Economy stonks v14, brokergate

[Revolver]

read the thread. RH makes a killing by loaning your stocks to short.

 

[rob mafia]

But seriously, why Rolls-Royce? That has 11m avg volume. Basically no one is trading that. Why on earth would you need to restrict how many shares people can own of Rolls-Royce?

beats the fuck out of me. unless the computation involves FINRA fees or something.

 

[CatchnShoot]

https://www.barrons.com/articles/why-did-robinhood-stop-gamestop-trading-51611967696

A little-known intermediary in the process of buying and selling equities forced Robinhood and other brokers to restrict trading in several securities on Thursday, including GameStop, AMC Entertainment, BlackBerry, and Nokia. All have been swept up in the WallStreetBets-fueled short-squeeze phenomenon and have seen intense volatility in recent days.

Theories abounded online about Robinhood—a mobile-first, low-cost brokerage founded on the idea of expanding access to trading to more people—being in league with the “men in suits” at hedge funds on the losing side of those trades. Politicians on Twitter from across the political spectrum condemned the broker’s move. But Robinhood’s provided reason that it needed to restrict trading in those stocks until it could increase its collateral with the Depository Trust & Clearing Corporation, or DTCC, holds water.

Explaining that requires getting into a bit of market plumbing and elements of the trading process that usually don’t get much attention.

When an investor orders their broker—Robinhood or E*Trade, for example—to buy or sell a security, the broker accepts the trade and sends it to an exchange like the New York Stock Exchange or the Nasdaq. The exchange then matches buyers with sellers, and from the investor’s perspective, the transaction is as good as done. But there are still some mechanics that need to be worked out behind the scenes.


Investors may have noticed that the cash proceeds from selling a stock aren’t immediately available to withdraw from their account after a trade is completed—that usually takes a business day or two. Back in the day, that time was spent physically exchanging stock certificates between brokers. Today’s trading volumes make that an impossible task. (Curious readers should learn about the 1960s Paperwork Crisis.)

Today, after a stock exchange completes a trade, it sends the information to the DTCC, which keeps track of brokers’ books. The DTCC is a clearing house, an important part of the financial system. Clearing houses not only process and complete trades in an efficient manner, they help limit systemic risk. The clearing house promises to make good on all trades that happen regardless of what happens to an individual broker.

The DTCC is responsible for transferring ownership of the stock from the seller’s broker to the buyer’s broker—and vice versa for the cash involved. Rather than doing that after every single one of the trillions of dollars of trades each day, the DTCC waits until it can net several trades into “one position per security, per client, per settlement date,” according to its website. The settlement date is the day when the cash and securities involved in a trade actually change hands.

At the settlement date, which falls two days after the investor places their trade, the seller’s broker must deliver the stock being sold and the buyer’s broker must provide the cash. The DTCC guarantees that the transfer will happen and eliminates the risk of a single broker going under rippling across the market.

In exchange, the DTCC collects a fee per trade and requires some collateral from the brokers to ensure they have the assets to complete the transaction. It’s like putting a refundable deposit on a purchase that reduces the middleman’s risk while the package is in the mail, with full payment due once it arrives. The DTCC’s collateral requirements for brokers are calculated by a much more complex formula, based on the specific shares’ notional value, volatility, and other variables.

For a relatively risk-free transaction—in liquid, less volatile stocks like, say, Apple (AAPL) or Microsoft (MSFT)—that collateral requirement could be around the order of 10% of the transaction value. For a stock like GameStop this week, the DTCC’s formula might spit out a collateral requirement several times higher than that because it takes on greater risk. That’s because the DTCC could be on the hook to deliver an asset that’s worth a materially different amount on the settlement date than the trade date if one of the brokers involved can’t complete the transaction.

When traders are using margin to buy, the broker needs to come up with the cash on its own. And when there’s a large imbalance between a broker’s buy and sell orders for a given security, it doesn’t net out as cleanly at the end of the day, meaning more collateral is required.

All of those factors applied to Robinhood and Gamestop on Thursday. The stock traded in a wide range from $112 to $438 on heavy volume, its users were predominantly placing buy orders for the shares, and many were using margin.

