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Correct, this is the responsibility of the NYSE, not RH.
No, it was the responsibility of RH. The problem is that while buy and sell orders execute immediately, the actual transfers of the money from the buyers to the sellers take about two days to go through. Brokerages are required to hold a certain percentage of money in reserve to cover that float. Once they hit that limit, under SEC rules they have to stop trading. RH had no choice in the matter. They had to suspend trading in GME or risk losing their brokerage license.
But the SEC could have ordered the NYSE to temporarily suspend all trading on GME once it became clear just how big this short squeeze was becoming. That would have given the smaller brokerages like RH, who hold smaller capital reserves, time to allow their existing trades to clear, and it would have advantaged or disadvantaged no one.
Ultimately the blame falls on the SEC, who didn't do right by the little guys. But is anyone surprised by that? There's practically a revolving door between the big banks and brokerages and the SEC these days. It's a classic case of regulatory capture.
No, it was the responsibility of RH. The problem is that while buy and sell orders execute immediately, the actual transfers of the money from the buyers to the sellers take about two days to go through. Brokerages are required to hold a certain percentage of money in reserve to cover that float. Once they hit that limit, under SEC rules they have to stop trading. RH had no choice in the matter. They had to suspend trading in GME or risk losing their brokerage license.
But the SEC could have ordered the NYSE to temporarily suspend all trading on GME once it became clear just how big this short squeeze was becoming. That would have given the smaller brokerages like RH, who hold smaller capital reserves, time to allow their existing trades to clear, and it would have advantaged or disadvantaged no one.
Ultimately the blame falls on the SEC, who didn't do right by the little guys. But is anyone surprised by that? There's practically a revolving door between the big banks and brokerages and the SEC these days. It's a classic case of regulatory capture.
Thanks for clarifying. This is the point I was trying to make. The NYSE and the SEC should have stepped in.
Except the CEO nor RH's official statement referred to this.
And the posters are correct, they should have suspended all trading for GME if this was the case.
This was simply calling in / demanding a favor that this is going to destroy us if we don't stop the buying. These are the same kind of guys who crashed our economy in 2008. They make this massive short bet on a stock with what only 70M outstanding shares and didn't hedge anything. Most traders when they make a bet and it goes against them, they get out and take their losses. Instead, they dug in, got a bailout and now they are even more underwater. Think about it this way, AAPL has 17B, yes 17 BILLION vs GME's 70 MILLION. They gambled and now they want a bail out and are crying for intervention from government, media and brokerages.
This was simply calling in / demanding a favor that this is going to destroy us if we don't stop the buying. These are the same kind of guys who crashed our economy in 2008. They make this massive short bet on a stock with what only 70M outstanding shares and didn't hedge anything. Most traders when they make a bet and it goes against them, they get out and take their losses. Instead, they dug in, got a bailout and now they are even more underwater. Think about it this way, AAPL has 17B, yes 17 BILLION vs GME's 70 MILLION. They gambled and now they want a bail out and are crying for intervention from government, media and brokerages.
Yes, suspending ALL trading of GME wouldn't have had the same effect. That would just have been a pause to let the transfer monies settle, after which the Reddit crowd would have been able to continue to cheerfully kick the hedge funds in the 'nads. Which if course is why a brief suspension of all GME trading wasn't done.
The foxes are running the SEC and the Treasury Department. And until we get big money out of political campaigns, I don't see that changing.
Yes, it would have. Freezing ALL trading in GME, instead of just freezing buying but permitting selling, might not have upset their customer base as much either.
It’s rare a firm would restrict closing out positions for two reasons. 1. It reduces their liability in that a 500 stock could fall to zero and you customers have no way out, leaving closing abilities open is almost always how it goes unless the sec/finra or some other agency is the one making the call and 2. Allowing people to close out, price not withstanding helps with the liquidity issues
Still don't think it's right for RH to block people from trading stocks. This must be fixed.
Every firm does this and not all for the same reasons. I don’t think this will change.
Also shutting down all trading in GME a over the entire market because some of the smaller firms were having issues isn’t the correct answer
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