Robinhood says restrictions on GameStop due to tenfold increase in deposit requirements

Online broker Robinhood said it was placing temporary purchase restrictions on a small number of securities as mandatory deposit requirements for Wall Street central clearinghouse shares increased tenfold.

The move by Robinhood, a free trade pioneer and popular app among small investors, caught the attention of its customers over the past week.

“It wasn’t because we wanted to prevent people from buying these stocks,” Robinhood said in a blog post on Friday night.

“We did this because the required amount that we had to deposit with the clearinghouse was so large – with individual volatile securities representing hundreds of millions of dollars in deposit requirements – that we had to take steps to limit. buying these volatile stocks to make sure we could comfortably meet our demands, ”he continued.

Amateur investors using Robinhood and other apps bid on the heavily sold stocks and skyrocketed GameStop shares by 400% last week, resulting in significant losses for hedge funds that shorted the stocks. actions.

Robinhood first told investors that they can’t sell and not buy new shares of certain companies that are drawing the attention of retail traders on Reddit. Brokerage now allows customers to buy only one share of GameStop. A total of 50 titles are now limited on the stock trading app.