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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 cashewchoo on Friday January 29, 2021 @09:12AM (#25957367)
The financial system is slow. ACH can take days before you can be sure things won't be reversed, trades take two days to settle, there's various anti-money-laundering policies everywhere that generally take the form of holding on to money for a bit to make shady things easier to track and detect.

So, anyway, for lots of reasons, things that users think should be instant, aren't. And that's really bad UX, especially for a platform that depends so much on emotional stuff: "deposit $200 bucks and buy 3 shares of X, leaving you with a $30 cash deposit which RH can then earn interest on" is probably how a large amount of RH's balances come into being. That breaks if it's going to be a 1-day gap between someone depositing their money and then buying the shares.

So everyone papers over holes like this with margin.

[ Parent | on HN ]
Re:Robinhood, in Need of Cash, Raises $1B from Its Investors by ryandrake on Friday January 29, 2021 @12:17PM (#25959723)
It's amazing that we still accept financial transactions taking days to actually "clear." Surely there's a market opportunity for someone to invent a way to do these anti-money-laundering things without delaying transactions. It's astounding that in 2021, it takes multiple days to increment a number in one database whilst decrementing that number in another database.
[ Parent | on HN ]