The Gamestop Stock Market Boogaloo

[Diarcesia]

Wall Street Journal suggests GameStop, Bitcoin, and QAnon all come from the same source: online cultish behavior.

Shut up WSJ.

I mean they're technically correct. "Online cultish behavior" is a tool.

[Galloism]

Okay yeah, so RH confirms they just straight-up didn't have the capital

With the extraordinary market activity this week, and the temporary restrictions we put in place on certain securities, we’ve received questions about how Robinhood works, trading, clearing and settlement, and clearinghouses. Here’s an overview of the mechanics—or the plumbing—behind your trades. Let’s dive in.

Settling trades

When you buy or sell a stock, Robinhood sends your orders to market makers that execute your trades. Market makers send a record of the trade to Robinhood Securities, which works with a clearinghouse to record the trade. It takes two days for the clearinghouse to transfer the stock to the buyer and funds to the seller. This is known as “clearance and settlement.” In other words: everyone getting what they agreed to when the trade executed. In the industry, this is referred to as the trade date plus two days to settle, or “T+2.”

Meet your clearinghouse

Clearinghouses are SEC-registered organizations that act as the central depository for securities. They keep a record of the stocks owned through a brokerage. Clearing brokerages, like Robinhood Securities, are members of clearinghouses. These clearinghouses have membership rules, approved by the SEC, that govern the activity of their members. Clearinghouses establish financial requirements for members including deposit requirements designed to reduce risk to the clearinghouse.

Clearinghouse requirements

To clear and settle customer transactions, each trading day by 10am ET, clearing brokers like Robinhood Securities have to meet those deposit requirements to support their customer trades between the trade date and the date the trades settle. We withdraw money on some days, and deposit money on other days, depending on that day’s requirement.

How do clearinghouses determine how much is required?

It’s pretty technical, but the process basically works as follows: clearinghouses look at a firm’s customer holdings as a portfolio. They use a volatility multiplier, looking at specific stocks, to quantify their risk. The clearinghouse may assign significant additional charges based on how much of one stock a firm’s customers hold. If a firm’s customers have more buy than sell orders, and the securities they’re buying are more volatile, the deposit requirement will be higher. Clearinghouses can also require additional deposits if certain thresholds are met.

What happened this week

The amount required by clearinghouses to cover the settlement period of some securities rose tremendously this week. How much? To put it in perspective, this week alone, our clearinghouse-mandated deposit requirements related to equities increased ten-fold. And that’s what led us to put temporary buying restrictions in place on a small number of securities that the clearinghouses had raised their deposit requirements on.

It was not because we wanted to stop people from buying these stocks. We did this because the required amount we had to deposit with the clearinghouse 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.

Our goal is to enable purchasing for all securities on our platform. This is a dynamic, volatile market, and we have and may continue to take action to make sure we meet our requirements as a broker so we can continue to serve our customers for the long term.

Rest assured, our position remains firm—we stand with our customers and will continue to provide you with the resources and tools you need to become a confident, informed investor.

(relevant portion bolded)

Notably, the DTCC raised the collateral requirements on GameStop dramatically (my margin available dropped by 90%, and I don’t use robinhood).

This of course helped the hedge funds at the expense of the retail investor, but it’s unclear if this was to benefit the hedge funds, or just the way the math worked out. I’m not sure how the DTCC determines that.

[Diarcesia]

Okay yeah, so RH confirms they just straight-up didn't have the capital

With the extraordinary market activity this week, and the temporary restrictions we put in place on certain securities, we’ve received questions about how Robinhood works, trading, clearing and settlement, and clearinghouses. Here’s an overview of the mechanics—or the plumbing—behind your trades. Let’s dive in.

Settling trades

When you buy or sell a stock, Robinhood sends your orders to market makers that execute your trades. Market makers send a record of the trade to Robinhood Securities, which works with a clearinghouse to record the trade. It takes two days for the clearinghouse to transfer the stock to the buyer and funds to the seller. This is known as “clearance and settlement.” In other words: everyone getting what they agreed to when the trade executed. In the industry, this is referred to as the trade date plus two days to settle, or “T+2.”

Meet your clearinghouse

Clearinghouses are SEC-registered organizations that act as the central depository for securities. They keep a record of the stocks owned through a brokerage. Clearing brokerages, like Robinhood Securities, are members of clearinghouses. These clearinghouses have membership rules, approved by the SEC, that govern the activity of their members. Clearinghouses establish financial requirements for members including deposit requirements designed to reduce risk to the clearinghouse.

