The first part of that has been a common bit of misinformation. Opening new positions (either by attempting to buy shares of the stock, or entering into a new short position) is what was prevented. Closing positions (selling for owners of shares, or in the case of short obligations buying shares) was still allowed as closing reduces credit risk for the broker.
The brokerages that did restrict, were smaller firms and did so to maintain liquidity for all assets, instead of allowing a vast amount of their capital to be consolidated largely into a few assets, due to the increased capital cost of clearing.
Edit: OK, I think the list I looked at is wrong. I meant Charles Schwab, but I don't know which one is _actually_ the largest.
In their case, it may not have been a necessity to maintain liquidity for other assets, but capping the exposure to how much capital they were putting down for it probably still made sense.
They very much did 3 weeks ago. Not to the same degree as the smaller brokerages, but they still put limitations on margin trading, and restrictions on options.
[0] https://www.thinkadvisor.com/2021/01/29/gamestop-lawsuits-hi...
1. Increased margin requirements for GME 2. Restrictions on naked strategies
Both of these are pretty much acceptable on a very volatile stock. They never prevented you from buying the stock or options. I think including Schwab or TD in this is near misinformation because 99% of users wouldn’t make use of the features that Schwab ended up restricting
TDA is a subsidiary of Schwab and was blocking some purchases for some period of time during the week, before they put out a statement that said they "will not prevent clients from making basic buy and sell transactions".
Existing restrictions became sizable due to the market volatility. This impacted certain clients of the brokerage that had significant exposure to the names relative to their account.
Not the same thing as the brokerage implementing new restrictions.
Trades by certain brokers or apps were also notably halted on a Thursday due to lack of liquidity.
Buying to open new positions was blocked by some brokers in response to the the bump in collateral requirements they were required to fulfill. Some brokers were capable of blocking only margin account trading, but RH sounds like they blocked all buyers (plus their target market is margin account holders)
DTCC is basically interested in ensuring that trade settlement occurs. They eliminate a lot of counterparty risk, but the flipside to that is that they clearly have discretion that surprises brokers.