AOC and Trump Jr on the same side of an issue. Who would have thought?

Also ma boi Benny

Also just because this is the best thing ever:

2 h ago public brokerages (eg robinhood) stopped buy options on GME. Shorting ladder attack resumed. Disgusting collusion.

SEC better punish them for this. Although they won't, because the rich own the government and politicians are probably clients of the hedge funds that are losing money.

You need fucking margin to buy it now. Everyone who has margin is short on GME already, that's how they got into this fucking mess. Etoro's still got buy options apparently.

Our financial system is obviously messed up beyond belief and nothing really surprises me anymore including brokerages removing the ability to buy GME options; come help us create another one from the ground-up via Ethereum.

In any case I'm liking the bipartisanship here.

Etoro's stopped buy orders. They've all done it. Holy shit.

Looks like you can still buy on Trading 212 (Invest), although not on Trading 212 (CFD).

Cheers. T212's stopped "onboarding clients"!

Class action lawsuit launched against Robinhood in New York.

This guy says the institutional side actually drives a large proportion of the trend upwards on the basis of algorithms/automated strategy.

Fuck Robinhood. They're finished. Don't have money on a trading app but I'm well in crytpo. Come on over, WSB.

BTW, you can get all the WSB stonks on FTX (they even have a WSB index now) and they won't stop it, guaranteed.

https://ftx.com/

The most relevant point - was there market manipulation? Yes, but it was by the hedge funds who are screaming out for market regulation right now. — StreetlightX

What's alarming to me is that, even when the stock prices started to increase, they refused to close their position. This either suggests that they had their eye on the ball less than a bunch of amateurs on Reddit, or, more likely, their belief in their entitlement to an even greater profit made them forego the profit they had secured.

Melvin have been bailed out by friends, brokers have intervened, the government are monitoring the situation, and we're probably going to see legislation criminalising the purchase of stocks that the financial elite have a vested interest in. Even when they lose, they don't lose, instead just rigging the game even more in their favour. But they'll still tell you that, left to its own devices, the market looks after itself.

we're probably going to see legislation criminalising the purchase of stocks that the financial elite have a vested interest in — Kenosha Kid

I actually have a feeling it will be done far more subtly than this - in fact, we're already seeing how the response is shaping up. It's not to criminalize the purchasing of stock, but to control access to brokerage. Hence why Robinhood and others - who have a vested interest in servicing the hedge funds which provide them the majority of their business - stopped the purchasing of GME stock, and only allowing selling. What's being played out now in SEC complaints is how legal this is - and the pessimist in me reckons it's going to be A-OK.

This is how the elites govern now - by means of 'structural power', where they close ranks and deny access to means rather than end-product. One precedent for this which I've studied alot is in the case of sovereign debt, where solidarity among lending institutions (banks and so forth) simply refuse to lend more to indebted countries in order to enforce austerity and political change (this is basically the story of international finance relations since the 70s, and no one talks about it). This kinda of neoliberal strategy is favoured because it sticks with the script of "open-markets": the state isn't denying anything, it's allowing certain institutions to do stuff (even if that stuff happens to be denying access). It's devolution of power 'outside' the state and 'freedom' to corporate action.

Anyway, what happened here was or is the identification of gap in this kind of structural power, which is what allowed this bubbling-up of organization from 'below' to gain any traction. And it took all but three or four days to shut the tap off - although obviously not completely as there's brokerages still willing let people buy the stock. At the very least this is going to spur an attempt to consolidate brokerage agencies under the direct control of hedge funds, probably by means of massive push for regulation whose costs and burdens only they can bear (if Robinhood isn't made bankrupt by the shenanigans that it's pulling, I have every expectation that business models like it will be legislated out of existence in the future now). But this is just speculation on my part.

But as usual yeah - the free market is a fucking lie.

I noticed my brokerage limited purchase of those stocks to a 100% margin requirement, i.e. you have to actually have the cash on hand to purchase them, you can't borrow it, but otherwise you're free to buy.

Is that all the other brokerages like Robinhood etc have been doing, or have they been limiting it even further?

@StreetlightX I see you mentioned margin above, but it sounds like you're saying the opposite of what my brokerage seems to be saying? I would think that if anything it would only be big institutional investors who would have margin on which to buy (though Googling it right now it seems like some margin is a pretty standard feature of every brokerage account?), and the requirement from my brokerage seems to be that you cannot buy on margin, not that you must buy on margin.

