk and systemic risk and such.​
So how does the NSCC clearing deposit get calculated?
It's basically Deposit = min( 99% 2d VaR + Gap Risk Measure, Deposit Floor Calc) + Mark-to-Market ... math and jargon!​
Let's use an example. Say Fidelity has clients who bought 2bn of stock and sold 1.5bn of stocks. First, net down buy/sell between customers in the same stock.​
Say that leaves 1bn buy and 0.5bn sell. Run some math to answer "that won't move more than X with 99% odds in the next 2 days." Let's say that's 3% of the net, so 3% * (1bn-0.5bn) = 0.15bn = 15m. That the 99% 2d VaR.​
Next, we ask "is any one stock net more than 30% of the net buy/sell" ... and if it is, then we take 10% of that amount and add it as the Gap Risk Measure. So if Fidelity customers bought 200m IBM, then add 20m to that 15m. That's Gap Risk Measure.​
Deposit Floor Calc is some thing that looks at the 1bn buy and the 0.5bn sell and does a small calc and adds them, so that if the first calc (99% 2d VaR + Gap Risk Measure) is small, then this floor will keep the overall from being tiny.​
Then, last, you add Mark-to-Market. Basically if your customers bought IBM at 140/shr and it goes to 110/shr before it settles for cash at 140/shr, the NSCC has 30/shr of credit exposure to the clearing broker and that amount gets added to the required collateral posted to NSCC.​
There are some other items, but that's the basic idea - full details are here: dtcc.com/-/media/Files/…
The NSCC sets the framework, but it is spelled out in Dodd-Frank that they have to do so by law.​
These deposits are held in the Clearing Fund at the NSCC.​
Financials are here: dtcc.com/legal/financia…
They had 10.5bn in the Clearing Fund as of Sep 30, 2020.​
This is the regime post-Dodd-Frank. NSCC updated it's rules in 2018 to improve the VaR calc and to add the Gap Risk Measure.​
How did this impact Robinhood?
Well, let's say Robinhood had $20bn of client assets starting 2021. Those customers used to trade $1bn/d say. What is the context for Clearing Deposit? Say 2 days it's a little unbalanced and it's 1.2bn buy and 0.8bn sell. Ok, that's probably around 12m, maybe 20m deposit.​
If they take in $600m of new deposits and say $400m wants to buy GME. Plus of their $20bn existing, say there is $400m of GME buys over the past 2d. Then the picture could look like 2.0bn buys and 1.0bn sells, which might normally be 30m deposit. But volatility went up. A bit.​
Now 99% 2d VaR is much higher. It should be 20x higher for their net portfolio, but the formula will smooth it out some. Maybe it's ~4x bigger. So just on VaR, they have to post 120m now. That they should have.
The Gap Risk Measure is what kills them.
If GME is over 30% of their net unsettled portfolio, then they are required to post 10% of all the GME buys. So if that's 800m, they have to post another 80m. And there is no limit to it. As long as their clients are up P&L, the mark-to-market covers it.​
But if RH takes in 500m of new money and 300m buys GME, then at minimum they are looking at posting 30m+ from just that exposure at NSCC. They cannot use client money - RH has to use their own resources to post. And if GME stock drops, RH has to post the loss pre-settlement.​
This would also explain why RH drew its credit lines and said vague things about clearing requirements. bloomberg.com/news/articles/…
The policy goal here is to avoid the central plumbing entities from taking credit risk. In reality, such regulations raise costs and create barriers to entry. It raises profits for entities like DTCC (which owns NSCC and is itself owned by Wall St)​
RH offered to open up stock market investing more broadly. They succeeded, clearly. But the regulations didn't change - there are still pro-Wall St, pro-incumbent rules and capital requirements. It's one of the most highly regulated industries in our nation.
So @AOC is right to ask how it can be that Robinhood stopped its clients from buying certain securities. And what she'll find is that the reason is that Dodd-Frank requires brokers like RH to post collateral to cover their clients' trading risk pre-settlement.​
And it isn't the Fed or SEC who sets the rules. It's the Wall St owned central clearing entity itself, DTCC, that makes its own rules. So when the retail masses decided to squeeze the short-sellers, in the middle of crushing them, it was govt regulations which tripped them up.
All of which leaves us wondering, with risk only having increased yesterday (from a VaR and thus capital perspective), regardless of who Robinhood borrowed the money from, or where it is now, it is 'we, the people' who are essentially the last line of defense against a complete financial implosion (and just like they were yesterday, will be sacrificed at the altar of Wall Street to ensure survival).
Given GME's 80%-plus surge this morning, once wonders how soon RH will be forced to 'choke' buying once again, and how many clients will abandon Tenev and his not so merry-men.
Not sure where you got that but it was a great explanation and sounds reasonable.

But it will be a tough sell Impossible to get the unwashed gimme-dats trading in their parent's basements to understand any of that- or even care. All they care about is that they were promised 'free' stonk trades and they want their fuck'n due. Now.

In the end, it doesn't really matter what happened. There are enough of them out there looking for their pound of flesh, so they will get it. Overwhelming force always trumps reason.
 

BarnacleBob

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Keep in mind the numbers. We are hundreds of millions strong. They are a tiny minority. Let's all go down in a financial "suicide bomber" attack on the group that financed the coup.

Hard to arrest somebody for buying a stock.

 

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<SLV>

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Don't forget AMC.
 

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gliddenralston

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The casino is rolling this morn.
 

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Cramer doesn't get it. He thinks "winning" is about booking a profit on price gains. The RH insurrectionists have a different definition of winning.

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