Robinhood was asked for $ 3 billion to cover the volatility risk of GameStop and other “ memes stocks, ” CEO Vlad Tenev told Elon Musk.

• Robinhood last week requested a deposit of $ 3 billion to cover trading risks in highly volatile stocks.
• This is why the brokerage house imposed trading restrictions last week, CEO Vlad Tenev told Elon Musk.
• After Robinhood curtailed retail, the clearing agency reduced that figure to $ 700 million.
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Robinhood has placed restrictions on transactions after a clearinghouse asked the brokerage firm $ 3 billion to back up trades on GameStop and other volatile stocks touted by Reddit, CEO Vlad Tenev told Monday. Elon Musk in a Clubhouse livestream.

Musk introduced Tenev on the show as “Vlad the Stock Impaler” and asked him to explain what exactly happened with Robinhood. “What happened last week? Why can’t people buy GameStop shares? People are demanding answers and wanting to know the truth,” he said.

Tenev said the National Securities Clearing Corporation (NSCC) sent an unusual request early Thursday morning to offer a $ 3 billion deposit to cover trading risk.

It wasn’t something Robinhood could handle, as at that time the stock trading app had only raised $ 2 billion in venture capital.

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Musk then quizzed the CEO, asking, “Did you sell your customers on the river or didn’t you have a choice?”

Tenev explained that the clearing house’s request was “for an order of magnitude greater than it typically is.” But after Robinhood agreed to block retail investors from making further highly volatile stock purchases, the NSCC agreed to reduce that figure to $ 700 million early Thursday. The company explained its settlement process in a statement on Saturday.

Robinhood and other brokerage firms are required to maintain accounts with clearing agencies. The minimum deposit required increases as the risk increases, hence the requirements for a capital injection.

Tenev referred to the fact that Robinhood raised over $ 1 billion in capital in 24 hours last week to ease trade restrictions. At the same time, he regretted the limits he was setting. “We knew it was a bad result for the customers,” he said. “People are really pissed off if they own stock and want to sell it and can’t.”

On Monday, the brokerage reduced the list of restricted stocks to 8 from 50.

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