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A comment on Class Action Lawsuit Filed Against Robinhood. Parent comment

Re:Class Action Lawsuit Filed Against Robinhood by FabHK on Thursday January 28, 2021 @06:51PM (#25951256)
There is no real-time-settlement for securities, AFAIK. They're settled two biz days later. RH, of course, seemingly settles things immediately vis-a-vis its retail clients. That creates the whole web (well, not a web, really, but a snow flake with a central counterpart which branch off again) of credit and collateral, which generally works extremely well, but comes to its limits with irrational price action such as this.

I don't see the lack of real-time-settlement as a vulnerability so much, but more the mismatch. But I'd suggest fixing it not by increasing the frequency of settlement, but by decreasing the frequency of trading (Tobin tax (which, funnily enough, is also called Robin Hood tax [1]); replace continuous trading with a couple of auctions a day; ???).

[1] https://en.wikipedia.org/wiki/Tobin_tax

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Re:Class Action Lawsuit Filed Against Robinhood by areoform on Thursday January 28, 2021 @07:15PM (#25951575)
Quick note, settlement risk is indeed serious and I've covered it somewhere else.

Side note, I am against the Tobin Tax. I think public markets are more important than most folks believe.

I do believe that frequent trading is a good thing, as is retail participation in markets. One of the amplifiers of income inequality, I suspect, in the past few decades has been the fact that high-growth companies that normally would have gone public sooner have stayed private for longer, denying participation from the public market.

For example, a well chosen index of Dot Com stocks that included Amazon, Google, E-Bay etc. picked in 1998 would have, provided there was continuous investment and a long-hold, injected a large amount of capital back into the public and retirement systems, which would have helped lift all boats so to speak.

AMZN was originally at around $4/share (adjusted for splits, provided this data source is correct, https://www.macrotrends.net/stocks/charts/AMZN/amazon/stock-... ), if you had bought 1k stocks of the company in pre-2000, and held until now. Your originally $4k position would be worth 3.2M.

That's quite crazy. And it's retirement money for a lot of people.

Amazon's growth has occurred in the public, giving retail investors the ability to tap into the formation of new wealth. SpaceX's, AirBNB's, DropBox's etc hasn't. They're playthings of the well heeled. Not the gumshoes.

We need to re-orient public markets in such a way that everyone gets to participate in wealth creation. Not restrict it even further.

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Re:Class Action Lawsuit Filed Against Robinhood by FabHK on Thursday January 28, 2021 @09:08PM (#25952731)
> I do believe that frequent trading is a good thing, as is retail participation in markets.

On the frequent trading, let's agree to disagree.

On retail participation, agreed. But I don't think that the Tobin Tax would inhibit it, but rather HFT and maybe day trading.

Fully agree that this new thing of companies staying private longer and longer is a bad development, with the best deals available only to the few connected and wealthy.

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