Robinhood blocks purchases of Gamespot, AMC | Hacker News Reader

Robinhood blocks purchases of Gamespot, AMC

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183 pointsforgingahead45 comments

This is already being discussed on the front page here: https://news.ycombinator.com/item?id=25941431

That post is three hours old with 1000+ points but is somehow ranked below multiple older posts with fewer points. It's currently ranked #27 putting it at the bottom of the homepage. It seems somebody is manipulating HN's ranking in effort to push it off the front page.

The big funds have many connections

It most likely triggered the anti-flamewar protection, which downweighs threads that are too active. This mechanism was in place for a long time now.

Perhaps it's for the better. I'm addicted to following the #gamestonk debacle as it is, but I wouldn't want to see HN to look like /r/wallstreetbets. One or two threads on the front page are OK for me, and if they're being recycled quickly - that's even better, given the pace of development of this situation.

I don't think HN is as important as this is making it out to be

https://news.ycombinator.com/newsfaq.html

Part of the "How are stories ranked?" section:

> Other factors affecting rank include user flags, anti-abuse software, software which demotes overheated discussions, account or site weighting, and moderator action.

Notice the "overheated discussions" part. A lot of threads like this end up bumped off of front-page - it's not that visible unless it's something that you're specifically paying attention to.

And... it's back to #2 again.

Dropped from 500 to 117 now 238.

Lots of money changing hands.

The narrative appears to be that the shorts will have to eat the loss and cover at some point, but the house has taken possession of the short position and is now putting their thumb on the scale.

What drama, people already counting their student loans paid off as they scream “hold!”

> The narrative appears to be that the shorts will have to eat the loss and cover at some point

Supposed Melvin already has.

Because they publicly stated it, as far as we know the only interest in sharing such information is to point precisely that they want people to believe they are out.

So, as far as we know, they haven't closed yet.

> the house has taken possession of the short position and is now putting their thumb on the scale.

With such low volume it's unlikely. They literally blocked the buy side, so they are just tanking the price with a few shares to scare retail and trigger stop losses.

There's almost no volume. About 60% of Robinhood's userbase owns GME and all of them are blocked from buying more.

Not being very familiar with stock trading regulations, I'm a little surprised it's legal for them to do this. Stopping all trading of a stock due to volatility, yes, but to permit selling while forbidding buying appears calculated to drive the price down, which seems like the sort of market manipulation that would be banned.

A broker is an intermediary, and if it accepts your stock transaction, incurs certain responsibilities and certain liabilities. No broker wants to be held responsible in court for "letting me do something stupid" (and yes, that happens). Some number of participants are going to be left holding stock when this flash in the pan action reaches its peak, and if it's a bunch of a single broker's customers, then their liability is much too high compared to their own gain.

I'm not surprised there's a rational explanation for their action that doesn't involve collusion with investors holding short positions; I'm just surprised it's legal. As for liability, they're definitely getting sued for the one-sided stop. Do you know if that suit could have any merit?

IMO, any suit the court accepts to hear has merit. The thing is that every broker operates under the same rules, and as long as RH didn't violate those, then they'll win in court. However, they may well lose even more financially in customer base no matter which way the suit decides.

Interesting to me is that there's lots of timely chatter in the crypto world how trading on a high-capacity blockchain (Avalanche, maybe Cardano, etc). removes the broker's gatekeeping. We'll get to see who the lawmakers are pulling for here, and well, my cynicism knows no bounds when it comes to that.

I believe it is also the clearinghouses clamping down on them. I got a notice from Tasty earlier today explaining it.

Note: I am not involved in this Gamespot show in any way.

Did their clearing firm force their hand?

Webull had to stop because of their clearing firm.

My guess is Citadel and Susquehanna stopped routing RH's flow, and since RH, despite being a $10b company, is too incompetent to route its own orders to the exchanges, they had to acquiesce to the demands of the companies that route for them.

My impression was that achieving best execution without an intermediary was actually extremely difficult and not something most retail brokerages attempted to integrate. Is this not the case?

Most don't, but most aren't the most valuable brokerage firm in the US. Interactive Brokers does. TD does. ETrade didn't, but Citadel owned a huge stake in ETrade.

The main reason RH hasn't done it is that they have this free model, and whenever you route your own flow, it costs money--too much money for RH to swallow and make back on margin interest. So instead of creating a backup that makes them unbeholden to the order routers, they just hoped the problem would never occur by diversifying the places they route flow to.

I didn't realize RH was the most valuable brokerage firm in the US!

I understand their business model. They would lose their only revenue stream if they routed themselves.

Robinhood now works for the Prince.

I remain amazed at the moral relativism going on here. GME was manipulated into an unnatural pump, likely criminally IMHO, though we'll see. If "the Prince" had made exactly the same trades that WSB folks did and produced the same result, then we'd be (rightly) screaming for blood.

This is just not OK. It's not. It's not OK when Melvin does it and it's not OK when Reddit does it.

Criminal

Indeed, this is a class-action suit. I don't have high hopes of the perpetrators getting jailed, but at least it's all out in the open now that the little guy shouldn't be able to win.

What happens when the masses pivot to another stock, will they block purchases of that also?

so has Interactive Brokers and a few others.

https://twitter.com/IBKR/status/1354792600004386818

"long stock positions will require 100% margin"

There seems to be a good bit of misinformation (or really just misunderstanding) where people have said that brokers are not allowing trades. While Robinhood really isn't allowing trades, many other brokers are just not letting you borrow money to make them. Interactive Brokers fits this bucket.

This just means that you need cash or collateral to buy the shares, and they won't let you use leverage to buy it. This is very reasonable given the huge volatility on this stock. The price could very easily totally collapse, and IB would be left holding the bag if it's allowing margin purchases.

I just tried to buy AMC options and IB told me I'm still restricted to only closing positions related to that security. I have plenty of funds available.

In Capitalist America, free market bans you.

Don’t know why you are being downvoted. What you said is exactly what’s happening, and what always happens.

When the “free market” moves against the people in power that control it, they exert their power and reign it in.

Why aren’t regulators stepping in to stop Robinhood and all the other brokers who are manipulating the market by blocking their own customers?

Edit: and I guess people reading this don’t like it. Would love a reply with a reason why though.

I didn’t downvote, but isn’t there precedent to halt trading when markets get too volatile? I remember a few years back when JNJ trading was stopped due to HFT “anomalies”. Back then, people had trades revoked when they got a great deal on a reputable company.

Whether nefarious or not, it is chalked up to preserving faith in the market by giving breathers when things get too wonky

> isn’t there precedent to halt trading when markets get too volatile?

There are mechanisms in place that do this automatically. It's done at the exchange level and includes ALL trades (buy and sell) on a particularly volatile stock. This is functioning normally. GME has been halted many times over the past few days.

But what OP is describing is not that. This is retail brokerages, where normal people buy and sell, disabling the "buy" on certain stocks and only allowing "sell". Without the ability to buy, the stock price can only go one way; Down.

Thank you for clarifying.

This is the motto for 2021 so far.

It's a Calvinball market.

Thank God. We have to remember that many of the people they are protecting are PoC.

Care to explain further what your post means?

Yes please, I'd love to understand how your mild form of racism is relevant to the conversation

I think deep down we all know that the best way to reverse white supremacy is to help PoC. Jews are overrepresented in investment banking relative to their population, so statistically giving hedge funds extra time to think by blocking buys helps to dismantle white supremacy.

>deep down >we all know

Starting your post with double-weasel-words really devalues your point, whatever it may be.

Do you not agree that helping PoC reverses white supremacy?

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