Robinhood, TD Ameritrade restricts trading of shares of GameStop, AMC

GameStop’s shares continued to make big moves, surpassing $ 400 on Thursday, powered by Reddit users facing Wall Street. But investors looking to do business faced several problems in their preference investment websites and apps in the past few days, with many experiencing service disruptions, according to Bloomberg. The frenzy over GameStop stock led to TD Ameritrade and Robinhood restricting new purchases of specific stocks (GameStop, AMC and others). It also caused a subreddit becomes private and a Discord server is shut down for violating the terms of service.

On Thursday morning, Twitter users began posting screenshots of their Robinhood apps that showed a message appended to the stocks of GameStop, AMC, Nokia and Bed, Bath and Beyond: “This stock is not supported on Robinhood.”

Robinhood said in a blog post on Thursday morning, just before the stock exchanges opened: “In light of recent volatility, we are restricting transactions for certain securities to position closing only, including $AMC, $BB, $BBBY, $EXPR, $GME, $KOSS, $NAKD and $NOK.”

In a tweet, the @wsbmod Twitter account (which is tied to the Wall Street Bets subreddit community driving recent trades), said: “Individual investors are being stripped of their ability to trade on [the Robinhood app]. In the meantime, hedge funds and institutional investors can continue to trade normally. “

US Congresswoman Rashida Tlaib, a Michigan Democrat, responded to Robinhood’s decision, calling on the House’s Financial Services Committee to hold a hearing on the trading service’s actions, calling them “market manipulation.”

This is beyond absurd. @FSCDems you need to have an audience on Robinhood’s market manipulation. They are blocking the bargaining power to protect Wall St.’s hedge funds, stealing millions of dollars from their users to protect people who have used the stock market as a casino for decades. https://t.co/CGkJxVfzkv

– Rashida Tlaib (@RashidaTlaib) January 28, 2021

An image that circulated on social media on Wednesday just after noon ET showed an apparent warning from TD Ameritrade saying it placed restrictions on trading shares in GameStop, AMC and others. The broker confirmed the restrictions, saying it made the decisions “out of extreme caution amid unprecedented market conditions and other factors”.

“In the interest of mitigating risk for our company and customers, we place several restrictions on some transactions in $ GME [GameStop], $ AMC [AMC Theaters] and other titles “, says the message from TD Ameritrade.

A spokesman for TD Ameritrade said the restrictions made include increasing the need for loans for shares known as margin and limiting transactions, such as short sales.

“It is not uncommon for us to make such decisions, which we consider individually, in the interest of mitigating the risk,” the spokesman said on Wednesday by email. “We have been adjusting our requirements for several days as we continue to see trends indicating unusual volume in an unprecedented market environment, which appears to be divorced from traditional market fundamentals. We take what we believe are prudent and appropriate decisions to place certain limits on certain transactions for certain securities. “

The fervor about stock trading did not go unnoticed. Nasdaq CEO Adena Friedman told CNBC on Wednesday that if there is any market manipulation, it could halt the negotiation of a stock to investigate. AMC is listed on the Nasdaq, while GameStop is traded on the New York Stock Exchange.

Massachusetts Community Secretary William Galvin told Barron’s on Wednesday that he thinks the New York Stock Exchange should “consider simply suspending it for a month and stop trading”.

The Securities and Exchanges Commission, which oversees stock markets, told the New York Times that it is looking at “internet chat rooms for signs of possible market manipulation”.

“We are aware of and actively monitoring ongoing market volatility in the options and stock markets, and consistent with our mission to protect investors and maintain fair, orderly and efficient markets,” the agency said in a statement. declaration Wednesday. “We are working with our fellow regulators to assess the situation and review the activities of regulated entities, financial intermediaries and other market participants.”

Even the White House is “monitoring the situation,” according to press secretary Jen Psaki on Wednesday.

Clarification: This story initially distorted the actions that TD Ameritrade took. The company imposed certain restrictions on the shares of GameStop and AMC, but did not ban them.