SINGAPORE (Reuters) – Online broker Robinhood has restricted trading in about 13 highly volatile stocks such as GameStop and AMC Entertainment to protect the company and its customers, CEO Vladimir Tenev said on Thursday.
The app, popular with young investors for its simplicity, was at the heart of the day-trading mania that followed social media calls to buy stocks that were heavily shorted by hedge funds. The restrictions allowed customers to sell but not to buy.
“We absolutely did not do it under the guidance of any market maker or hedge fund … the reason we did it is because we as a brokerage firm have a lot of financial requirements,” Tenev told CNBC.
“To protect the business and protect our customers, we had to restrict the purchase in these shares,” he said, adding that it was a ‘difficult decision’.
The company had earlier announced the restrictions and increased the margin requirements in a blog post stating that limited purchases would be available on Friday. The move drew the anger of angry customers and even politicians.
“We understand that our customers are upset. We are doing what we can to make the purchase possible again in these names,” Tenev said.
“We want to be clear in the communication, and I own that we should have been there a little earlier.”
Reporting by Tom Westbrook; Edited by Shri Navaratnam and Stephen Coates