The Robinhood application on a smartphone.
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Online broker Robinhood announced that it has placed temporary purchase restrictions on a small number of stocks as the deposit requirements for stocks imposed by the Wall Street clearinghouse have increased tenfold.
The decision of Robinhood, a pioneer and app for free trade popular with retail investors, was scrutinized by its customers over the past week.
“It wasn’t because we wanted to stop people from buying these stocks,” said Robinhood said in a blog post published late Friday.
“We did this because the amount required to deposit into the clearing house was so large – with individual volatile securities adding up to hundreds of millions of dollars in deposit requirements – that we had to take steps to purchase them limit volatile stocks to ensure this could comfortably meet our requirements, “it continued.
Amateur Investors Using Robinhood and Other Apps Offer sharply abbreviated stocks and causes GameStop Shares rose 400% over the past week, causing significant losses for hedge funds, which sold the shares short.
Robinhood first announced to investors that they couldd only sell and not buy certain stocks of certain companies that caught the attention of retailers on Reddit. With the online broker, customers can now only buy a single GameStop share. All in all 50 stocks are now limited to the stock trading app.