The GameStop Corp. logo on a laptop and the Robinhood app on a smartphone.
Tiffany Hagler-Geard | Bloomberg | Getty Images
Robinhood will continue to limit trading Monday on short names like GameStop that have experienced explosive concentrations and unprecedented volatility last week.
Customers can only purchase one share of GameStop shares and five option contracts. Still, the millennial-favored stock trading app narrowed the list of restricted shares from up to 50 Friday to eight starting Monday.
“The table below shows the maximum number of stock and option contracts to which you can increase your positions,” Robinbood said in an updated message from the help center on Sunday. “These limits may be subject to change throughout 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 these securities.
If traders already have 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 move to extend the restrictions came after Robinhood revealed that the Wall Street clearinghouse demanded a ten-fold increase in the firm’s deposit requirements last week to secure the ordered settlements. Clearinghouses try to protect investors and markets by making sure brokers have the funds needed to liquidate the trade, a process that takes two days.
The company also raised margin requirements or the amount of money in a customer’s account when they will use leverage to buy a security.
The popular trading platform took advantage of the lines of credit and raised nine billion dollars from investors to meet the requirements of the clearing house last week.
A speculative buying frenzy swept through Wall Street last week as a new wave of home-based traders continue to use social media, in this case Reddit’s WallStreetBets forum, to coordinate massive short straits. Shares of GameStop, a struggling video game retailer, shot up 400% last week and closed January up 1.625%. AMC shot up 277% last week, while Koss booted more than 1,800% more.
Many on Wall Street became increasingly concerned that this retail craze would cause more pain to brokers like Robinhood and short pressures will force large hedge funds to sell other positions to raise cash, creating turmoil in the wider market.
Stock futures fell early Sunday in early trading.
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