And those are the reasons the DTCC asked brokers for more collateral for each such trade. The clearing house didn’t want to be caught with brokers not having the funds they need to settle. Therefore, Robinhood and others restricted buying on these highflying stocks until it could come up with enough cash to pay collateral. Robinhood allowed users to sell the stocks because the selling broker puts up the shares as collateral, not cash.

Since then, the brokerage has drawn down its credit lines at several banks and brought in $1 billion from existing investors to fund additional collateral requirements. On Friday, Robinhood reopened buying of Gamestop and other recently popular stocks.

The DTCC says it processes trillions of dollars of transactions a day, including equities, bonds, mutual funds, and derivatives. It said that collateral requirements for all of its broker clients were $33.5 billion on Thursday, up from $26 billion the day before.

How dare you attempt to bring reason into this.
That is un-sherdoggian.
How dare you, sir!



Good read.

 

[CatchnShoot]

But seriously, why Rolls-Royce? That has 11m avg volume. Basically no one is trading that. Why on earth would you need to restrict how many shares people can own of Rolls-Royce?

You can't buy if nobody is selling?

 

[Grassshoppa]

honestly, you guys are the ones spreading fake news.

Apparently I'm too retarded to understand your statement.

 

[Cuzcatlan]

I've never felt this intellectually vulnerable.

Every one does in the beginning. It takes a while but take it slow. My advice is don't trade, invest.
Look for companies that you feel will be around 10 years from now and will be successful. Don't just look at the trendy stocks. Buy and hold in the long run is always the better choice

 

[tonni]

Every one does in the beginning. It takes a while but take it slow. My advice is don't trade, invest.
Look for companies that you feel will be around 10 years from now and will be successful. Don't just look at the trendy stocks. Buy and hold in the long run is always the better choice

What are some of your investments if I may ask?

 

[KeepingItReal]

You can't buy if nobody is selling?

I'm sorry what? People already did sell, look at any number off Rolls Royce stocks from last year to this year. The stock price doesn't just drop like that if people haven't sold the stock.

 

[brackis1]

I've never felt this intellectually vulnerable.

It's literally a destabilizing event stoked on by right wing incels to create this sentiment.

 

[rob mafia]

Please for the love of god people: don't believe every retardo contextless screenshot someone is promoting on reddit or twitter.

i gotta say,* i thought the v13 thread was a cesspool but then i saw the wsb discord thread, and... i sure as shit didn't read it, but skimming the beginning/end was painful.

people REALLLLLLLLLY need to stop believing fake news/jumping to crazy conclusions and brigading with nonsense.

*this initially said "i gotta gay," - brb, gotta find some trap pr0n

 

[tonni]

It's literally a destabilizing event stoked on by right wing incels to create this sentiment.

I meant in a general sense, I don't know anything about stocks (a little more now), so everything people say is both confusing and convincing at the same time.

 

[tonni]

i gotta gay

Well, when you got to, you got to!

 

[rob mafia]

Well, when you got to, you got to!

lolz, i saw/fixed that when you made the previous post. i almost left it in with an edit pointing it out. now i wish i did that.

 

[tonni]

lolz, i saw/fixed that when you made the previous post. i almost left it in with an edit pointing it out. now i wish i did that.

We don't get along on almost anything generally but what's your opinion on the Gamestop stocks and the redditor's plans to get one up on the man?

I don't know much about this, but I feel like those hedgefunds dude or Robinhood or whatever have some very fine print somewhere deep in an agreement somewhere and they're safe.

 

[rob mafia]

We don't get along on almost anything generally but what's your opinion on the Gamestop stocks and the redditor's plans to get one up on the man?

I don't know much about this, but I feel like those hedgefunds dude or Robinhood or whatever have some very fine print somewhere deep in an agreement somewhere and they're safe.

tl;dr - you're all being hoodwinked.

it's not about revenge or social justice or occupy wall street, it's just a bunch of traders pulling off a short squeeze.

