(Reuters) – Online broker Robinhood, one of the hottest spots in this week’s retail trade frenzy, said he has placed temporary buying restrictions on a small number of securities, as the clearinghouse’s mandatory deposit requirements for shares increased tenfold.
“… The amount of money we had to deposit in 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 the purchase of these volatile securities to guarantee we could meet our needs comfortably, ”he said in a blog on Friday night.
Robinhood’s free, simple-to-use app made him popular with a new generation of small traders and his restrictions on Thursday drew a strong reaction from high profile politicians and celebrities.
Retail investors using Robinhood and other apps boosted the so-called “Reddit rally” that boosted the shares of GameStop Corp and other companies defended on social media platforms, including Reddit, resulting in heavy losses for large hedge funds that had sold the shares.
Reporting by Rama Venkat in Bengaluru; Editing by Raju Gopalakrishnan