Their decision came with a tradeoff: A spike in volatility could be very, very bad 2/X
Robinhood is not the only brokerage that limited buys on GameStop this week, so why is it catching all the heat?
Maybe because @stoolpresidente & others were quick to spread a theory that hedge funds must have forced the move? Or, Robinhood acted alone
A thread on facts 1/X
Their decision came with a tradeoff: A spike in volatility could be very, very bad 2/X
They carry some liability in the days it takes for your trade to settle. That usually isn't a problem, but can become one if a stock swings fast 3/X
But Robinhood in 2018 decided to cut ties with Apex to build their own clearing house called Clearing By Robinhood 4/X
In Robinhood's own blog they trumpeted their achievement as the "only clearing system built from scratch, and on modern technology, in the last decade." 5/X
So what took Robinhood so long? 7/X
Building their own clearing house came with added risks - it just seems no one saw GameStop rising 500% in a week 8/X
Letting customers continue to buy GameStop stock was like selling lottery tickets while knowing there could be problems with the drawing 9/X
Messaging to customers that this wasn't about "protection" could have come sooner
The SEC could've done something (anything) and *market wide* to protect the lopsided impact to protect the market's poorest investors 10/X
But running with a theory that hedge funds pressured them into anything before those facts exist is dangerous and endangers any real change 11/X
I'm just as angry about it as everyone else (even Mama Guz couldn't trade on Robinhood!) I'll keep chasing the truth.
https://t.co/CGhDIqjRk1