Did you mean @fdrake? I didn't mention margin. But yeah, for the moment it seems they're opening up again somewhat after the furious (bi-partisan!) backlash against their denying the ability to buy. Now it seems you can, but with the kind of limitations you mentioned.

Did you mean fdrake? I — StreetlightX

Whoops yeah, similar avatars (both mostly white with the mod badge) confused my tired brain.

So, was what Robinhood etc were doing earlier something more than just requiring 100% cash on hand to buy? Like, you couldn't buy it at all, even in cash? I thought it was the latter but then my brokerage's notice plus @fdrake's mention of margin earlier makes me wonder if wasn't just that.

One the one hand, this is a fun prank on the hedge funds, and a nice reductio ad absurdum of the current stock market.

On the other hand, isn't further pushing up the stock, knowing full well that it'll eventually crash again, like taking part in a pyramid scheme? Someone will loose eventually, and I doubt it'll be just the hedge funds.

I actually have a feeling it will be done far more subtly than this - in fact, we're already seeing how the response is shaping up. It's not to criminalize the purchasing of stock, but to control access to brokerage. Hence why Robinhood and others - who have a vested interest in servicing the hedge funds which provide them the majority of their business - stopped the purchasing of GME stock, and only allowing selling. What's being played out now in SEC complaints is how legal this is - and the pessimist in me reckons it's going to be A-OK. — StreetlightX

One would hope this would lead to a demand for brokers who promise not to do this sort of thing, and a mass exodus from platforms like Robinhood.

One precedent for this which I've studied alot is in the case of sovereign debt, where solidarity among lending institutions (banks and so forth) simply refuse to lend more to indebted countries in order to enforce austerity and political change (this is basically the story of international finance relations since the 70s, and no one talks about it). — StreetlightX

Mmm such as Greece. I'm not sure how Varoufakis' backup plan would have played out (he's a bit of a blowhard) but I kinda regret we never found out. Seems to have worked out okay, though. Adults in the Room describes a somewhat different story in which really it came down to one stubborn man who never approved of Greece being in the EU in the first place, with everyone else promising the Earth then backing down. Again, not sure Varoufakis is a trustworthy narrator.

So, was what Robinhood etc were doing earlier something more than just requiring 100% cash on hand to buy? Like, you couldn't buy it at all, even in cash? I thought it was the latter but then my brokerage's notice plus fdrake's mention of margin earlier makes me wonder if wasn't just that. — Pfhorrest

As I understand it they were capping the amounts they'd broker.

So, was what Robinhood etc were doing earlier something more than just requiring 100% cash on hand to buy? Like, you couldn't buy it at all, even in cash? I thought it was the latter but then my brokerage's notice plus fdrake's mention of margin earlier makes me wonder if wasn't just that. — Pfhorrest

Robinhood stopped buy orders of GME. Full stop. As did Etoro. t212 stopped new clients from joining. Heard reports about other agencies that buy orders of GME were made impossible. A brokerage I saw but can't remember the name of IBKR started requiring that an investor had the ability to buy on the margin - borrow money to buy stock - in order to issue buy orders for GME - IE they put in a requirement that someone was an institutional investor in order to buy GME.

Citation: https://twitter.com/IBKR/status/1354792600004386818

Interactive Brokers has put AMC, BB, EXPR, GME, and KOSS option trading into liquidation only due to the extraordinary volatility in the markets. In addition, long stock positions will require 100% margin and short stock positions will require 300% margin until further notice.

Edit: Seems I didn't know what I was talking about. More than possible I misinterpreted all of this. Things I know for certain: Robinhood made buy orders impossible for regular clients (confirmed from friend), as did Etoro (confirmed from other friend).

So, was what Robinhood etc were doing earlier something more than just requiring 100% cash on hand to buy? Like, you couldn't buy it at all, even in cash? — Pfhorrest

I think RH has a tiered system depending on your subscription fee. But they were, for a period, specifically halting any buying of GME. They're putting it down to liquidity problems, which may even be true, but it still stinks. I read of some people having RH force the sale of GME stock on their behalf at one point, but I haven't seen much traction on that story so I don't know how trustworthy it is.

One would hope this would lead to a demand for brokers who promise not to do this sort of thing, and a mass exodus from platforms like Robinhood. — Kenosha Kid

True, but if brokerage becomes consolidated - much like ratings agencies - what demands people have won't matter. That's my worry anyway.

