> If a stock trading app manipulates the market by preventing purchases

They're likely close to hitting their collateral limits with the clearing house[0]. During yesterday's 5-minute interview with CNN's Chris Cuomo, RH's CEO mentioned their collateral obligations (plus unnamed regulatory requirements) as the reason for preventing new positions in GME. Every trade creates a collateral obligation with the clearing house for 2 days, so if RH goes bankrupt while the trades are being settled, nobody loses. The amount of this collateral obligation is a function of the volatility of the stock. Lots of high-volatility trades in the middle of the 2-day settlement process eat up collateral very quickly. If RH runs out of collateral, none of their customers can trade until some of the pending trades finish clearing.

The reason for still allowing people to close positions is presumably because people would scream bloody murder even harder if they were suddenly unable to exit these high-volatility positions.

Collusion to manipulate markets, particularly in such an incredibly high-profile situation, seems unlikely. Whatever RH does, they know there will likely be investigations, so they're almost certainly on their best behavior right now.

[0] https://news.ycombinator.com/item?id=25951475

So they have a legitimate technical reason for why the app doesn't work.

How does that excuse them? If cat picture app has issues with their image hosting partner it is not my problem, that's the entire point of going through a middle-man like stock brokerage

There is a reason why stocks get straight up halted from trading due to extreme volatility. Robinhood had to the same on this extreme event to keep their company solvent. Just because folks don't understand how the market works doesn't mean it is a nefarious plot against the little guy.

It's a problem, but the accusation of criminal market manipulation appears unwarranted.

I thought we are discussing app reviews.

I specifically quoted the claim of market manipulation in the GP.

IF they are already requiring people to have the cash in their account to cover buys, how can they not have the collateral to cover them. They could have disabled options trading right? But why buying with cash?

I think the issue is that they're allowing people to use cash right away when they sell, rather than waiting until T+2, and they can't instantly unilaterally change their ToS. They could block people from selling, but not block them from buying, but that would cause all kinds of problems.

As I remember, eTrade also used to not require you to wait until T+2 to reinvest the proceeds from stock sales.

It already was a dangerous scam app. The data on trades went straight to front running traders, so they could feed their algorithms and profit off your plans.

Is that actually true? I thought "frontrunning" was one of the fundamental things that is forbidden by stock trading regulation. Does it not apply when done with those new-fangled computers?

https://en.wikipedia.org/wiki/Front_running

I mean, that's what you get for not paying for a service. It's a trade-off people knowingly took.

the thing is that robin hood it's not a trading app, you don't buy a share on your name, those shares are pooled and bought and selled off the official market.

If you want to invest, use a real broker, but then you will have to pay commissions.

Also, have in mind that even if they say that they are commission free, you pay with higher spreads, so if the transaction price is 1, robinhood will sell it to you by 1.02 and bough by 0.98, getting a margin from you each time you make a transaction with them.

Commissions have the same impact, increasing your effective spread.