GameStop Corp. on a laptop and the Robinhood app on a smartphone.
Tiffany Hagler-Geard | Bloomberg | Getty Images
Robinhood will continue to limit trading on Monday with short names such as GameStop, which have experienced explosive rallies and unprecedented volatility in the past week.
Customers can only buy one share of GameStop shares and five option contracts. However, the millennial-favored stock trading application has narrowed its list of restricted shares from 50 to Friday to eight since Monday.
“The table below shows the maximum number of stock and option contracts you can increase your positions on,” Robinbood said in an updated message from the help center on Sunday. “These limits may change during the day.”
The eight names are GameStop, AMC Entertainment, BlackBerry, Koss, Express, Nokia, Genius Brands International and Naked Brand Group. Robinhood also limits the purchase of option contracts for those 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, Robinhood said.
The tightening measure came after Robinhood revealed that Wall Street’s central clearing center imposed a ten-fold increase in the company’s deposit requirements last week to ensure orderly settlements. Clearing houses try to protect investors and markets, ensuring that brokerages have the necessary funds to settle the trade, a process that lasts two days.
The firm has also raised the margin requirements or the amount of money in a client’s account when using leverage to buy a security.
The popular trading platform exploited credit lines and raised new billions of dollars from investors to meet the requirements of the clearing house last week.
A speculative buying frenzy swept Wall Street last week as a new wave of home-based retailers continued to use social media, in this case Reddit’s WallStreetBets forum, to coordinate the massive short spills. Shares of GameStop, a brick-and-mortar video game retailer, rose 400% in the past week, closing in January with a 1.625% rally. AMC rose 277% last week, while Koss pulled out 1,800% higher.
Many on Wall Street have become increasingly concerned that this retail craze will cause more pain for brokers like Robinhood, and short leaks will force large hedge funds to sell other positions to raise cash, creating unrest. on the wider market.
Equity futures contracts fell on Sunday at the start of trading.
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