The website of the UK stock trading app Freetrade.
Freetrade
LONDON – British stock trading app Freetrade told customers on Friday that it has disabled US stock purchases.
Freetrade blamed the suspension of US stock purchases in a move by its foreign exchange provider and bank to limit the platform’s trading volume. Freetrade uses the UK’s fintech company, Currencycloud, for foreign exchange transactions.
Barclays made an unexpected decision to significantly limit the volume of foreign exchange transactions it could process for Freetrade, a person familiar with the matter told CNBC. The person preferred to remain anonymous, as he was not allowed to speak publicly.
Barclays was not immediately available for comment when contacted by CNBC.
The move affects purchase orders that were placed prior to the opening of the US market, Freetrade said, while sales orders will also be restricted for a short time at market opening.
“We have received no warning of what we consider to be an extremely bad decision,” said Freetrade co-founder and CEO Adam Dodds in a statement on Friday. “We are deeply dissatisfied with this decision and are doing everything possible to correct the situation.”
“Due to high volumes, we will not be able to answer individual questions about this at the moment.”
Freetrade, which has more than 300,000 users, says it experienced an increase in activity this week as a result of great volatility in the stock markets.
A series of heavily shorted stocks, including GameStop and AMC, soared this week with a flurry of amateur investors inspired by the Reddit WallStreetBets community accumulating such stocks, resulting in massive losses to some hedge funds.
American investment app Robinhood on Thursday was criticized by users after restricting trading to thirteen shares, including GameStop and AMC. Subsequently, the company said it would resume negotiations with these securities.
Robinhood said his decision to restrict trading was necessary to meet the capital requirements required by the U.S. Securities and Exchange Commission for brokers.
“These requirements exist to protect investors and the markets and we take our responsibility to comply with them seriously, including through the measures we take today,” said the company.
Robinhood also restricted cryptocurrency trading on Friday, stopping instant deposits for crypto purchases “due to extraordinary market conditions”. The change came when bitcoin and the meme-inspired dogecoin token saw huge spikes.
The SEC said on Friday that it was reviewing “extreme stock price volatility” and that it “would act to protect retail investors” from potential abuse or market manipulation.