THELOGICALINDIAN - After the WallStreetBets association sets its architect on Nokia and AMC Cash App users are barred from purchasing those stocks
Cash App appear a account beforehand today advertence that Axos, the app’s allowance broker, is now accountable to a 250% access in basic requirements, briefly blocking the app from accomplishing AMC and Nokia (NOK) purchases.
Cash App Blames Clearinghouse for Trading Halt
Cash App stated that Axos, its allowance broker, now needs to accommodate 250% added basic than afore to abide its services. Neither Axos nor Cash App was able to defended a band of acclaim to accommodated the new requirement, and Cash App was affected to stop its users from affairs AMC or NOK.
However, users can still advertise their stocks.
Clearing brokers charge to accommodate basic deposits for apps like Cash App to abutment trading. The DTC, a world-leading clearinghouse, afresh aloft the basic claim on Axos, and Axos has belted Cash App’s trading accordingly. A
statement from the app apprehend that “We are absolutely accountable to our brokers’ adeptness to abutment our trades,” abacus that “Axos has not provided the all-important added basic and has belted purchases of AMC and Nokia.”
Cash App acquaint the email from its broker-dealer, DriveWealth, which alerted them about the change.
The account went on to say there was no bright aisle to a band-aid at this time, abacus that “we are ecology the bearings carefully and are alive to accomplish these stocks accessible for acquirement afresh as anon as possible.”
Market Wide Bans Affect Retail Traders
The buy barter arrest comes aloof canicule afterwards the Robinhood trading app abeyant GameStop (GME) trading afterward a amount pump led by retail traders that resulted in $5 billion account of liquidations for barrier funds like Melvin Capital.
Retail traders on Reddit’s WallStreetBets community about acquaint their own trading activity, advertence that they were affairs up GME due to the Melvin Capital barrier fund’s overexposed abbreviate position. Nokia and AMC were two stocks actuality targeted by the association for purchase.
Robinhood allegedly awash users’ banal after permission and apoplectic buying, consistent in a accessible clamor as Wall Street traders connected unhindered. The GME amount pump was one of the aboriginal instances of retail traders activity toe-to-toe with Wall Street and advancing out on top.
Robinhood abhorrent the adventure on clearinghouse basic requirements and has back raised $2.4 billion to awning its own clearinghouse collateral.
Notably, Robinhood is partnered with Citadel, a Wall Street barrier armamentarium and a above broker in Melvin Capital. Robinhood agents affirmation they were not pressured into awkward trading by Citadel.
Disclosure: The columnist captivated Bitcoin at the time of writing.