Mmm such as Greece. — Kenosha Kid

Greece but also Argentina, Mexico, and Italy, among other places. Aside from Varoufakis check out Jerome Roos' Why Not Default? and Wolfgang Streeck's Buying Time where they really delve into the politics of how lending conslidation functions. Also, I realized in my big speculative rant I missed the most obvious mode of how this stuff is being prevented - by simply shutting down the forums where people gather to talk about this stuff. Both the wsb discord and facebook page were shut down in the last two days, even though the reddit page remains up.

IE they put in a requirement that someone was an institutional investor in order to buy GME. — fdrake

This shit, this shit is gonna become more common. And it'll be done in the name of shielding from volatility and 'market stabilization' or some crap.

In addition, long stock positions will require 100% margin

As I understand it, that means that you must have 100% of the purchase price on hand, i.e. you may not borrow to purchase; not that you are required to borrow to purchase.

short stock positions will require 300% margin until further notice

And this should mean that it’s more difficult to do what the hedge funds were doing, because it requires that you have 300% of the purchase price on hand to short it.

I read of some people having RH force the sale of GME stock on their behalf at one point, but I haven't seen much traction on that story so I don't know how trustworthy it is. — StreetlightX

From what I was reading earlier to make sure my understanding of margins was correct, that’s normal practice when someone buys something on margin and then it tanks below the required maintenance margin percentage (e.g. if you buy $2k of something with only $1k of cash, i.e. at 50% margin, and then it tanks to only $1.5k in value, if your maintenance margin is 33% then your holdings of that will be liquidated to cut the losses of the money you borrowed from the brokerage to purchase it).

Requiring cash on hand or 100% margin for a volatile stock is entirely reasonable and banks and brokers can freely set these margin levels as they see fit. The clearing broker and clearing members are guaranteeing all these trades will settle vis-a-vis all the other participants of the clearing system. That allows everybody else to trade without knowing their counterparty and whatever settlement risk might be involved with that. From a risk management perspective it's necessary to allow a lot and that includes telling traders to fuck off with orders unless they post additional margin.

Banning trading in a specific stock or derivative is possible too but with a reasonable notification period - which can be very short in volatile markets. For instance, I once bought KIOR stock and that tanked into penny stocks and the costs for the bank to pay the deposit fees were no longer in line with the value of the underlying stock so they told me to get rid of it or they'd close out the position for me on a specific future date.

Problem with Robin Hood is that margin lending is embedded in its use case as far as I can tell and if hordes of dummies lend margin to buy a volatile and shitty stock then quite obviously banning them to buy, in order to protect the recovery rate on those loans, is an obvious risk measure.

So quite frankly, I think the outrage is totally misplaced.

if hordes of dummies lend margin — Benkei

Is it not RH, rather than the dummies, who would be doing the lending? And in requiring 100% margin, RH is basically refusing to lend toward the purchase of

a volatile and shitty stock — Benkei

which yeah, sounds reasonable to me.

I’m as skeptical as the next socialist of big capital, but I’m even more skeptical of the skreechings of 4channy people who call themselves “autists”, and though I admittedly don’t know a whole lot about this topic, from what I’ve been reading it sounds like they know even less and are just furious about normal reasonable procedures.

As I understand it, that means that you must have 100% of the purchase price on hand, i.e. you may not borrow to purchase; not that you are required to borrow to purchase. — Pfhorrest

That seems right to me too. I thought it suggested that the user required the ability to buy on the margin in order to buy the stock, perhaps I've misinterpreted things. I edited the post I made to flag that explicitly.

I think it remains the case that brokerages stopped people from being able to buy GME even with all their own money up front. But they allowed people simultaneously to sell it. Robinhood and Etoro definitely did that - a couple of friends tried to buy the stocks with their own money and couldn't. But it was fine to sell the stock!

From a risk management perspective it's necessary to allow a lot and that includes telling traders to fuck off with orders unless they post additional margin. — Benkei

It is a very risky stock, the reason all this started was that for some reason a few hedge funds had been shorting the hell out of it. It's still currently at 120% short volume. The rising value of stock caused a big loss for Melvin Capital.

Yes, sorry, language thing. In Dutch borrowing = lenen and lending = uitlenen. I still get them confused at times.