Why? We have the intersection of 3 things:
1. A financial system with opaque and often counter-intuitive inner workings (from an outsider's perspective)
2. A history of financial firms "innovating" (sometimes outright fraud, sometimes legal but leading to new legislation to restrict the "innovation"). Also the industry is not exactly known for being guided by strong moral principles.
3. A lot of money at stake.
If this is not a perfect breeding ground for conspiracy theories, I don't know what is!
1. almost a week later, there are still people in certain communities (eg. wsb) that still believe in the conspiracy, and haven't bothered to inform themselves of at least the counter-arguments (eg. DTCC deposit requirements).
2. prominent politicians decide to jump in themselves without doing due diligence on their part, for some cheap political points.
Erm, the politicians who jumped in (Cruz and AOC) kind of do this crap all the time. Its no surprise to me. No different than Cruz jumping in to the "stolen election" crap a few weeks ago.
That's the thing about "Populism" today. Its about following and agreeing with meme arguments without having any deeper analysis. I think its fine when the memes are stupid / joke level (ex: Bernies mittens is kinda funny). But even in joke/stupidity levels (ex: Bernie's mittens), there's a level of conspiracy and unreasoned / counterfactual / direct lies that aim to shift public opinion. (On the right: Bernie's mittens represent how the pandemic has closed shops, believe it or not. Which is why the right is willing to meme the Bernie's mittens, corrupting the left's interpretation of the image)
Its how things operate in today's political atmosphere. I can only hope that we Americans grow up and learn to see how stupid this strategy is eventually. Welcome to meme warfare. (At least in my social circles, the Bernie mittens meme seems to be leaning towards the left-interpretation of the story. But there's constant meme warfare to change the meaning of these images).
It seems to be a fact that limiting or preventing buy orders would benefit hedge funds. So we can spin the fact that they prevented buy orders because it benefited hedge funds.
Another fact seems to be that Robinhood needed to cover its margins and required capital to do so. So the new spin is that Robinhood prevented orders because it needed to cover margins.
There is no real truth anywhere, just competing narratives. Slowly the prevailing narrative is changing from the first to the second. Some people are choosing one story over the other as the Truth. There is no doubt some actual paid PR going into both stories. My own opinion is that in cases as complex as this, there is no real Truth that fits any promoted narrative.
It just bugs me when people don't consider that, and it's hard to tell if they're speaking in bad faith, have poor logical deduction skills or something else.
It's a false dichotomy [1] and that is exactly how these narratives are spun. Another technique isn't forwarding your own narrative, but belittling the opposing narrative. "Only a fool could possibly believe A when it is possible that B is the reason". They don't even have to say that B is the reason, just suggest that it is a possible reason and believing anything else is foolish.
We're seeing exactly that. People are too stupid/ignorant to understand how complex this subject is, so they should just shut up and trust us when we say B is the reason. Do you even know how B works? Clearly you don't. If you did you would understand your own foolishness in even considering that A factored into any decision related to this subject. You idiot. Maybe you're a conspiracy theorist!
I think this is really under-appreciated as an argument in favor of lower settlement times. There's a lot of indirect societal costs in having the financial system look so strange.
I'd assume if one were to check out from Amazon with say several millions of dollars of goods, there would be some phone calls being done in the back offices.
The first is a trivial item, the second an item of zero marginal cost that doesn't matter if payment fails.
A better example is settlement time of a car or house. If you buy a car maybe you can drive away today, but it takes a while before your ownership is fully registered.
If the title transfer took 10 days, your transaction settled in T+10, even though you might think it's instantaneous.
It's not. This is one of those "tell me what happens when you navigate to a URL" interview questions. What really happens when you order something off Amazon? Is there a float? Is there delayed settlement? Does Amazon at some point have to settle with another party? And the answer to all of those questions is "yes". We could continue to deconstruct your analogy, but I think the point is made.
Sibling comment made an analogy to buying a car. I believe if one really tore into the question, one might find that just about the only financial transaction that doesn't work with many similarities to the stock market is handing a fiver to the clerk at your local convenience store. (And someone that knows more about retail than I do can tell me how wrong I am about that.)