Some large brokerage houses have begun to respond to a frantic rise in the share price of companies that has been attributed to the rabid purchase by individual investors on social media platforms.
On Wednesday, TD Ameritrade said it was restricting trade by GameStop
GME,
i AMC Entertainment Holdings
AMC,
in addition to other names, amid a three-digit percentage increase in the price of these companies in recent days.
“In order to mitigate the risk to our company and customers, we have established several restrictions on some transactions in $ GME, $ AMC and other securities,” a TD Ameritrade spokeswoman told MarketWatch, referring to the company symbols .
“We made these decisions very cautiously amid unprecedented market conditions and other factors,” he said.
Charles Schwab, who bought TD Ameritrade but continues to operate as an independent retail brokerage platform, said it has reduced margin requirements on some of those trade names, including GameStop.
A Schwab spokeswoman said the platform changed its margin requirements, or how much an investor can borrow, on Jan. 13 and said it has set “restrictions on certain GME transactions and other securities.”
Restrictive movements occur as shares of the GameStock video game store rose 1,600% in January as traders gathered in online chat forums to place big bets on stocks through options, often called out of money. who pay for the shares increase in value over a fixed period.
Traders on sites like Reddit’s WallStreetBets and those using trading platforms like Robinhood have clashed with hedge fund investors, sparking a battle between prominent Wall Street short sellers and individual investors in GameStop stocks.
A Robinhood spokeswoman said officials from the popular trading platform “continuously monitor markets and adjust as we see fit for the benefit of our customers.”
Robinhood said it also moved the high requirements of GME and AMC to 100%, stressing that Robinhood does not allow for equity shortages or allow customers to change nude options.
However, GameStop’s recent readiness has spread to other areas of the market, as shares of companies like AMC Entertainment also rise in price on Wednesday, along with shares of Bed Bath & Beyond BBBY,
and retailer Express Inc. EXPR,
whose shares increased by 250%.
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The recent volatile trade has even made some uneasy on Wall Street, with the worries of a bubble. The Dow Jones Industrial Average DJIA,
the S&P 500 SPX index,
and the Nasdaq Composite Index COMP,
all traded lower on Wednesday.
Regulators have been mindful of the recent action, with William Galvin, the Commonwealth Secretary of Massachusetts, telling Barron’s Tuesday that in an exclusive statement he was watching the action unfold.
“This is definitely on my radar,” Galvin said. “I’m worried, because it suggests there’s something systematically wrong with the options listed on this stock.”