Robinhood says it temporarily curbed buying of some securities as deposit requirement increased ten-fold

Jan 30 (Reuters) – 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. https://bit.ly/3akZ57q

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. (Reporting by Rama Venkat in Bengaluru; Editing by Raju Gopalakrishnan)

Photo A Game Stop store in Springfield, Virginia, USA, 28 January 2021. The San Francisco-based stock trading app Robinhood has stopped allowing users to buy Game Stop, along with several other stocks, after day traders took on the Wall Street establishment, causing wild fluctuations in Game Stop’s stock price. EPA-EFE/SHAWN THEW