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Comment by fny | Hacker News Reader

I can't. They all saw this coming from at least two days before, and they managed to fix this problem with a trading session. Rather than freeze the entire market on GME so no one could buy or sell, institutional traders were free to buy out of their positions while retail accounts were being liquidated in a coordinated fashion across all brokerages.

It's very clear to me that insiders saw the how much hurt this short squeeze would bring the financial markets, and they all coordinated to relieve it. It's no coincidence so many hedge funds started degrossing, futures were down, and the VIX spiked to the moon exactly as $GME's price started accelerating...

...once brokerages bricked buying the VIX collapsed and markets rose.

Infinity squeeze averted and all's well in Wall Street. No big institution is likely at risk anymore and retail traders along with smaller funds will be the bagholders.

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Who is “they”? Unless I’m very much mistaken, Robinhood has no institutional clients. The institutional clients as well as the more serious retail clients were unaffected.

It would be quite odd to halt trading on a stock market-wide because a small number of brokers run out of collateral.

Stop being "less smart". Robinhood's clients are/is a hedge fund manager, Citadel Securities - Robinhood’s largest customer, which tried to bail out Melvin Capital which got bankrupted in the short squeeze on GME. Unless you've lived under a rock you should know by now how Robinhood is making the money.

Hopefully wsb goes to war against citadel next

Unless you’re paying for trades you’re routed to someone buying order flow. E*TRADE, Ameritrade, etc sell order flow for revenue.

IB charges for orders and doesn’t sell order flow but also cut off GME. What’s the theory around that broker?

I could buy GME through ETrade but IB wouldn't allow a buy with cash. The chairman said something about market health but the reason he gave was about margin without using that word.

When you put some billionaire guys, some of them happen to be have multiple roles such market makers, brokers, hedge funds that short GME and even the investors in the brokerage platform where GME is traded on one side and some poor retailers on the side side you don't need a big brain to figure out who wins.

Maybe you are not aware but Melvin lost almost 3 billions and was bailed out by Citadel and Point72 and probably they will loose even more and go bankrupt if they don't stop people buying GME.

Do you think these guys want to leave all that cash on the table and play fair? If you look at Point72 owner(Cohen) you see some really "interesting" things.

Cut off how? A quick search suggests that they have increased margin requirements but still allow trading.

They allowed only to "Sell" not buying. Not even with cash (no leverage). Source: Personal experience.

IB's CEO was interviewed on CNBC, and he actually said that his motivation was to "protect the market" ... specifically large players important to the market, whose solvency was threatened by the short squeeze.

"... we are concerned about the financial viability of intermediaries and the clearing house."

https://streamable.com/tfg1ow

That is really scary. If few of them go under, what happens to the market in terms of liquidity?

A year old, but on point...

https://www.russellclarkim.com/marketviews/russell-clark/201...

> There is no doubt that a default by a clearinghouse member is more likely when initial margins are low and may be caused by a sharp unexpected move in the underlying markets. In the event of a default by one member this could trigger a chain reaction. Firstly, initial margins will rise in an event of a default, which will restrict other trader’s ability to participate in the market possibly acerbating the move in the underlying markets. Secondly, if the defaulting member was a particularly large player in one asset (likely, as this would be the cause of the default), the members with opposite positions may not receive variation margin and hence will become unhedged at the very moment they need hedging. Thirdly, the clearinghouse may well have to recapitalise itself from the surviving members. Major clearinghouse members (including JP Morgan) appear to be seriously worried about a clearinghouse problem after the default by a member of Nasdaq Clearing AB ..."

Be careful out there. :-)

Much better quality but shorter length: https://www.youtube.com/watch?v=7RH4XKP55fM (uploaded by CNBC, so might get deleted someday)

> It's very clear to me that insiders saw the how much hurt this short squeeze would bring the financial markets

Maybe. But if this is a trolly car problem it's clear they made the call to let the train run down the track with the retail investor when it should have been the track that eviscerated Citron and Melvin and all their backers.

Big institutions that made the bad trades should have been the bagholders.

Hmmm. How many companies claim to put users first? And of those how many actually do? Oh right.

I would not put a fintech in charge of said trolley.

Don't quite understand the bricked buying part. Can you explain?

Pretty sure he’s referring to multiple brokerages making it so you could no longer buy certain stocks (GME, AMC, BB, others), only sell.

They restricted buying and selling, except to close existing positions.

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