It's the equivalent of security theater. Do something conspicuous that they can spin as having done something about the problem. That serves their purpose regardless of whether it actually does any good or makes any sense.
On top of that, cryptocurrency kind of competes with banks, so they have an excuse to cause trouble for the competition.
HSBC are well within their rights to refuse to accept bad orders. HSBC are exposed to specific regulatory risk not shared by US banks. Having a ton of customers go bust because a regulatory change nuked some meme stocks seems undesirable to me. If you don't like it you can always find another broker.
Says a lot about the 'risks' involved with that business model.
It's like saying that net neutrality exists, because "if you don't like throttling you can find another ISP"
That is absolutely not the case in a categorical sense.
Brokers can and do apply different margin requirements on a stock by stock or customer by customer basis. There's nothing out of the ordinary about a security not being marginable or having increased requirements due to risk assessment.
For example, here is a list of stocks at one broker with particular margin requirements, and it says it "changes frequently":
https://invest.ameritrade.com/cgi-bin/apps/u/MarginReq
Given that there are hundreds starting with "A", I'd assume the entire list is in the thousands, of securities that have individual margin requirements.
I think in fact the ticker GBTC which is a trust that owns Bitcoin isn't marginable.
https://www.tdameritrade.com/td-ameritrade-trading-restricti...
Here's another with GME and AMC:
https://www.schwab.com/margin-updates
But there are also lots of others you never heard of, that aren't mentioned.
Yes, as an alternative to not allowing the trade.
If the bank considers something highly risky, it makes sense to protect themselves and the customer by making sure they've got some money locked up outside of the trade (a bankrupt customer is no longer a customer, after all). It would basically cap the percentage of net worth that they could put at risk, where they'd need to have $10 set aside for every $1 in the risky position.
and/or we could tokenize securities onto permissionless and decentralised ledgers and stop feeding the intermediaries
note that a ledger with transaction validation rules which enforce KYC can still be permissionless and decentralised
bitcoin isn't "permissioned" just because you need a valid signature to spend an output
Cash trades still expose brokers to volatility due to settlement.
This policy is likely one part regulatory theatre and one part customer selection. Customers buying MicroStrategy stock are unlikely to be lucrative customers for the banking products HSBC hocks.
This doesn’t solve the problem of clearing collateral. That said, HSBC is a money centre bank. It isn’t worried about clearing collateral.
The policy is almost certainly a filter. If you’re trading MicroStrategy, you’re probably not a fit for their banking and wealth management services.
https://www.theguardian.com/business/2012/dec/14/hsbc-money-...
But you wouldn't be? This is a product literally called "InvestDirect" where private individuals are buying stocks and assuming all the risk.
If you don't want to offer margin on virtual currency products, more power to you, that is your risk. But if customers are buying with cash, it seems pretty suspect for the bank to claim that is increasing the bank's risk exposure.
Honestly it wouldn't be the worst idea to have a "Net Neutrality" for brokers.