Only someone who doesn't understand how any of this works would believe these absurd conspiracy theories.
1) Citadel is one of FIVE of wholesale market markets RH use. Even if they did refuse to accept orders for GME, why wouldn't their four main competitors not happily accept them if it meant blowing up the biggest player in the field? They have no incentive to help Citadel. In fact, they have a clear financial incentive to do the opposite.
2) Why would RH care if Citadel went away? Citadel is one of their five 'suppliers' if you will. If Citadel disappeared overnight, RH would just route their order to the others. It makes absolutely no difference to them. They just route to whoever currently pays the most for orderflow.
3) RH customers are extremely small players with next to no capital between them. Cutting them off makes no difference, because it was professionals with real money driving the squeeze at that point. They recognised that they could make a ton of money, and put a bunch of competitors out of business in the process, so they kept hammering the stock.
4) The claim that Citadel itself even had a GME short position (beyond their MM inventory) is baseless. Citadel Advisor's previous 13F filing shows that they were outright LONG GME stock, were LONG GME calls, and were LONG GME puts. So while those puts will have lost money, the other two positions will have GAINED MASSIVELY during the squeeze. Their short exposure was mainly via the money that they lent to Melvin Cap during the squeeze.
In 2020, 34% of their revenue came from Citadel. 75% of their entire revenue stream comes from forwarding their clients' orders to one of FOUR market makers like Citadel. This practice in and of itself is contentious, and they readily admit this in their risk factors section of the filing.
They also readily acknowledge the absolute thrashing they would receive financially if even one of the four market makers decide to not do business with them.
Of these four, Citadel is the largest.
>Message board people believe a lot of weird things about how markets work.
Message board people also love reading comments and not looking at the articles they're typically commenting about.
RH stopping all GME purchases was market-moving news and citadel got to know before anyone else, to the detriment of those RH users that were long GME.
Yes, that is the point of paying for order flow. That is doubtless why RH users don't pay commissions.
Losing PFOF from Citadel alone means kissing away more than 5% of their _revenue_. With essentially no cost associated with PFOF, these payments account for a large portion of their profit.
I wasn't happy about it but I don't blame them. As much as people were talking about over 100% of GME shorted, I can't imagine how much margin on top of margin people were trading while there options had yet to be settled. If anything the issue should be how long it takes a trade to settle.
[1]https://markets.businessinsider.com/news/stocks/robinhood-we...
These institutions were limiting the quantity that users could purchase, not necessarily halting the options.
Robinhood has been self clearing for years before the GME incident
What they did was illegal, so why not blame them? Robinhood is being investigated for it. Why not blame everyone that's guilty?
https://www.vice.com/en/article/wx5p8z/feds-seized-robinhood...
Because being investigated means you're guilty? I guess a fair and impartial trial is just red tape.
Sure, if it turns out they didn't commit the crime don't blame them (but there is overwhelming evidence that I have personally witnessed so I already know for a fact that they did this). What I don't get is why this guy is apologizing for theft.
You think that what they did was illegal, but the person you initially replied to (https://news.ycombinator.com/user?id=adabyron) only said he "wasn't happy about it". That's not the same as "apologizing for theft".
>but there is overwhelming evidence that I have personally witnessed so I already know for a fact that they did this
do share.
I'm guessing you're aware of the trading halts in January and are arguing that's legal (or at least remain unconvinced it's illegal). Rather than have a long argument about whether or not brokers were legally entitled to restrict trading, I'll just concede as it really wasn't the point I wanted to make. I'm not a lawyer, there is nuance in the legal system, blah blah blah. I could go down the GME rabbit hole but nobody gives a shit. I think of it more like when a cop gets away with murder in our legal system. Did he commit a crime? Well, technically no, because our legal system said so - but I still feel comfortable calling him a criminal. Likewise, nobody in the US went to jail for the 2008 financial collapse, so I guess nobody committed any crimes.
But that's me moving the goalposts, making appeals to emotions, and just generally making a very weasely argument. My frustration is with people so willfully absolving others of guilt. I feel like the way to make the world a better place is by holding people accountable for their actions, instead of just chant it as some bullshit mantra at another dumb tech startup that provides no real value to anyone. Obviously other people have different perspectives and may not have seen any wrongdoing in what happened. Everyone is entitled to their beliefs. And I'm allowed to think people are ignorant and morally bankrupt for the beliefs they hold.
So you're right, but I don't care because that's not what matters.
Insofar as "I don't think they're guilty", yes. This is a slightly lower bar than "I think they're innocent", because the former covers cases where you're unsure. Maybe the person you replied to actually thinks robinhood is innocent beyond a reasonable doubt, but that can't be confirmed via his comments.
> I think of it more like when a cop gets away with murder in our legal system. Did he commit a crime? Well, technically no, because our legal system said so - but I still feel comfortable calling him a criminal
This analogy only works because you can presuppose that the cop is guilty. It breaks down when you can't. For instance if you only knew that he shot and killed someone. Maybe he acted in self defense (the actual kind).
My understanding of the situation was that robinhood was forced to restrict trading for meme stocks due to increased deposit requirements on them. If they couldn't come up with money to meet deposit requirements (due on the day of trade), then they have to halt trading. Meme stocks like GME had disproportionately higher deposit requirements, so restricting those stocks would allow them to continue operating with the smallest impact. If those stocks weren't restricted, they would have burned through their cash/credit they had (to meet deposit requirements) and would have to halt trading anyways.
