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Comment by valuearb | Hacker News Reader

There was nothing illegal in what Robinhood did, and every broker has the right to determine which instruments they are willing to sell or buy, at any time.

Would you prefer Robinhood to implode so you have to wait years to get a small fraction of your account paid?

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Brokers can't stop you from selling shares; they're your shares. Only the regulator can prevent sales.

This made what RH did look unfair, but stopping buys was all they could do.

They could have limited buying to settled cash only. Orders of magnitude lower risk for them.

The issue was between Robinhood and DTCC, and couldn't be resolved by having customers' settled cash because of the rules that forbid using the customers cash as collateral. Though it might have worked if it just slowed down buys enough.

I'm not tuned in enough to know the exact relationship between RH and DTCC.

I am tuned in enough to know there is a big difference between rolling up and asking for credit saying "Hey I've got X dollars in settled cash to buy Y. Please lend me some money." and saying "Hey I've lent out X dollars to buy Y. Please lend me some money."

Well the parent poster said they aren’t allowed to use that cash as collateral - if that’s the case, then not really?

If you don’t understand how the DTCC works, why are you trying to correct others?

I said I don't know the exact relationship between RH and DTCC because it isn't public. Why would they be asking the DTCC for credit? That is absurd on the face of what collateral is there for.

They can borrow money and use that for collateral which is exactly what they did. And there is a massive world of difference rolling up to a bank/investors saying "Hey I have settled funds, I need to borrow money to post as collateral" vs "Hey I lent people a bunch of money, I need to borrow a money to post collateral".

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