Extreme volatility in stocks such as GameStop Corp i AMC Entertainment Holdings Inc. “generated substantial risk” for brokers, imposing stricter requirements on companies, according to the Wall Street DTCC clearing house.
“As volatility increases, portfolio margin requirements also increase,” the Depositary Trust & Clearing Corp. said Thursday. in a statement sent by email.
The wild trade this week was driven by traders from a Reddit forum, who joined forces to increase the shares of several strongly short stocks, causing losses of billions of dollars for hedge funds.
Companies included Robinhood Markets, E * Trade and Morgan Stanley Interactive Brokers Group Inc. he was one of those who reduced the bargaining of some of the names fed by Reddit.
In a blog post, Robinhood related its decision to impose trade restrictions to increased clearing center requirements.
“These requirements exist to protect investors and markets and we take our responsibilities to meet them seriously, including the steps we have taken today,” Robinhood said.