Clearinghouse requirements

To clear and settle customer transactions, each trading day by 10am ET, clearing brokers like Robinhood Securities have to meet those deposit requirements to support their customer trades between the trade date and the date the trades settle. We withdraw money on some days, and deposit money on other days, depending on that day’s requirement.

How do clearinghouses determine how much is required?

It’s pretty technical, but the process basically works as follows: clearinghouses look at a firm’s customer holdings as a portfolio. They use a volatility multiplier, looking at specific stocks, to quantify their risk. The clearinghouse may assign significant additional charges based on how much of one stock a firm’s customers hold. If a firm’s customers have more buy than sell orders, and the securities they’re buying are more volatile, the deposit requirement will be higher. Clearinghouses can also require additional deposits if certain thresholds are met.

What happened this week

The amount required by clearinghouses to cover the settlement period of some securities rose tremendously this week. How much? To put it in perspective, this week alone, our clearinghouse-mandated deposit requirements related to equities increased ten-fold. And that’s what led us to put temporary buying restrictions in place on a small number of securities that the clearinghouses had raised their deposit requirements on.

It was not because we wanted to stop people from buying these stocks. We did this because the required amount we had to deposit with the clearinghouse 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.

Our goal is to enable purchasing for all securities on our platform. This is a dynamic, volatile market, and we have and may continue to take action to make sure we meet our requirements as a broker so we can continue to serve our customers for the long term.

Rest assured, our position remains firm—we stand with our customers and will continue to provide you with the resources and tools you need to become a confident, informed investor.

(relevant portion bolded)

i.e. it's a combination of being a scapegoat, covering their own arse, potentially being bitten by the Feds again, and biting more than they can chew

What an unenviable... position.

[Kowani]

Okay yeah, so RH confirms they just straight-up didn't have the capital

With the extraordinary market activity this week, and the temporary restrictions we put in place on certain securities, we’ve received questions about how Robinhood works, trading, clearing and settlement, and clearinghouses. Here’s an overview of the mechanics—or the plumbing—behind your trades. Let’s dive in.

Settling trades

When you buy or sell a stock, Robinhood sends your orders to market makers that execute your trades. Market makers send a record of the trade to Robinhood Securities, which works with a clearinghouse to record the trade. It takes two days for the clearinghouse to transfer the stock to the buyer and funds to the seller. This is known as “clearance and settlement.” In other words: everyone getting what they agreed to when the trade executed. In the industry, this is referred to as the trade date plus two days to settle, or “T+2.”

Meet your clearinghouse

Clearinghouses are SEC-registered organizations that act as the central depository for securities. They keep a record of the stocks owned through a brokerage. Clearing brokerages, like Robinhood Securities, are members of clearinghouses. These clearinghouses have membership rules, approved by the SEC, that govern the activity of their members. Clearinghouses establish financial requirements for members including deposit requirements designed to reduce risk to the clearinghouse.

Clearinghouse requirements

To clear and settle customer transactions, each trading day by 10am ET, clearing brokers like Robinhood Securities have to meet those deposit requirements to support their customer trades between the trade date and the date the trades settle. We withdraw money on some days, and deposit money on other days, depending on that day’s requirement.

How do clearinghouses determine how much is required?

It’s pretty technical, but the process basically works as follows: clearinghouses look at a firm’s customer holdings as a portfolio. They use a volatility multiplier, looking at specific stocks, to quantify their risk. The clearinghouse may assign significant additional charges based on how much of one stock a firm’s customers hold. If a firm’s customers have more buy than sell orders, and the securities they’re buying are more volatile, the deposit requirement will be higher. Clearinghouses can also require additional deposits if certain thresholds are met.

What happened this week

The amount required by clearinghouses to cover the settlement period of some securities rose tremendously this week. How much? To put it in perspective, this week alone, our clearinghouse-mandated deposit requirements related to equities increased ten-fold. And that’s what led us to put temporary buying restrictions in place on a small number of securities that the clearinghouses had raised their deposit requirements on.

It was not because we wanted to stop people from buying these stocks. We did this because the required amount we had to deposit with the clearinghouse 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.

Our goal is to enable purchasing for all securities on our platform. This is a dynamic, volatile market, and we have and may continue to take action to make sure we meet our requirements as a broker so we can continue to serve our customers for the long term.

Rest assured, our position remains firm—we stand with our customers and will continue to provide you with the resources and tools you need to become a confident, informed investor.

