Central players in the GameStop market boom will call on Congress to cut back on the time it takes to establish stock trading, according to testimonies released before their appearances at a congressional hearing Thursday.
Why it’s important: A typically dark part of stock trading is among the highlights, as Robinhood and others try to divert the rage that arose from the stock market frenzy fueled by Reddit.
What they say: Billionaire Ken Griffin will testify that there should only be one day between when an operation is executed and when it is resolved, instead of the two business days it currently takes.
- CEO of Robinhood Vlad Tenev will go further, calling for the settlement of operations in real time.
- This would have allowed the company to “react better to periods of increased market volatility without restricting the purchase of securities,” Tenev will claim from lawmakers.
Flashback: Tenev has said the sharp jump in the amount of cash needed to post while resolving transactions caused it to curb trading on its platform, a move that angered users and lawmakers.
Griffin, owner of Citadel Securities, will also advocate for the firm’s oversized role in conducting stock trading on the Robinhood platform and elsewhere.
- “When others couldn’t or didn’t want to handle large volumes, Citadel Securities increased,” Griffin will say.
- He will recall that the company executed 7.4 billion shares to live up to the mania of trading on behalf of retail investors in one day, more than the average daily volume of the entire equity market in 2019.
Of note: Reddit CEO Steve Huffman, who is also about to testify, will be advocating for r / WallStreetBets, the community that served as a zero for stock meme posts.
- Huffman says the group’s activity “was within normal parameters” and that the group was not infiltrated by robots, foreign agents or bad actors.
- Reddit marketer Keith Gill will tell Congress that the idea he used social media to “promote GameStop shares to involuntary investors is absurd.”
Without Plotkin, CEO of Melvin Capital, a hedge fund targeting ar / WallStreetBets for his short position at GameStop, will say he was “personally humiliated” by efforts to raise stock prices, highlighting anti-Semitic language directed at him .
- According to his testimony, Melvin closed his GameStop after six years last month. He received a cash infusion from the Citadel (and Point72) hedge fund led by Griffin after suffering heavy losses.
Jennifer Schulp, a former official of financial regulator FINRA, will state that wild trade “posed no systemic risk to the functioning of our markets.”
- Schulp, who currently works at the Cato Institute, will also say that regulatory changes in response to the episode are likely to be unnecessary “in light of the minimal impact on market function.”
In depth: Read his testimonials …