Robinhood CEO speaks out after GameStop stock chaos

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Robin hoods roller coaster ride and a new interview from the company's ceo. Trying to slow things down. The popular free brokerage app has experienced unprecedented high volume of trading as well read it reading retail traders pile into a few highly. Shorted stocks in a move organized. In part on the irreverent wall street bet sub reddit. The volume was so overwhelming and companies. You've been hearing about maybe again after a few years game stop. Amc blackberry and nokia but robin hood suspended trading in those stocks on thursday. Wow the reaction to this move was swift and surprising both congresswoman out of cossio. Cortez and senator. Ted cruz found themselves on the same side of an issue. Both tweeting that robin hoods moves were unacceptable and at the expense of the little guy investor over the hedge funds feeling the squeeze when stocks they shorted suddenly shot up a thousand percent in the legend. Robin hood stole from the rich to give to the poor so this was a confusing metaphor yesterday for everybody. Robin hood said it was a risk management decision to protect investors the markets and the firm. The company has to deposit money to a clearinghouse based on the volume of trades. And they feared they'd be unable to meet the anticipating deposit requirements now. The company's ceo joined our andrew. Ross sorkin of squawk box just earlier this week on the power of retail investors. It is a huge time for retail investors. Check your feed for that conversation and then take a listen to this one done just two days later. When the company was dealing with the anger of the robin hoodies they're typically younger users and trying to raise money through credit lines to ensure it had enough capital to resume trading on these volatile stocks. Here's andrew flat. Ten of is with us right now and we appreciate you joining us on a day where there are so many questions there are frankly as you know a lot of angry customers out there and a lot of questions about what took place in the decisions that you made to limit so many your customers ability to buy stocks like game. Stop questions about whether you have a liquidity problem. Whether you're trying to protect them from themselves whether citadel did this explain what happened today. Thank you for having me on the show again andrew. So what happened. Today was as you pointed out. We had to make a very difficult decision. It's been a it's been a challenging day. We made the decision in the morning to limit the buying of about thirteen securities on our platform so to be clear customers could still sell those securities if they had positions in them and they could also trade in the thousands of other security is on our platform so it was a difficult decision. And that's what we had to do as part of normal operations but explain. Why did you do this. What did the call you and tell you you had to do this. Was there a problem inside. The company in terms of liquidity in terms of the demand deposits. The you had to put it in front to the exchanges. What led to this sure and let me let me explain exactly how this works. First of all i want to address some of the misinformation. That's been out there. There's a lot of a. We absolutely did not do this. At the direction of a market maker or hedge fund or anyone we row to or other market participants. The reason we did it was because Robin a brokerage firm. We have lots of financial requirements including sec net capital requirements and clearinghouse deposits. So that's money that we have to deposit burying clearing-houses so some of these requirements fluctuate bid based on volatility in the markets and they can be substantial in the current environment where there's a lot of volatility and a lot of concentrated activity in In these names that have been going viral on social media so we're really in unprecedented times and in order to protect the firm in protect our customers. We had to limit by in these in these stocks in to be absolutely. It's ahead but it sounds to me though that you're suggesting that there was a liquidity problem inside the firm and my question about that then raises all sorts of new questions about whether there's a systemic issue underneath the system and underneath the company unto itself. No there was no liquidity problem and to be clear this was done preemptively so we did this. Proactively in thousands of whether securities remain tradable on the platform customers that held these positions. Were able to seldom in. We're doing what we can to allow a buying 'em to remove these restrictions in the morning but also You might have seen robin hood has been the number one app in the in the store overall so we have seen unprecedented interest due to the fact that finance has been culturally irrelevant in a way that hasn't been before and these stocks are going viral on social media. And i think it's really interesting to juxtapose against some of the other questions that we've been having a before this of course robin For everyday investors from the very beginning with stood for investors opening up access and giving them the ability to trade commission. Free in whatever they want a in. We've gotten a lot of criticism that you know. Maybe there should be more restrictions so it pains us to have had to these restrictions and we're gonna do what we can to enable trading test. How concerned should customers be though about the robustness of the system. If in fact what ultimately had to happen was you had to shut down. Access to buying these securities because of the deposit required. Well to be clear. This was the system working. We have the ability to restrict buying in symbols for a unprecedented market conditions. Such as this in to be clear we didn't shut down the system. We shut down by four of these thirteen stocks for the thirteen securities but customers that position could still sell and customers still could buy and sell the thousands of other securities on the robin hood platform. But when you look at the precipitous fall for example of game stop. Do you think that robinhood bears any responsibility for that. I can't comment on price. Action of of securities and probably would be inappropriate for me to do that in also. I should know rodman wasn't the only firm to restrain buying other. Brokerages have been restricting the buying and trading of these types of securities all week. And even today. Of course we get the lion's share of the attention since we've been the cognitive referring for retail investing in america but other other people are dealing with these challenges as well

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