Is this sarcasm? If not I am missing your point and please explain.
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These Are The Shadowy New York Financial Institutions That Forced Robinhood To Restrict Trading In
- Thread starter Banjo
- Start date
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OK, you guessed right/not sarcasm.
ITS in the brokers best interest to have as much stock /ETF etc... volume as possible.
Therefore, when they raise margins\ restrict trading/its like a bank wanting more money down on a house. Of course not all can afford a bigger down payment, but that is a good thing for the bank+ stockholders. Zero downpayments have a higher forclosure rate.
And now days, some whiner may even sue a broker because they[customer] were goofy about a risk in buying GME/LOL
Some put buying limits on ammo, past 52 weeks, because many would just buy ammo like Hunts bought silver. I scale in on most anything/ so ok by me.
And this really calls into question the function and necessity of those clearinghouses. Their function is supposed to be in between the buyer and the seller to be a guarantor to ensure that the transactions settle. What's there for them to guarantee if one side is already putting money upfront in the form of "collateral" as the guarantee for any possible default of their own? If something happens, the "collateral" will be there to settle any shortfalls. What else is there for them to "guarantee"? Everything is already guaranteed. For every single transaction that we do, we pay them a fee for this one "guarantee" function that they do. They can't just earn the fees from us and then when push comes to shovel still expects the retail side to pay more especially it's not even the retail side that's losing and they do s*** in this "guarantee" function. They talk about "risk", "risk", well they are SUPPOSED to be there to take this risk when the transactions can't settle for whatever the reason and in this case is actually the MM side. That's what they are there for, to take the "risk". If there is no "risk", anybody can be there. Sure, I can be there as the guarantor as the "clearinghouse" when I just tell everybody to pay for everything if something happens meanwhile I take a cut out of every single transaction.
If they are not going to do s*** when something happens and everybody is going to be on their own anyway then there is no reason for their existence. From now on, every single brokerage will just deal directly with the exchanges and pay the collateral upfront to the exchanges. They will have to do this anyway whenever there is something so why go through another middleman when all it does is just collect the fee and do nothing at the end? We should be able to trade with each other. And all the exchanges should be protected and backed financially by the government. They are overseen and regulated by the government anyway, they might as well be financially backed by the government. So when something happens, the government will just stand in as the lender of the last resort and settles everything. Eventually something happens, the government steps in and bails out everybody anyway so why not have the government financially backing the exchanges anyway?
This would result in cheaper transaction cost and higher market efficiency too. This s*** of restricting trading shouldn't happen in a free efficient market. You can't just stop one side from trading just because they are winning and the other side can't pay up. And if they are going to eliminate payment for order flows, we are going to need all the reduction of our trading costs we can get for us to be able to still make a profit.
Naive. You obviously do not understand the concept of counter-party risk and margin.
