Despite rumors circulating that the Robinhood exchange was forced to stop trading in the shares targeted by a community of Reddit users, the CEO of the company said he made the decision on his own. safeguard the company.
Protect users
In an interview on the Bloomberg news site, Vlad Tenev said the rumors were "categorically false" and Robinhood was not "headed by a market maker or any other market participant," but rather the decision was based on an assessment. "Technical and operational".
“Robinhood, as a broker, has some financial requirements including deposits we have to make in various clearing houses. Some of these requirements vary based on market volatility, ”Tenev said.
In order to “protect Robinhood's company” and customer base, Tenev said his platform has disabled the purchase of 13 shares associated with the Reddit community action called WallStreetBets (WSB).
The current frenzy of trading activity has represented an "unprecedented market environment" in the past two weeks, according to the CEO. He said Robinhood had not disabled the sale of the shares as it would have been "painful" for users of the platform if they were not allowed to exit their positions.
The case of Reddit as an opportunity to educate the public on the dynamics between finance and the market
Stock prices for companies like Nokia (NOK), AMC Entertainment (AMC) and GameStop (GME) (all NASDAQ shares, ed.) have risen to astronomical levels in recent weeks, as WSB has tried to create a "short squeeze" towards large US institutional hedge funds trying to bet against those companies.
Despite the calls, the share prices of AMC, GME and NOK have fallen in the past 24 hours and, in the meantime, several lawsuits have been filed against Robinhood. "Concentrated investment" around these types of stocks was in high demand due to an unprecedented "intersection" of social media and finance, the CEO said.
When asked if he would be willing to visit Washington DC to testify on this matter, the CEO said he was willing to have a conversation and that current developments have represented an "opportunity" to educate the public on how finance mechanisms are based. with market dynamics.
"Market volatility increases deposit requirements at various clearing houses where we have to deposit cash ... the more cash we have to deposit in these clearing houses, the more we can allow clients to buy, especially if these shares are unrestricted" , Tenev said.
"We are interested in removing restrictions based on our operational requirements and increasing the amount of money available to fund these deposits which will enable us to do it better to the fullest extent possible."
