Stocks and Trading Thread - Channeling your inner Mono

[Admiral Yi]

Tax dollar bailout?  Where did that come from?

[Grey Fox]

What are the mechanisms to deal with the voting rights associated to the stock being loaned-sold-bought-resold?

The simple answer is that if a share has voting rights attached to it, whoever is the owner of the share has the rights attached to the share.  I am not sure what you are asking.

Who's the owner of a loaned share that has been sold & resold.

I see.  It isn't actually a loan - its called a borrowed share in the sense that shares need to be given back (but obviously not exactly the ones that were given since those shares were sold by the short seller).   So when the short seller sells them, the buyer of those shares now owns all the rights attached to those shares.

Ah. Thank you.

[Tamas]

OK so Robinhood allegedly was near bankruptcy and that's why they fucked their clients. Fine.

What about all the other platforms who did the same, though?

[Admiral Yi]

I haven't seen anything about bankruptcy.  What I've seen is about broker/dealer capital requirements.

[Tamas]

I haven't seen anything about bankruptcy.  What I've seen is about broker/dealer capital requirements.

Fine, that then. Was that the same for all other brokerages refusing but orders for a few specific stocks?

[Admiral Yi]

Fine, that then. Was that the same for all other brokerages refusing but orders for a few specific stocks?

Haven't seen anything about the other brokerages.

[Tamas]

Fine, that then. Was that the same for all other brokerages refusing but orders for a few specific stocks?

Haven't seen anything about the other brokerages.

So would you agree that the alleged troubles of Robinhood even if true are not sufficient to rule out the narrative that these brokerages restricted service to their retail clients in the financial interest of their owners/institutional business partners?

[Admiral Yi]

So would you agree that the alleged troubles of Robinhood even if true are not sufficient to rule out the narrative that these brokerages restricted service to their retail clients in the financial interest of their owners/institutional business partners?

I don't know what you mean institutional business partners.  If you mean the evil short hedge funds, I haven't seen anything that suggests Robinhood did this as  favor to them, or got some kind of bribe for doing it.

My understanding is they did it to maintain regulatory compliance.  So yes, to the extent that not paying a fine is in one's financial self interest, I imagine it was.

[Tamas]

So would you agree that the alleged troubles of Robinhood even if true are not sufficient to rule out the narrative that these brokerages restricted service to their retail clients in the financial interest of their owners/institutional business partners?

I don't know what you mean institutional business partners.  If you mean the evil short hedge funds, I haven't seen anything that suggests Robinhood did this as  favor to them, or got some kind of bribe for doing it.

My understanding is they did it to maintain regulatory compliance.  So yes, to the extent that not paying a fine is in one's financial self interest, I imagine it was.

You keep returning to Robinhood's individual case despite we have established they might have a genuine reason to sodomise their clients' backsides. What I pointed out that they were far from the only firm doing this so Robinhood's individual predicament is surely not explanation enough for this limiting action across multiple brokerages.

However, if you do insist on pretending it was just Robinhood, there are some easily traceable links which while do not prove anything, they sure should raise some questions.

https://www.washingtonpost.com/business/2021/01/29/robinhood-citadel-gamestop-reddit/

The Silicon Valley-based trading platform makes a large amount of revenue from Citadel Securities, a Chicago-based financial-services giant. Robinhood's regulatory filings show the company charges large investment firms called "market makers" fees to access real-time information about which stocks its users are buying and selling, a practice some regulators and industry watchers have seen as a potential conflict of interest.

Robinhood routes more than half of its customer orders to Citadel, by far its largest market-making partner by volume, Robinhood disclosures show. The app also works with Virtu, G1 Execution Services, Wolverine and Two Sigma.

Citadel LLC, a separate hedge fund also founded by Griffin, recently helped bail out Melvin Capital, a fund that sank 30 percent in a few weeks after shorting GameStop.

[Admiral Yi]

I keep returning to Robinhood's case because that's what I've seen interviews and articles about.  I haven't seen anything about TD Ameritrade, nor Etrade.

Yes, Citadel is a market maker and gives a kickback for each order they route to them.  That's Robinhood's entire business model.  They are commission free because they get a cut of Citadel's market making activity.

Their cut does not increase when they route fewer trades to Citadel.

Citadel has denied requesting Robinhood to halt trading on WSB stocks.  Citadel also would not make more money if Robinhood routed fewer trades to them.

Citadel's bailout of Melvin does raise the appearance of conflict of interest between itself and Melvin (not, we should note, between Robinhood and Melvin).  However, Melvin closed out all its shorts very early in this process.  Maybe Monday?  Maybe Tuesday?  Anyway, it was before Robinhood halted trading.

[Tamas]

Fine, Robinhood is all innocent in this because a) they say they had no ulterior motives and b) they say they were forced to restrict people due to these whatever circumstances they listed.

But as I said, this was more widespread than Robinhood and as you pointed out nobody else seem to have provided an explanation, so dismissing the claim of wrongdoing just because one accused actor gives verbal assurances that they did not do this to benefit themselves or other institutions financially, seem quite lenient.

[Admiral Yi]

If you think what I'm saying is incorrect, why do you have to mischaracterize it?

[alfred russel]

A valid reason to restrict access to Gamestop:

Since Wednesday, every day, at certain points I've been unable to log into my Ally account. On Friday, there was a point that I could log into my account, but the whole stock trading system went down.

On Vanguard, where I had to call to place a type of order, I spent an hour and forty minutes on hold, before hanging up.

For actual investors and not jackasses wanting to play the Gamestop lottery game, Gamestop is making it very tough to access financial services. They have a legitimate grievance. I'm really annoyed by it and I'm one of the fucktards only interested in playing the Gamestop lottery game.

[Tamas]

A valid reason to restrict access to Gamestop:

Since Wednesday, every day, at certain points I've been unable to log into my Ally account. On Friday, there was a point that I could log into my account, but the whole stock trading system went down.

On Vanguard, where I had to call to place a type of order, I spent an hour and forty minutes on hold, before hanging up.

For actual investors and not jackasses wanting to play the Gamestop lottery game, Gamestop is making it very tough to access financial services. They have a legitimate grievance. I'm really annoyed by it and I'm one of the fucktards only interested in playing the Gamestop lottery game.

That's actually a complaint fairly in line with your corona hiking shtick, bravo. 

[The Minsky Moment]

Smaller investors are legally excluded from forming hedge funds. If they folks on reddit were able to meet the wealth requirements to form a hedge fund, they could have done so and run up the price of Gamestop with their collective money, and it would all be legal (assuming of course that they are really driving Gamestop, which I don't believe).

That is not a sound assumption. Hedge funds and their traders are subject to regulations and funds owe contractual and other legal duties to investors. For example, hedge funds cannot (as one of the reddit leaders did) follow a trading strategy with the express objective of losing money.