Robinhood lifts all trading restrictions including Gamestop and AMC shares
Robinhood, the financial trading platform credited with enabling and then inhibiting the unprecedented rise of Gamestop stocks, lifted all trading restrictions on Friday, allowing users to buy shares in Reddit-promoted companies after a week of financial tumult.
The company has been criticized by users after it limited the number of Gamestop and AMC shares individuals could purchase following a Reddit-led spike in certain companies’ share prices. “There are currently no temporary limits to increasing your positions,” Robinhood said in a statement on its website.
Robinhood had only allowed users to trade 500 shares in GameStop, a video-game store chain, and 5,500 AMC shares, according to Reuters, after an initial surge in mid-January. The lifting of restrictions came as the US treasury department reportedly began to explore how to prevent a similar set of events from happening again.
Robinhood had been accused of protecting hedge funds, some of whom pay the company to execute its users’ trades, when it introduced restrictions on purchases.
Thousands of small traders had used Robinhood – which positioned itself as a user-friendly platform for inexperienced investors – to purchase Gamestop, AMC, BlackBerry and other companies after the WallStreetBets sub-Reddit inspired a mass trading event.
Politicians as ideologically diverse as Alexandria Ocasio-Cortez and Ted Cruz have criticized Robinhood, with Ocasio-Cortez suggesting a congressional hearing into the company. But Robinhood said the restrictions were necessary for it to cover potential losses.
“With individual volatile securities accounting for hundreds of millions of dollars in deposit requirements … we had to take steps to limit buying in those volatile securities to ensure we could comfortably meet our requirements,” a statement on Robinhood’s website said.
On Friday, Axios reported that treasury secretary Janet Yellen had convened regulators in the wake of the Gamestop surge, to discuss preventing the boom and bust events of the past two weeks.
The government is exploring a crackdown on market manipulation and a tax on financial transactions, Axios said.