(Reuters) – Online broker Robinhood, one of the hottest venues in this week’s retail-trading frenzy, said it put temporary buying restrictions on a small number of securities as clearing house-mandated deposit requirements for equities increased ten-fold.
“….the required amount we had to deposit with the clearing house was so large – with individual volatile securities accounting for hundreds of millions of dollars in deposit requirements – that we had to take steps to limit buying in those volatile securities to ensure we could comfortably meet our requirements,” it said in a blog post late on Friday.
Robinhood’s fee-free and simple-to-use app has made it popular with a new generation of small-time traders and its restrictions on Thursday drew a heavy backlash from high-profile politicians and celebrities.
Retail investors using Robinhood and other apps drove the so-called “Reddit rally” that pushed up shares of GameStop Corp (NYSE:) and other companies championed on social media platforms including Reddit, resulting in heavy losses for big hedge funds that had shorted the shares.
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