The Robinhood and Interactive Brokers platforms have restricted trading in GameStop stock and options on Thursday morning, triggering a significant backlash among retail investors who decried the move as market manipulation.
It follows steps taken by TD Ameritrade and Charles Schwab on Wednesday.
“We continuously monitor the markets and make changes where necessary. In light of recent volatility, we are restricting transactions for certain securities to position closing only, including $AMC, $BB, $BBBY, $EXPR, $GME, $KOSS, $NAKD and $NOK. We also raised margin requirements for certain securities,” Robinhood said in a statement explaining the move.
Interactive Brokers explained why it is suspending trading of the stock and others like AMC Theaters, Koss, Express, and BlackBerry: “As of midday yesterday (1/27/2021), Interactive Brokers has put AMC, BB, EXPR, GME, and KOSS option trading into liquidation only due to the extraordinary volatility in the markets.”
“In addition, long stock positions will require 100 percent margin and short stock positions will require 300 percent margin until further notice,” the firm wrote to news outlets. “We do not believe this situation will subside until the exchanges and regulators halt or put certain symbols into liquidation only. We will continue to monitor market conditions and may add or remove symbols as may be warranted.”
On Reddit forum WallStreetBets, where calls to buy stocks have helped drive the moves in recent weeks, some of its more than 4 million members reported trading platform Robinhood was now preventing investors from buying new shares in GameStop and other companies.
After Robinhood implemented the restrictions, users on the Reddit forum accused Robinhood and others of market manipulation.
“Robinhood just burned down their own company to save the hedge funds. This is bigger than we knew,” said one highly-upvoted comment.
Dave Portnoy, the head of Barstoolsports, panned Robinhood, saying the platform is one of “the biggest frauds of them all. ‘Democratizing finance for all’ except when we manipulate the market cause too many ordinary people are getting rich.”
The dramatic jumps in the stock price of companies including GameStop, BlackBerry, and AMC drew more calls for regulatory scrutiny and action from commentators. The calls for regulation have drawn backlash from retail investors using the WallStreetBets sub-Reddit, who again said it’s tantamount to market manipulation on behalf of hedge funds and large corporations.
“In terms of short interest being monitored, the U.S. markets are probably the most transparent, but there’s always room for improvement,” former SEC chairman Jay Clayton told CNBC.
Reuters contributed to this report.