The Robinhood app on a smartphone.
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Online broker Robinhood said it has temporarily restricted the purchase of a small number of securities, as mandatory Wall Street deposit requirements for stock centers have increased tenfold.
The decision made by Robinhood, a pioneer and free trading application, popular with small investors, has attracted the attention of its customers in the last week.
“Not because we wanted to stop people from buying these shares,” Robinhood said in a blog post published late Friday.
“We did this because the amount of money we had to deposit with the clearing house was so large – with volatile individual securities representing hundreds of millions of dollars in deposit requirements – that we had to take steps to limit buying those volatile securities to make sure they could comfortably meet our requirements, ”he continued.
Amateur investors using Robinhood and other apps auctioned sharply shortened shares and caused GameStop shares to rise 400% in the past week, resulting in major losses for hedge funds that shortened the shares.
Robinhood initially told investors that they could sell and not buy new shares in certain companies that caught the attention of retailers on Reddit. Brokerage now allows customers to buy only one share of GameStop. In total, 50 securities are now restricted in the stock trading application.