(Reuters) – Online broker Robinhood, one of the hottest places in this week’s retail frenzy, says it has temporarily restricted the purchase of a small number of securities, as the requirements for mandatory deposit of the clearing house for shares have increased ten times.
“… the amount we had to deposit at the clearing house was so large – with individual volatile securities representing hundreds of millions of dollars in deposit requirements – that we had to take steps to limit the purchase those volatile securities to ensure we could comfortably meet our requirements, ”it was said in a blog post late Friday.
The Robinhood application, free and easy to use, made it popular with a new generation of small traders, and its restrictions generated a strong reaction on Thursday from politicians and celebrities.
Retail investors using Robinhood and other apps led the so-called “Reddit rally” that supported the actions of GameStop Corp and other social media platforms, including Reddit, leading to heavy losses for large hedge funds that shortened shares.
Report by Rama Venkat in Bengaluru; Montages of Raju Gopalakrishnan