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A comment on Robinhood, in Need of Cash, Raises $1B from Its Investors. Parent comment

Re:Robinhood, in Need of Cash, Raises $1B from Its Investors by nojito on Friday January 29, 2021 @08:00AM (#25956786)
Trades aren't immediate they take T+2 to clear. During that time frame, Robinhood has to put up collateral.
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Re:Robinhood, in Need of Cash, Raises $1B from Its Investors by IG_Semmelweiss on Friday January 29, 2021 @08:12AM (#25956886)
Correct. And more to the point, RH cannot use customer funds to cover that timeframe.

It must be its own funds. And the requirement of funds to be covering (collateral) can change on them with very little warning

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Re:Robinhood, in Need of Cash, Raises $1B from Its Investors by rattray on Friday January 29, 2021 @09:00AM (#25957276)
Who determines the collateral required?
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Re:Robinhood, in Need of Cash, Raises $1B from Its Investors by IG_Semmelweiss on Friday January 29, 2021 @09:28AM (#25957517)
The NSCC sets the framework, but it is spelled out in Dodd-Frank that they have to do so by law.

There are some other items, but that's the basic idea - full details are here: https://dtcc.com/-/media/Files/Downloads/legal/policy-and-co...

If you want to dive further i recommend this thread :

https://mobile.twitter.com/KralcTrebor/status/13549526861652...

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Re:Robinhood, in Need of Cash, Raises $1B from Its Investors by bradleybuda on Friday January 29, 2021 @09:27AM (#25957496)
It’s federal law, part of the Dodd-Frank reforms in the wake of the 2008 financial crisis. I recommend this: https://twitter.com/kralctrebor/status/1354952686165225478?s...
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Re:Robinhood, in Need of Cash, Raises $1B from Its Investors by mzi on Friday January 29, 2021 @09:28AM (#25957524)
I only knows how it works in otc derivatives and then the collateral is equal to the cost of taking an offsetting position, and is calculated inter-day. But I would guess it is something similar on the stock market.
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Re:Robinhood, in Need of Cash, Raises $1B from Its Investors by disgrunt on Friday January 29, 2021 @09:43AM (#25957700)
In this case, the NSCC, or the NAtional Securities Clearing Corporation.
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Re:Robinhood, in Need of Cash, Raises $1B from Its Investors by ImprovedSilence on Friday January 29, 2021 @08:29AM (#25957017)
This is the right answer. And with the amount of volitility GME was seeing, and the amount of trades of it, created lots of money for the user, but RH was still days away from the transactions actually settling, thus they didnt have the cash from the sale yet.
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