SINGAPORE (Reuters) – Online broker Robinhood has restricted trade in about 13 highly volatile stocks, such as GameStop and AMC Entertainment to protect the company and its customers, Chief Executive Vladimir Tenev said on Thursday.
The app, popular with young investors for its simplicity, has been at the heart of the day-trading craze that followed calls for social media to buy heavily shorted stocks by hedge funds. The restrictions allowed customers to sell, but not buy.
“We absolutely did not do this under the direction of any market maker or hedge fund … the reason we did this is because Robinhood, as a broker, we have a lot of financial requirements,” Tenev told CNBC.
“To protect the company and protect our customers, we had to limit the purchase of these stocks,” he said, adding that it was a “difficult decision”.
The company had previously announced restrictions and increased margin requirements on a blog that said the limited purchase would be available on Friday. The move drew the ire of angry customers and even politicians.
“We understand that our customers are upset, we are doing what we can to reactivate the purchase with these names,” said Tenev.
“We want to be clear in communications and I recognize that we should have left a little earlier.”
Reporting by Tom Westbrook; Editing by Shri Navaratnam and Stephen Coates