(Reuters) – Robinhood, the US online broker who has emerged as a gateway to amateur traders challenging Wall Street hedge funds, has held talks with banks over the acquisition of $ 1 billion in debt so he can continue to to shorten strong shares. people familiar with the matter.
The capital raised would be separate from the $ 3.4 billion funding that Robinhood announced on Monday that it had secured from its investors since January 29. This reflects the financial pressure that the Reddit frenzy put in stocks like GameStop Corp last week on the company. , which leads to restricting some transactions.
Robinhood needs the money to trade that places its customers because its clearing house demanded more insurance due to increased volatility. Robin Ten chief executive Vlad Tenev said on Sunday that the trade program had decided to impose a cage on some transactions because the clearing house had asked for $ 3 billion in collateral.
Robinhood began negotiating with banks over expanding its credit lines or arranging a new one after it drained its revolving debt facility during the frenetic trade last week. It is not clear how much debt Robinhood will be able to obtain.
The sources asked for anonymity because the case is confidential. Robinhood declined to comment.
Robinhood, which has become popular with young investors due to its user-friendly interface, is at the heart of a mania that began last week following calls from WallStreetBets by Reddit to trade certain stocks that were heavily shorted by hedge funds.
The online brokerage has received criticism from some of its users for placing restrictions on transactions. His misery has raised doubts as to whether plans to launch an initial public offering by April will stay afloat.
The Menlo Park, California company, was founded in 2013 by Baiju Bhatt and Tenev, with the goal of democratizing finances. With its platform, users can trade unlimited commission-free in stocks, exchange traded funds, options and cryptocurrencies.
Robinhood said on Monday that its latest equity financing is led by Ribbit Capital, with participation from existing investors including ICONIQ Capital, Andreessen Horowitz, Sequoia, Index Ventures and NEA.
Reporting by Sumeet Chatterjee in Hong Kong, Anirban Sen in Bengaluru and David French in New York; Edited by Lisa Shumaker