Some large brokerage houses have begun to respond to a frantic rise in the price of shares in companies attributed to the tumultuous buying by individual investors on social media platforms.
TD Ameritrade said on Wednesday that it was trading for GameStop
GME,
and AMC Entertainment Holdings
AMC,
as well as other names, amid a three-digit percentage increase in the price of companies over the past few days.
“In the interest of reducing risk for our company and clients, we have imposed a number of restrictions on some transactions in $ GME, $ AMC and other securities,” a TD Ameritrade spokesman told MarketWatch, referring to the symbols of the companies. .
“We have made these decisions out of abundance of caution amidst unprecedented market conditions and other factors,” she said.
Charles Schwab, who bought TD Ameritrade but still operates as an independent retail brokerage platform, said it has tightened margin requirements in some of the brands, including GameStop.
A Schwab spokesman said the platform changed its margin requirements, or how much an investor could borrow, on January 13, saying it “imposed restrictions on certain transactions in GMEs and other securities.”
The restrictive moves come as video game retailer GameStock rose 1.600% in January when traders gathered in online chat forums to place a big bet on the stock using options, often non-money calls that only paid if the stock increases in value over a set period of time.
Traders on sites like RedStit’s WallStreetBets, and the use of trading platforms like Robinhood, clashed with hedge fund investors, sparking a battle between prominent Wall Street short sellers and individual investors in GameStop shares.
A spokesman for Robinhood said that officials on the popular trading platform ‘constantly monitor and adjust the markets as we feel necessary for the benefit of our customers. ‘
Robinhood said it also raises the increased requirements for GME and AMC to 100%, stressing that Robinhood does not allow the shorting of shares or that customers can trade naked options.
However, the recent rise in GameStop has spilled over to other parts of the market, while shares of companies such as AMC Entertainment also rose in price on Wednesday, along with shares of Bed Bath & Beyond BBBY,
and retailer Express Inc. EXPR,
of which the shares rose by 250%.
Read: It’s not just GameStop: here are some other heavily shorted stocks that are shooting higher
The recent volatile trade has even upset some on Wall Street with concerns about a bubble. The Dow Jones Industrial Average DJIA,
the S&P 500 index SPX,
and the Nasdaq Composite Index COMP,
traded all lower on Wednesday.
Regulators have taken note of the recent actions, while Massachusetts Secretary of State William Galvin said in an exclusive statement to Barron on Tuesday that he sees the action unfolding.
“It’s definitely on my radar,” Galvin said. “I am concerned because it indicates that there is systematically something wrong with the options being traded on this stock.”