the problem is that since the "msft 200" meme (when we realized we could move a big market cap from our asshattery), there have been a lot of pump&dumps (and many more attempts) on wsb. the mods are generally good at shutting that down, but the recent shit's out of control. wsb was basically just a bunch of self-proclaimed retards (we'd say it's an anagram of traders) and autists who basically just laughed at their risky bets (and subsequent loss [usually] / gain porn). then jartek (admin) returned after years of absence and made a fake account with fake gains ("wsbgod") and used it to pump interest into wsb and set up pump&dump schemes. the pump&dumps weren't enough, so he wrote a book... about... us (as in, not him), while taking credit for our shit. then he set up a scam (trading instructional site ]) and got another wsb user (stormwillpass, who sadly was the general of theta gang [i'm theta gang] ) in on it, fleecing morons out of $. thennnnnnnnnnnn they set up a 1 day trading competition ppv with a prize that was... illegal as hell. people revolted, a lot of mods got kicked, and dissenters were banned.

the mods were able to get reddit involved and overthrew jartek, restoring wsb to the trading asshattery glory.

months went by

then (only1parkjisung) the top mod (who was basically idle for... years [and was either a friend of jartek's or jartek, himself] ) decided to make an official twitter account. and posted shady shit. we hated it/him and pressured him to shut the fuck up/deactivate the twitter, as it was trying to set up more pump&dumps (as well as being cringey and asinine), most notably... on gme. this was like 10 days ago.

citron starts shit talking wsb

now it's melvin/citron vs wsb, and wsb has a million subscribers. most of which are n00bs and don't know shit about us/the market/trading.

melvin blows up/citron diededs, overall market takes hits as collateral damage due to shorts having to dump their long positions. cnbc won't shut up about wsb. first villifying (for about 2 weeks), then suddenly pulling a 180 on thursday and acting like it's poors vs billionaires.

wsb gets another million subs. it's hysteria. there's now a narrative that we're heros or some shit. people start jumping in. now there's pump&dump/squeeze attempts on amc, express, nokia, etc. the n00bs just parrot dumb shit they don't understand. the broker's get squeezed by the clearing houses/dtcc increasing the collateral requirements. the morons pretend it's a grand conspiracy from melvin. cue tin foil insanity. worsens on friday.

gme closing over $300 on friday is a big deal, as a ton of money in puts is wiped out. the gamma squeeze is probably about over (probably happened on wednesday), the short squeeze may/may not be done with.

now.




maybe gme will still go up/squeeze. maybe not. i'm just selling far otm puts on it because the IV is like 1000% and it's low-risk free money, although no moonshots for me.

worst for me is that wsb was my favorite sub/site, and it's gone to total shit. we were once known for "guh" and "literally can't go tits up" box spreads (it went tits up), but now is a bunch of clueless fools believing conspiracy theories and pretending they're sticking it to wall st.

i'm just hoping that the clearing houses/dtcc can reverse the collateral requirement increase on the brokers, so trading can go back to normal and the market can stabilize.


tl;dr (yes, a 2nd one) - wsb is now 95% just pump&dumpers, idiots, and 'activists' who think they're sticking it to hedge funds, while being too ignorant to realize that a whole slew of funds are involved in this and most are benefitting (and often, they'll jump at the chance to knock off their competition). nearly everyone's believing some kind of crazy narrative, generally whatever they want to believe.

 

[brackis1]

i gotta say,* i thought the v13 thread was a cesspool but then i saw the wsb discord thread, and... i sure as shit didn't read it, but skimming the beginning/end was painful.

people REALLLLLLLLLY need to stop believing fake news/jumping to crazy conclusions and brigading with nonsense.

*this initially said "i gotta gay," - brb, gotta find some trap pr0n

People think them being denied margin loans to buy $400/shares of shitty companies is "wall street fucking them over like in 2008" when it's literally the opposite and they're being saved from total collapse.

 

[Deleted member 513083]

tl;dr - you're all being hoodwinked.

it's not about revenge or social justice or occupy wall street, it's just a bunch of traders pulling off a short squeeze.

the problem is that since the "msft 200" meme (when we realized we could move a big market cap from our asshattery), there have been a lot of pump&dumps (and many more attempts) on wsb. the mods are generally good at shutting that down, but the recent shit's out of control. wsb was basically just a bunch of self-proclaimed retards (we'd say it's an anagram of traders) and autists who basically just laughed at their risky bets (and subsequent loss [usually] / gain porn). then jartek (admin) returned after years of absence and made a fake account with fake gains ("wsbgod") and used it to pump interest into wsb and set up pump&dump schemes. the pump&dumps weren't enough, so he wrote a book... about... us (as in, not him), while taking credit for our shit. then he set up a scam (trading instructional site ]) and got another wsb user (stormwillpass, who sadly was the general of theta gang [i'm theta gang] ) in on it, fleecing morons out of $. thennnnnnnnnnnn they set up a 1 day trading competition ppv with a prize that was... illegal as hell. people revolted, a lot of mods got kicked, and dissenters were banned.

