Robinhood backtracks on stock trading restrictions
Faced with a wave of discontent and criticism, Robinhood has backtracked from the restrictions on trading certain stocks introduced on January 28, 2021, amid extraordinary market volatility.
On Thursday, the company said it was restricting transactions for certain securities to position closing only, including $AMC, $BB, $BBBY, $EXPR, $GME, $KOSS, $NAKD and $NOK. Robinhood also raised margin requirements for certain securities.
Several hours later, Robinhood had to defend its actions. The company said:
“As a brokerage firm, we have many financial requirements, including SEC net capital obligations and clearinghouse deposits. Some of these requirements fluctuate based on volatility in the markets and can be substantial in the current environment. These requirements exist to protect investors and the markets and we take our responsibilities to comply with them seriously, including through the measures we have taken today”.
Starting Friday, Robinhood plans to allow limited buys of these securities. The company says it will continue to monitor the situation and may make adjustments as needed.
A lot of brokerage platforms suffered issues yesterday amid unprecedented demand and heavy trading volumes. Many traders simply could not log in and access the platforms. Online brokers used social media channels to apologize to traders for the tech issues.