Re:Robinhood maxed out credit line last month amid market tu...
by JumpCrisscross on Tuesday March 10, 2020 @04:57PM
(#22539602)
> Why wouldn't the Prime Broker just force you to sell it
One, that could result in a fire sale. Freezing is safer than forcing liquidation. If your liabilities outweigh your assets, the latter are the PB's; getting pennies on the dollar instead of dimes is against their interest.
Two, the client may be able to post collateral. You don't want to lose an institutional relationship because you were trigger happy.
Three, you might have made a mistake. Freezing the position until you get your facts straight is prudent in most markets.
One, that could result in a fire sale. Freezing is safer than forcing liquidation. If your liabilities outweigh your assets, the latter are the PB's; getting pennies on the dollar instead of dimes is against their interest.
Two, the client may be able to post collateral. You don't want to lose an institutional relationship because you were trigger happy.
Three, you might have made a mistake. Freezing the position until you get your facts straight is prudent in most markets.