The Robinhood app on a smartphone.
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Online broker Robinhood said it imposed temporary purchase restrictions on a small number of securities because Wall Street’s mandatory deposit requirements for shares multiplied by ten.
The decision by Robinhood, a pioneer and application in free trade, popular with small investors, served to examine its customers over the past week.
“It wasn’t because we wanted to prevent people from buying those shares,” Robinhood said in a blog post posted Friday at the end.
“We did this because the required amount that we had to deposit at the clearing center 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 of these volatile securities to ensure we could comfortably meet our requirements, ”he continued.
Amateur investors using Robinhood and other apps offered very short shares and caused GameStop shares to skyrocket 400% last week, causing significant losses for hedge funds that accessed the shares.
Initially, Robinhood told investors that they could only sell and not buy new shares in certain companies that caught the attention of Reddit retailers. Now, online brokerage allows customers to buy only a portion of GameStop. There are now a total of 50 securities restricted to the securities trading application.