The GameStop Corp logo. on a laptop and the Robinhood app on a smartphone.
Tiffany Hagler-Geard | Bloomberg | Getty Images
Robinhood will continue to limit trading on Monday on short-squeeze names like GameStop that experienced explosive rallies and unprecedented volatility last week.
Customers can purchase only one share of GameStop shares and five option contracts. However, the stock trading app favored by the millennium generation has reduced its list of restricted stocks from 50 on Friday to eight starting on Monday.
“The table below shows the maximum number of stock and option contracts for which you can increase your positions,” said Robinbood in an updated help center message on Sunday. “These limits may be subject to change throughout the day.”
The eight names are GameStop, AMC Entertainment, BlackBerry, Koss, Express, Nokia, Genius Brands International and Naked Brand Group. Robinhood is also limiting the purchase of option contracts on these securities.
If traders already hold more shares or contracts than the limits listed above, their positions will not be sold or closed, but they will not be able to open new positions, said Robinhood.
The move to extend the restrictions came after Robinhood revealed that the central clearinghouse on Wall Street determined a tenfold increase in the company’s deposit requirements last week to ensure orderly liquidations. Clearing houses seek to protect investors and markets by ensuring that brokers have the funds necessary to settle trades, a process that takes two days.
The company has also increased margin requirements, or the amount of money in a customer’s account when he will use leverage to buy a security.
The popular trading platform took advantage of credit lines and raised $ 1 billion in new investor funds to meet the clearinghouse’s requirements last week.
A speculative shopping frenzy swept through Wall Street last week, as a new wave of stay-at-home merchants continued to use social media, in this case Reddit’s WallStreetBets forum, to coordinate major price hikes. Shares in GameStop, a struggling traditional video game retailer, soared 400% last week, ending January with a 1.625% rise. AMC rose 277% last week, while Koss reached more than 1,800% more.
Many on Wall Street were increasingly concerned that this retail craze would cause more pain for brokers like Robinhood and short pressures would force large hedge funds to sell other positions to raise money, creating turmoil in the broader market.
Futures contracts fell at the beginning of Sunday’s trading session.
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