Now, this is what robinhood is claiming, and I can't verify every single detail of this story (although some elements were independently confirmed, like the deposit requirements going up). Maybe robinhood had a boatload of cash/credit on hand and could have easily met the day/week's trading volume, or maybe it would have been close and they didn't want to risk it, but you think they should have went ahead anyways. In any case, the whole situation is less clear cut than the standard villain narrative of "they shut down trading because the hedge funds told them to". More importantly, there's enough wiggle room for differences of opinion that if someone says "I can't blame robinhood", you don't have to immediately accuse them of "willfully absolving others of guilt".
Immediately after halting trading, Robinhood's initial public statement was "we have full liquidity for any event and that is not the problem." This is where it starts to become fraudulent, because that contradicts what they later said. Timelines matter, details matter, and you are correct that the court of law has its place for this sort of thing. I'm convinced they were willfully lying at this point, but it would take a long time to explain why in a convincing manner (so I don't blame you for not believing me here).
Now afterwards is when shit gets weirder, but the GME rabbit hole is really deep and the signal to noise ratio is atrocious. There is some good data from Robinhood's S1 filing though. For their transaction-based business, Citadel made up 27% of their revenue - which is significantly higher than anyone else. And last quarter 81% of Robinhood's revenue was for PFOF, payment for order flow.
I agree with you this should go to court and I look forward to it. I could provide you with plenty more data and evidence, but it's lots of little pieces and admittedly a lot of it is circumstantial. In other words, I'm doing a shitty job explaining my side and you don't have much reason to believe me.
I owe you and the person I originally responded to an apology.
On the spot! Robinhood has made it so easy to trade that I have seen many people trading from their mobile while having a coffee or commuting! I would really like to see all these "traders" in 5/10 years ... if it is true that 80% of day traders loose money .. I bet tons of improvised traders will learn a very expensive lesson.
I don't do trading, I simply don't have time to fully look into companies balance sheets etc. I buy index/mutual funds , I might have missed the meme stocks but I am happy with my steady growing investments, compounding effect works great!
Index funds are for my retirement account, it's fun to have a brokerage account and trade with it as a hobby. It's been very profitable so far but I don't expect that to continue.
I'd imagine day trading has a much higher return than buying lottery tickets or gambling at a casino for example.
I don't like Robinhood and don't feel any need to apologize for it; I think they're predatory. But this isn't why.
"Fraud of the century" is pretty funny, though. Kudos.
There's little chance that the Big Four banks in Australia were all part of a conspiracy to ripping off investors, at least in regards to GME (they're too busy ripping Aussies off via their superannuation).
I'd welcome an investigation, but based on the rest of your comment ("apologists", "only a naive fool would accept the explanation given") my guess is that your mind is already made up.
Here’s an excerpt from the linked article:
> The company also said it is under investigation by a series of regulators, state attorneys general, the SEC, and the U.S. Department of Justice in proceedings associated with the trading restrictions; the company said its CEO Vladimir Tenev has also had his cell phone seized by federal attorneys.
A CFO of a multimilion dollar company gave me the same explanation independently before Robinhood gave any statement.
The reality is unless you have an algo trading system or are a long-term investor you are going to lose on day trading in the long run. RH has done a great job of making trading easier for the masses; I'm not sure the net outcome is a good one.
I think you'll find that the opposite is the case.
Personally, I've never invested less than $2000 in a single lot. I also aim to have around $5000 cash in my accounts, more than that is a waste, and less puts me at risk of being unable to pay for things.
https://www.stockbrokers.com/guides/order-execution
Also here's the disclosure from IBKR, which is probably the polar opposite from robin hood in terms of favorable order execution
https://gdcdyn.interactivebrokers.com/Universal/servlet/Regi...
I know the first link said fidelity is better, but that's fidelity vs ibkr-lite, not ibkr-pro.
That people can get benefits from the stock markets? Or that investment/economic decisions van be made democratically?
Index funds rely on the the folks making the index to determine which stocks get bought -- who's on the s&P 500 is not a democratic process
It seems that in the 1900s the American Dream shifted to mean: get a job, buy a house, have kids, don't take risks, trust in the system and the system will support you.
Now in 2021, it's more like: get a job to ensure you don't go bankrupt from stupid high healthcare expenses, your employer will keep all the profits and shift all the risks onto you, and if you're moderately lucky and live in the right place, you won't be homeless.
I don't know how I feel about publicly traded stocks or the stock market, but I can't help but feel like "index funds democratized investing" is like saying "the 9 to 5 job democratized the American Dream".
In any case, it really doesn’t matter. It’s awful at order execution, so you get worst prices on things. This was proven but SEC just gave slap on wrist.
Its an extremely immature platform and has outages at the worst times.
It’s app is simple but missing key info compared to competitors.
Finally, the GameStop fiasco was unforgivable and only a naive fool would accept the explanation given. Citadel is the MAJORITY of Robinhood revenue and was opposite that trade. The stock market has existed for over a century with online trading for decades, including many volatile stocks, and apologists can’t name a single other example of one way trade restrictions. It didn’t happen during the Volkswagen short squeeze.
Despite that, apologists act like the clearing house explanation is stone cold fact. Source? Not a single investigation other than the word of Robinhood CEO, who contradicted himself multiple times explaining it. It was the fraud of the century and only people with little understanding of finance bought the explanation.