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Robinhood Restricts Users To Buying One GameStop Share

by : Julia Banim on : 30 Jan 2021 09:44
Robinhood Restricts Users To Buying One GameStop SharePA Images

Robinhood has now restricted users to buying just one GameStop share, while restricting trading on 50 stocks.

Previously, trading was limited on a list of just 13 stocks. This list of companies now includes General Motors (GM) and Starbucks, American Airlines and Bed Bath & Beyond.

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These actions follow Reddit’s chaotic stock surge, which led to GameStop‘s three largest shareholders making up to $2 billion.

RobinhoodPA Images

On Thursday, January 28, Robinhood sparked outrage after announcing clients would only be allowed to sell shares, not buy new ones, and that it also would be raising margin requirements.

This was described as a risk management solution intended to protect the free-trading app and its clearinghouses. Robinhood initially claimed that there would be an easing of restrictions by Friday, January 29, however restrictions were increasingly tightened throughout the trading day.

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In a blog post dated January 28, Robinhood stated that it will ‘continue to monitor the situation and may make adjustments as needed’:

Amid this week’s extraordinary circumstances in the market, we made a tough decision today to temporarily limit buying for certain securities.

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.

RobinhoodPA Images

On Friday, January 29, Robinhood announced it had raised $1 billion worth of emergency investment in order to handle the trading surge on its platform.

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As per the Robinhood website, those with existing positions which already exceed the limits ave been advised:

Outside of our standard margin-related sellouts or options assignment procedures, your positions will not be sold for the sole reason that you are currently over the limit.

However, you will not be able to open more positions of each of these securities unless you sell enough of your holdings such that you are below the respective limit.

Earlier in the day, before these latest restrictions were announced, clients were able to purchase five shares of GameStop.

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Julia Banim

Jules studied English Literature with Creative Writing at Lancaster University before earning her masters in International Relations at Leiden University in The Netherlands (Hoi!). She then trained as a journalist through News Associates in Manchester. Jules has previously worked as a mental health blogger, copywriter and freelancer for various publications.

Topics: News, GameStop, Now, Robinhood, stock market

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Robinhood and 1 other
  1. Robinhood

    Changes due to ongoing market volatility

  2. Robinhood

    An Update on Market Volatility