This is false. You could close positions (ie. sell), just not open new positions.
https://blog.robinhood.com/news/2021/1/28/keeping-customers-...
>In light of recent volatility, we restricted transactions for certain securities to position closing only.
The big problem here IMO is Robinhood's messaging. What the heck was their PR department thinking? Why didn't they just come right out and say "hey look, we have legal requirements which we're unable to fulfill in the short term, here's an explanation of the risk controls we're unable to meet. We want to help you do these trades safely, we're working to put more capital on the table for you, our beloved users"? Why molly-coddle your user base with "uhh sorry can't, goodbye"?
You must be new to RH's PR team. This is the same company that tried to roll out a 3% savings account, but had to pull it back because they deceived the public about it actually being a true savings account[0].
But the best part of this campaign was they got to keep all of the customer acquisition (even if some churned) to people they could upsell into brokerage accounts. Legality and ethics aside, this probably netted them more customers/money than the perceived mishap of the rollout...win for the PR team.
[0] - https://clark.com/personal-finance-credit/robinhood-checking...
Now, that is now how things actually work, but I could easily see such an announcement causing that.
1. PR people didn't really understand what was going on
2. Ppl at the company didn't expect retail traders to understanding what was going on.
3. They had trouble with regulation in the past and are trying to appear as a legit brokerage.
4. Maybe they figured that they could get enough capital quickly enough to open up trading again or they were in active negations with DTCC. (Which they sort of did.)
EDIT: Formatting
Not really, because there's an extenuating circumstance that forced them to do it (ie. DTCC raising deposit requirements).
I mixed up my frozen trading stories here. It was March 2020 where we saw fully frozen trades due to internal Robinhood infrastructure failures, unrelated to DTCC infrastructure and margin.
"No using colors in your UI other than grey, white and black"
Mostly because not everyone is bound by that distinction. Many people recognize that the need for there to be a difference between financial games is purely cultural or religious.
Even the delineation between positive expected value games (buy and hold investing) and negative expected value games (table games at casinos) is not so binary with derivatives.
The reason this discrepancy exists in the US is because states regulate casinos and property and the federal government regulates the subset of property that are deemed securities. But despite the supporting culture, the Federal government is actually quiet on gambling, except to maintain a prohibition on financial services helping transfer funds to online gambling, allowing states to maintain their monopolies.
For me, it doesn't matter, I like to know the rules or lack thereof for whatever game I happen to be playing. For me, energy is better spent towards fixing structural issues, such as DTCC and antiquated mandates on long settlement times, which should be much shorter.
It did catch up with them, but the headline marketing remains unchanged. https://www.sec.gov/news/press-release/2020-321
There is more than just random numbers involved. Equity prices may have a tenuous connection to reality, but there is some real-world basis for stock, bonds, and derivatives. That is what separates financial markets from casino games (which are purely random number games).
In one poll conducted in the FinTwit community, about 70% of individuals said they could not trade because of an outage at some point. Wild.
We're hoping to bring light to this issue, and hold brokers responsible.
Might want to polish this up a bit first mate.
SEC Charges Robinhood Financial With Misleading Customers About Revenue Sources and Failing to Satisfy Duty of Best Execution
It's not especially heinous, but they were not very transparent about it (to be fair, it probably would have taken a bit to explain that they took a greater cut of the price improvement vs the legal benchmark).
""The risk of a single centralized party was realized at the worst possible time when the system could least tolerate it.""
I can't believe our SPOF actually F-ed!!
As is tradition.
