Margin Trading Liquidations

The customers that were liquidated were trading on margin (aka with borrowed money.) When you accept that borrowed money, you also agree that the broker’s risk department can liquidate your positions to ensure they get their money back.I have not heard any anecdotes about US exchanges not allowing selling/exiting existing positions. In fact, on of the arguments from GMEanon is that disabling buying and keeping selling open drove the price down. There is nothing illegal about a broker dis

Losing your entire account is not a normal risk of margin trading. They were way too quick on the margin calls.

This is most likely the answer. They are taking on a lot of risk allowing this type of trading behavior. They likely don't have suitable risk infrastructure developed to feel like they have a handle on it, so they shut it down.

More the exchanges imo. Similar to Robinhood halting orders on GameStop.

Liquidating positions in a margin account is standard. They posted they changed the requirements for certain stocks. if you don’t meet the capital requirements, they’ll liquidate positions to reduce their risk. If people don’t realize they can do this, they have no business with a margin account.

Multiple brokerages shut down buying due to the collateral requirements that were raised. Robinhood seems like the fall guy here, hopefully people start asking the right questions about the collateral and the manipulation there.

Not really, because the amount of deposit you need to put up is proportional to the volatility, among other factors. Therefore it makes sense to shut down trading for the stocks that incur a disproportionately high amount of deposit requirements for them. I guess it's possible for them to say "fuck it" and let everything trade until they run out of money, but I don't think they have an obligation to do that.

To be clear, RH (and others) blocked their users from trading those stocks. That’s separate from trading halts, which are initiated by the listing exchange based on algorithmic rules and apply for all trades in the US. The broker is in its right to give you a margin call anytime. It cannot liquidate your position if the stock is halted by the exchange, because all trades are halted during that time.All that said, my personal opinion is that they couldn’t check in a code change to handle the i

I don't think Robinhood had any choice there. Trades don't settle instantly. Robinhood needs to post collateral with the Depository Trust & Clearing Corporation while settlement is pending, and the required collateral goes up with volatility. During the "GameStop debacle" they had to raise billions of USD in additional capital for this purpose, so no wonder they had to hit the brakes.

RH prevented users from closing positions and realizing gains?