(Reuters) – Online broker Robinhood, one of the most popular places in the retail frenzy, has said it imposes temporary buy restrictions on a small number of securities because the required deposit requirement for shares is tenfold.
‘… the required amount we had to pay into the clearing house was so large – with individual volatile securities amounting to hundreds of millions of dollars in deposit requirements – that we had to take steps to limit the purchase of the volatile bonds to ensure we could comfortably meet our requirements, ”it said in a blog post late Friday.
Robinhood’s fee-free and user-friendly app has made it popular with a new generation of petty traders, and the restrictions on Thursday caused a severe setback for high-profile politicians and celebrities.
Retail investors using Robinhood and other applications drove the so-called ‘Reddit rally’ that pushed shares of GameStop Corp and other companies on social media platforms, including Reddit, which resulted in huge losses for large hedge funds.
Reporting by Rama Venkat in Bengaluru; Edited by Raju Gopalakrishnan