The collateral requirements increased significantly overnight as a result of the dramatic surge in trading.

I wouldn't qualify that as normal operations.

It's certainly not a positive mark for them, but it seems reasonable, and they were able to quickly get more collateral, just not quickly enough to enable the surge of trading to continue on that particular day. Not the worst brokerage failure.

> normal operations

But that's the thing, a bunch of their userbase aping into one stock isn't (or rather, wasn't) normal operations. It's the financial markets equivalent of jumping in an elevator.

Can't help but say, elevator's are designed to handle jumping, even many people jumping.

There's a good chance you'd trigger the failsafe though, right?

Specifically a failsafe that temporarily halts the operation of the elevator ;)

They gave safety modes as well even things get out of ordinary.

> I don't know, not having enough collateral to fund normal operations seems like a failure on the company's part to me. It's not like the collateral was an unknown requirement, it's the normal way the system works.

Yeah, but the high volume of people buying a specific stock, and that stock being exceedingly volatile (which meant higher collateral requirements) was unknown.

What happened last year was FAR from normal operations in the markets. What happened last year wasn't even a "surge in activity"; it was a hurricane.

And, to be frank; Robinhood can obviously accept some blame, sure, but the financial settlement system is what almost bankrupt them. There's no good reason why transfers have to take four, now three, now two days to settle. Everyone in the industry knows this; but they're slow as molasses at remediating it.

Its insane to think about how much economic prosperity has been, quite literally, destroyed into nothingness by this antique component of our financial system. Whether its the billions of dollars tied up in depository collateral, rather than being productively deployed. Or the businesses, like Robinhood, which were (or were nearly) destroyed due to black swan events.

Is it really necessary for real productivity that we have instant transfers and trade on crazily priced equities?

What part of the real economy requires any of that?

I'm doubtful.

I wonder what a Tobin tax, and possibly even some kind of ban on high speed or even fast trading would do? i.e. throttling limitations? Or something to slow down the trading?

Would it affect the real economy and would the financial sector be prevented from creating value?

Or would it just mean some casino aspect of the operation is limited ...

I'm not suggesting we actually do that, because it's fine if people want to do those things so long as it doesn't affect the real economy with negative externalizations. But I wonder if it would be better for the system as a whole.

> Not having enough collateral to fund normal operations seems like a failure on the company's part to me. It's not like the collateral was an unknown requirement.

Collateral was a known requirement in known amounts. And then the clearing house increased that known collateral requirement amount overnight, due to GME volatility. That overnight increase was a complete unknown until it actually happened.