(relevant portion bolded)

Notably, the DTCC raised the collateral requirements on GameStop dramatically (my margin available dropped by 90%, and I don’t use robinhood).

This of course helped the hedge funds at the expense of the retail investor, but it’s unclear if this was to benefit the hedge funds, or just the way the math worked out. I’m not sure how the DTCC determines that.

i...don't know what that is

[Galloism]

Notably, the DTCC raised the collateral requirements on GameStop dramatically (my margin available dropped by 90%, and I don’t use robinhood).

This of course helped the hedge funds at the expense of the retail investor, but it’s unclear if this was to benefit the hedge funds, or just the way the math worked out. I’m not sure how the DTCC determines that.

i...don't know what that is

This event is giving me a world class education on how the market works.

[Kowani]

i...don't know what that is

This event is giving me a world class education on how the market works.

i'm suddenly liking the idea of nationalizing the stock market and creating people's banks

[Galloism]

This event is giving me a world class education on how the market works.

i'm suddenly liking the idea of nationalizing the stock market and creating people's banks

Me too, friend. Me too.

[Senkaku]

This event is giving me a world class education on how the market works.

i'm suddenly liking the idea of nationalizing the stock market and creating people's banks

or we just burn capitalism to the ground and return to monke

[Kowani]

i'm suddenly liking the idea of nationalizing the stock market and creating people's banks

Me too, friend. Me too.

and so it begins

i'm suddenly liking the idea of nationalizing the stock market and creating people's banks

or we just burn capitalism to the ground and return to monke

am i the only person who just doesn't find the monke meme funny-

[Fahran]

i'm suddenly liking the idea of nationalizing the stock market and creating people's banks

or we just burn capitalism to the ground and return to monke

I'm apprehensive about both of those ideas at the moment. Especially returning to monke.

[New haven america]

Me too, friend. Me too.

and so it begins

or we just burn capitalism to the ground and return to monke

am i the only person who just doesn't find the monke meme funny-

It's not supposed to be funny.

It's a way of life.

[Odreria]

Wall Street Journal suggests GameStop, Bitcoin, and QAnon all come from the same source: online cultish behavior.

Shut up WSJ.

I mean they're technically correct. "Online cultish behavior" is a tool.

>they all have a real world impact
Yeah it’s called the free money express

[Kowani]

and so it begins


am i the only person who just doesn't find the monke meme funny-

It's not supposed to be funny.

It's a way of life.

so that's a yes then
cool

[The Alma Mater]

Wall Street Journal suggests GameStop, Bitcoin, and QAnon all come from the same source: online cultish behavior.

Shut up WSJ.

I mean they're technically correct. "Online cultish behavior" is a tool.

True, but what is happening here is the stockmarket being used as it is meant to be used. People are supposed to buy stocks because they have some sort of bond with them. Maybe you have friends working at gamestop. Maybe you want Nokia to make phones that survive a nuclear impact. Maybe you stole your first kiss in an AMC theatre and are nostalgic. And so on.

The stockmarket is not meant to be used to bankrupt businesses with algortithms, having a slightly faster internetconnection so you can react to a change faster than the system itself etc. etc. And yet, that currently is considered the norm. Currently the cultists are in charge.

[Kowani]

how subtle

[Odreria]

(Image)

how subtle

Oh they’re telling the truth, they just didn’t say who the significant risks are for.

[The Alma Mater]

(Image)

how subtle

They are right though. People should not hop on the train thinking it is a way to get rich quick with zero risk, losing their pensions in the process.

[Galloism]

So a friend of mine is applying for a scholarship. They want her to write an essay.

“How does social media affect young people?”

...

>looks at thread

Very awesomely.

[Omniabstracta]

(Image)

how subtle

They are right though. People should not hop on the train thinking it is a way to get rich quick with zero risk, losing their pensions in the process.

Yeah, there are plenty of people who don’t really understand the reason that this is happening, and don’t understand that most people on WSB are willing and expecting to lose most of their investment, and that’s probably who this is targeting.

[Shrillland]

They are right though. People should not hop on the train thinking it is a way to get rich quick with zero risk, losing their pensions in the process.

Yeah, there are plenty of people who don’t really understand the reason that this is happening, and don’t understand that most people on WSB are willing and expecting to lose most of their investment, and that’s probably who this is targeting.

Or indeed, those who look at WSB's advice and end up burned because it doesn't quite go as expected, which could happen in future.

