Retail brokerages restricted trading on Thursday in GameStop and other stocks caught in a frenzy that has captivated Wall Street and caused big losses for hedge funds.
Free-stock trading pioneer Robinhood and Interactive Brokers said that in some cases, investors would be able to sell only their positions and not open new ones. Both brokerages raised margin requirements on certain securities.
After the announcement, shares of GameStop initially reversed their gains, sliding quickly into negative territory. The stock, which traded above $500 at one point in premarket trading, was below $290 per share shortly after the opening bell. About two hours after the Robinhood announcement, GameStop was down 20% from Wednesday’s closing price.
In addition to GameStop, the wild trading affected other heavily shorted stocks, including AMC Entertainment, BlackBerry and Koss.
“We continuously monitor the markets and make changes where necessary. In light of recent volatility, we are restricting transactions for certain securities to position closing only, including $AAL, $AMC, $BB, $BBBY, $CTRM, $EXPR, $GME, $KOSS, $NAKD, $NOK, $SNDL, $TR and $TRVG. We also raised margin requirements for certain securities,” Robinhood said in a statement.
Raising margin requirements increases how much money an investor using leverage and derivatives must have in their brokerage account after a stock purchase.
Interactive Brokers said: “As of midday yesterday, Interactive Brokers has put AMC, BB, EXPR, GME, and KOSS option trading into liquidation only due to the extraordinary volatility in the markets. In addition, long stock positions will require 100% margin and short stock positions will require 300% margin until further notice. We do not believe this situation will subside until the exchanges and regulators halt or put certain symbols into liquidation only. We will continue to monitor market conditions and may add or remove symbols as may be warranted.”
Stock trading app Webull stopped allowing clients to open new positions in GameStop, AMC Entertainment and Koss.
Source Article from https://www.cnbc.com/2021/01/28/robinhood-interactive-brokers-restrict-trading-in-gamestop-s.html
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