Ursine Catastrophe posted:

The funny thing is that RH being so blatant about preventing people from buying (words)

cr0y posted:

Messaging on birdsite now appears to be "ya gotta hold until Tuesday!"

Christ who is still pouring money into this

Power hour is gonna be somethin'

Leperflesh posted:

Lemme try and explain this.

I sell a stock to you for $10. Becuase of the 2-day settlement rule, your broker has to have capital on hand for your $10 expenditure, and they cannot use your account balance as that capital. (It's not the full $10, the capital reserve requirement is expressed as a percentage of the sale and I don't recall what percent, it doesn't matter though.)
Then a few minutes later, you sell that same stock to Susan, for $11. Your broker is still on the hook for the full amount they were before, because 2 days haven't gone by, but now Susan's broker is on the hook for capital reserves to cover her expenditure.
Then a few minutes later, Susan sells that same stock back to me, for $9. My broker is now on the hook for cash to capitalize my expenditure, and so is Susan's, and so is yours.

The same stock has been traded around right back to the original owner, but the charts record all three sales as volume. The float has been the same 1 share of stock the whole time, not 3. Three brokerages have now accumulated a responsibility to hold some cash on hand, because of regulations, for 2 days, no matter what, and they can't use our balances for that.

Do this millions of times and a bunch of discount brokerages that don't have enough cash on hand are starting to run out of reserves. It's OK if their own clients sell shares, because that does not incur any additional reserve requirement for them, but they restrict their clients from putting more buys in (not even a sell-and-then-buy-minutes-later) because each time their clients do that, their situation gets worse.

Now, this gets more complex in that in some cases it's not the brokerage itself, but a third party company that settles trades for them, which is accumulating these reserve requirements. The brokerages have arrangements with these third party settlement companies that may impose additional restrictions or requirements on order flow/halting/etc.

Moreover, these same brokerages handle loads of other shares changing hands, some for far more money at far higher volume. But: they already had cash on hand sufficient to handle the normal volume of those trades, it's not "extraordinary volume" so their own bean counters have accounted for how much they need. It may be that they have $1B set aside just to account for people trading AAPL, and only need $10M more to account for today's volume of AMC... but that doesn't matter, because these companies are not in the habit of having loads of unused cash sitting around, they run lean operations that are very carefully calculated to keep them in the black, just barely, for their capital reserve requirements and all the rest of their money is doing actual work.

The government says to these companies, via regulations: yes, not only are you allowed to restrict trading on individual securities for your own reasons, you have to restrict trading if you run out of reserves, you may not just run into the red on capital reserves and continue to allow trading.


Now, who set these rules up? Why? do they really benefit retail traders? That's a complex issue, and I'd argue that taken as a whole, the full set of rules by which big financial corps run by, heavily advantage the rich and powerful over the retail small-potatoes investor. But today, right now, outfits like Robinhood etc. are not intentionally loving over their customers just because they feel like being nice to the TWO hedge funds that are in big trouble over their big short positions.

PoopShipDestroyer posted:

Sorry if I'm wrong but it seems like people in this thread are under the impression this isn't going to go the way the reddit people were expecting? Why is that?

naughty joystick posted:

The WSB threads are nearing Qanon levels of fervor, at this point I genuinely hope it plays out the way they think it will because oy a lot of people with existing anxiety (financial or otherwise) saw this as the light at the end of the covid tunnel

Enigma89 posted:

I gave up on Robinhood and moved over to TDAmeritrade and Fidelity. I can't do fractional shares on Ameritrade so it feels like I have to use Fidelity but holy poo poo is that UI rear end.

Rabble posted:

It's going to end the way it always ends. A couple people are going to strike it big and the rest are going to be left holding the bag.

AngryBooch posted:

Do the largest volume days being Monday and Tuesday and therefore being settled on Wednesday and Thursday respectively not matter in this explanation?

PoopShipDestroyer posted:

Sorry if I'm wrong but it seems like people in this thread are under the impression this isn't going to go the way the reddit people were expecting? Why is that?

PoopShipDestroyer posted:

I see a lot of people pointing out that the DeepFucking dude or whatever his name is still has 50,000 shares. Is there any proof whatsoever that this is true aside from a screenshot of an account that could easily be photoshopped? Hell, not even photoshopped, it could be MSPainted.

AngryBooch posted:

Do the largest volume days being Monday and Tuesday and therefore being settled on Wednesday and Thursday respectively not matter in this explanation?

pmchem posted:

price went up a lot in the meantime, so you gotta look at aggregate price*volume to judge capital requirements

edit: also when volatility went up, counterparties raised margin requirements

Zero One posted:

Schwab has fractional. TD will get it after the merger is finished or you can move there now.

DoomTrainPhD posted:

pmchem posted:

I posted this yesterday, but, a lotta folks should give it a look:

https://twitter.com/bespokeinvest/status/1354936428816441353?s=20

Unsinkabear posted:

Schwab won't let you do fractional on GME right now.

Unsinkabear posted:

Schwab won't let you do fractional on GME right now.

Rabble posted:

What even happens when these clearinghouses go to settle all these retail buy orders and there's more shares owed than even available in the market? Is that even possible?

punk rebel ecks posted:

Is the stock market likely to crash when the inevitable mass eviction crisis happens?

punk rebel ecks posted:

Is the stock market likely to crash when the inevitable mass eviction crisis happens?

GreenBuckanneer posted:

so what happens if the short squeeze happens over the weekend and most people can't sell/buy? would wall street make out like bandits?

Leperflesh posted:

let's keep repeating this since it's still not clear to so many people:

there is no expiration date on short shares


the whole "Friday deadline" thing is for options, and every option contract has two parties.

The "short interest over 100% of float" thing is an obfuscation of the reality at best, but more importantly, short holders only have to close their position if they run out of sufficient financial reserves that whoever they owe shares to makes a margin call. When you're a multibillion dollar hedge fund, you do not get a margin call from robinhood or td or someone. The two big houses holding shorts have already covered themselves by getting cash from other financial institutions. That they have not necessarily closed out their short stocks is immaterial unless the share price skyrockets more from where it's been at the last couple days. In the meantime,

there is no expiration date on short shares

GreenBuckanneer posted:

so what happens if the short squeeze happens over the weekend and most people can't sell/buy? would wall street make out like bandits?

Harry Potter on Ice posted:

Like crash up?