[The Two Jerseys]

Okay yeah, so RH confirms they just straight-up didn't have the capital

With the extraordinary market activity this week, and the temporary restrictions we put in place on certain securities, we’ve received questions about how Robinhood works, trading, clearing and settlement, and clearinghouses. Here’s an overview of the mechanics—or the plumbing—behind your trades. Let’s dive in.

Settling trades

When you buy or sell a stock, Robinhood sends your orders to market makers that execute your trades. Market makers send a record of the trade to Robinhood Securities, which works with a clearinghouse to record the trade. It takes two days for the clearinghouse to transfer the stock to the buyer and funds to the seller. This is known as “clearance and settlement.” In other words: everyone getting what they agreed to when the trade executed. In the industry, this is referred to as the trade date plus two days to settle, or “T+2.”

Meet your clearinghouse

Clearinghouses are SEC-registered organizations that act as the central depository for securities. They keep a record of the stocks owned through a brokerage. Clearing brokerages, like Robinhood Securities, are members of clearinghouses. These clearinghouses have membership rules, approved by the SEC, that govern the activity of their members. Clearinghouses establish financial requirements for members including deposit requirements designed to reduce risk to the clearinghouse.

Clearinghouse requirements

To clear and settle customer transactions, each trading day by 10am ET, clearing brokers like Robinhood Securities have to meet those deposit requirements to support their customer trades between the trade date and the date the trades settle. We withdraw money on some days, and deposit money on other days, depending on that day’s requirement.

How do clearinghouses determine how much is required?

It’s pretty technical, but the process basically works as follows: clearinghouses look at a firm’s customer holdings as a portfolio. They use a volatility multiplier, looking at specific stocks, to quantify their risk. The clearinghouse may assign significant additional charges based on how much of one stock a firm’s customers hold. If a firm’s customers have more buy than sell orders, and the securities they’re buying are more volatile, the deposit requirement will be higher. Clearinghouses can also require additional deposits if certain thresholds are met.

What happened this week

The amount required by clearinghouses to cover the settlement period of some securities rose tremendously this week. How much? To put it in perspective, this week alone, our clearinghouse-mandated deposit requirements related to equities increased ten-fold. And that’s what led us to put temporary buying restrictions in place on a small number of securities that the clearinghouses had raised their deposit requirements on.

It was not because we wanted to stop people from buying these stocks. We did this because the required amount we had to deposit with the clearinghouse 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.

Our goal is to enable purchasing for all securities on our platform. This is a dynamic, volatile market, and we have and may continue to take action to make sure we meet our requirements as a broker so we can continue to serve our customers for the long term.

Rest assured, our position remains firm—we stand with our customers and will continue to provide you with the resources and tools you need to become a confident, informed investor.

(relevant portion bolded)

Does the clearinghouse accept Doordash gift cards? Robinhood seems to have plenty of those...

[Senkaku]

or we just burn capitalism to the ground and return to monke

I'm apprehensive about both of those ideas at the moment. Especially returning to monke.

Extinction has to happen sometime. Might as well give ourselves the illusion of control over the process

or we just burn capitalism to the ground and return to monke

am i the only person who just doesn't find the monke meme funny-

fine, we can burn capitalism to the ground, and then just have some incredibly dreary show trials and revolutionary purges or whatever for Mr. Humorless

starving to death trying to farm ancient maize varieties on a tiny plot of marginal land is my right as an American

[Kowani]

I'm apprehensive about both of those ideas at the moment. Especially returning to monke.

Extinction has to happen sometime. Might as well give ourselves the illusion of control over the process

am i the only person who just doesn't find the monke meme funny-

fine, we can burn capitalism to the ground, and then just have some incredibly dreary show trials and revolutionary purges or whatever for Mr. Humorless

starving to death trying to farm ancient maize varieties on a tiny plot of marginal land is my right as an American

i appreciate you too

[The Lone Alliance]

Wall Street Journal suggests GameStop, Bitcoin, and QAnon all come from the same source: online cultish behavior.

Shut up WSJ.

They only care because in this case the supposed "Cultist behavior" affects them personally. When the cultist behavior helps their bottom line, enforces the status quo, or becomes something they can market Cult behavior is great.

In this case though the 'cult' is doing something they don't like and it's starting to hurt their bottom line.

The media has gotten increasingly effective at mass movement control too so they're likely getting very frustrated about their lack of control here.

And reading the article shows it's just another smear job.

[Karlopetrus]

This episode shows how the stock market game is rigged against ordinary speculators. Perhaps we are seeing an acceleration into the end stage of the system of speculation. The root problem is the whole system of making money from money instead of from productive labor.