the mods were able to get reddit involved and overthrew jartek, restoring wsb to the trading asshattery glory.

months went by

then the top mod (who was basically idle for... years [and was either a friend of jartek's or jartek, himself] ) decided to make an official twitter account. and posted shady shit. we hated it/him and pressured him to shut the fuck up/deactivate the twitter, as it was trying to set up more pump&dumps (as well as being cringey and asinine), most notably... on gme. this was like 10 days ago.

citron starts shit talking wsb

now it's melvin/citron vs wsb, and wsb has a million subscribers. most of which are n00bs and don't know shit about us/the market/trading.

melvin blows up/citron diededs, overall market takes hits as collateral damage due to shorts having to dump their long positions. cnbc won't shut up about wsb. first villifying (for about 2 weeks), then suddenly pulling a 180 on thursday and acting like it's poors vs billionaires.

wsb gets another million subs. it's hysteria. there's now a narrative that we're heros or some shit. people start jumping in. now there's pump&dump/squeeze attempts on amc, express, nokia, etc. the n00bs just parrot dumb shit they don't understand. the broker's get squeezed by the clearing houses/dtcc increasing the collateral requirements. the morons pretend it's a grand conspiracy from melvin. cue tin foil insanity. worsens on friday.

gme closing over $300 on friday is a big deal, as a ton of money in puts is wiped out. the gamma squeeze is probably about over (probably happened on wednesday), the short squeeze may/may not be done with.

now.




maybe gme will still go up/squeeze. maybe not. i'm just selling far otm puts on it because the IV is like 1000% and it's low-risk free money, although no moonshots for me.

worst for me is that wsb was my favorite sub/site, and it's gone to total shit. we were once known for "guh" and "literally can't go tits up" box spreads (it went tits up), but now is a bunch of clueless fools believing conspiracy theories and pretending they're sticking it to wall st.

i'm just hoping that the clearing houses/dtcc can reverse the collateral requirement increase on the brokers, so trading can go back to normal and the market can stabilize.


tl;dr (yes, a 2nd one) - wsb is now 95% just pump&dumpers, idiots, and 'activists' who think they're sticking it to hedge funds, while being too ignorant to realize that a whole slew of funds are involved in this and most are benefitting (and often, they'll jump at the chance to knock off their competition). nearly everyone's believing some kind of crazy narrative, generally whatever they want to believe.

How did that whole GME thing start in the first place, as in how did they know that hedge funds were shorting it?
Or was it just pure coincidence someone found out about it.

 

[rob mafia]

How did that whole GME thing start in the first place, as in how did they know that hedge funds were shorting it?
Or was it just pure coincidence someone found out about it.

open interest* is generally easy to see, although, it's typically a few days behind.

the squeeze never would have happened if ryan cohen didn't get involved (and get on their board), though. that was the main catalyst

deepfuckingvalue is cool. he's just a lucky retard who went balls-in on gme in late 2019. afaik, he hasn't done anything shady.


edit: meant to say "short interest."

 

[Deleted member 513083]

open interest is generally easy to see, although, it's typically a few days behind. there are

the squeeze never would have happened if ryan cohen didn't get involved (and get on their board), though. that was the main catalyst

deepfuckingvalue is cool. he's just a lucky retard who went balls-in on gme in late 2019. afaik, he hasn't done anything shady.

Can't hate on that he did use the internet to his advantage.
You think Bitcoin is going to go up high?
Everybody is getting into it cause of Elons tweet, even the normies I know who never were interested in Crypto are all of a sudden super into it.
I still regret to this day not getting into it when I saw people talking about it back before it blew up

 

[Metusalemi]

Can't hate on that he did use the internet to his advantage.
You think Bitcoin is going to go up high?
Everybody is getting into it cause of Elons tweet, even the normies I know who never were interested in Crypto are all of a sudden super into it.
I still regret to this day not getting into it when I saw people talking about it back before it blew up

It's exactly the wrong time to get into it, when the normies are into it.