Robinhood imposes one share buy limit on dozens of stocks amid GameStop scrutiny
Robinhood App
Online broker Robinhood, one of the hottest venues in this week's retail-trading frenzy, said it put temporary buying restrictions on a small number of securities as clearing house-mandated deposit requirements for equities increased ten-fold.
"....the required amount we had to deposit with the clearing house was so large, with individual volatile securities accounting for hundreds of millions of dollars in deposit requirements - that we had to take steps to limit buying in those volatile securities to ensure we could comfortably meet our requirements," it said in a blog post late on Friday.
Meanwhile,Texas's attorney general announced on Friday a probe intoRobinhoodand 12 other online stock exchanges after they suspended trading on GameStop and other volatile equities.
Ken Paxton, the top prosecutor for the country's second-most-populous state, sent a civil investigative demand to the companies, the latest sign of escalating scrutiny from regulators and lawmakers over the trade suspensions. Trading of GameStop resumed Friday onRobinhood.
Paxton echoed criticism from across the political spectrum of the trading halts, which he said "stinks of corruption" and appears to show coordination among powerful interests.
US media reported the company had also raised $1 billion from its investors to help it stay afloat and allow its customers to continue trading, though on ThursdayRobinhoodchief Vlad Tenev told CNBC the company was not facing a liquidity crunch.
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Robinhoodneeds to maintain a certain amount of funds in the financial institutions that facilitate orders made on its platforms, and when it sees increased demand, that liquidity needs to increase as well.
Robinhood's fee-free and simple-to-use app has made it popular with a new generation of small-time traders and its restrictions on Thursday drew a heavy backlash from high-profile politicians and celebrities.
Retail investors using Robinhood and other apps drove the so-called "Reddit rally" that pushed up shares of GameStop Corp and other companies championed on social media platforms including Reddit, resulting in heavy losses for big hedge funds that had shorted the shares.