Robinhood was asked for $3 billion to cover the risk from the volatility in GameStop and other 'meme-stocks,' CEO Vlad Tenev told Elon Musk
Robinhoodwas asked last week for a $3 billion deposit to cover trading risks on highly-volatile stocks.
- That is why the brokerage imposed trading restrictions last week, CEO
Vlad Tenevtold Elon Musk.
- After Robinhood limited retail trading, the clearing agency cut down that figure to $700 million.
Robinhood set restrictions on trading after a securities
Musk introduced Tenev on the show as "Vlad the stock impaler" and asked him to explain what exactly happened with Robinhood. "What happened last week? Why couldn't people buy the
Tenev explained that the clearinghouse's request was "about an order of magnitude more than what it typically is." But after Robinhood agreed to restrict retail investors from making further purchases of highly-volatile shares, the NSCC agreed to reduce that figure to $700 million early Thursday. The company explained its settlement process in a statement Saturday.Robinhood and other brokerages are required to keep accounts with clearing agencies. The minimum deposit needed increases as risk increases, hence the requirements for a capital infusion. Tenev brought up that Robinhood raised over a billion in capital within 24 hours last week to loosen trading restrictions. At the same time, he expressed regret over the limits it set. "We knew this was a bad outcome for customers," he said. "People get really pissed off if they're holding stock and they want to sell it and can't."
On Monday, the brokerage narrowed down the list of restricted stocks to 8 from 50.
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