TD Ameritrade, Robinhood and other trading platforms have restricted access to GameStop, AMC, and “other securities” as retail traders continue to send these stocks to the moon. The collaboration of small money, retail traders, in a united front could amount to the buying power and market manipulation exercised by hedge fund companies. But when this means that big money is on the opposite end of this winning streak, it is not unusual for someone to call foul.
According to trading platforms, their reasoning for restricting access to certain securities is to protect investors and due to the unusual volume that has cause technical difficulty on their applications. But on the flip side, retail investors believe that the halting of certain stocks and system clinches are meant to provide leverage to hedge funds, and cheat small investors from their investments.
“In the interest of mitigating risk for our company and clients, we have put in place several restrictions on some transactions in $GME, $AMC, and other securities. We made these decisions out of an abundance of caution amid unprecedented market conditions and other factors,” Ameritrade said in a statement.
TD Ameritrade saw “unprecedented volumes” on Wednesday after retailer traders piled into heavily-shorted stocks. This meant that traders who often benefit from the demise of a company began piling loses in their portfolios instead.
The platform announced in a tweet that its mobile app had crashed due to the surge. About an hour later, it tweeted the problem had been resolved and apologized to customers for the inconvenience.
TD Ameritrade was one of several platforms, including Robinhood and E*Trade, that experienced outages as the number of retail trades soared in a wild day for the markets.
The trading platforms’ problems largely stem from Reddit’s WallStreetBets crowd, which now boasts over 2.2 million members. Many retail investors remain skeptical, as there is a lot of distrust in how these platforms use their applications to benefits to certain players through high-speed trades and other tactics
Traders on the platform are betting against short-sellers hoping to cause short and gamma-squeeze conditions that lead to monumental near-term price appreciation.
The most talked-about name in the Reddit trade has been GameStop. Shares of the once-forgotten retailer have skyrocketed more than 1,200% since WallStreetBets first piled in on January 11. The move cost short-sellers billions of dollars in losses in just a few weeks.
In the meantime trading platforms are taking things in their own hands and changing the trading rules as best benefits themselves or perhaps questionably who?
Take for example the phenomenon of TESLA that has reached insane market volumes, and has build an empire mostly on the back of price speculation. At what point is it ethical for trading platforms to decide who wins and who loses in a “Free Market”.
COMMENTS