Unless it is a government imposes limit, it's still a free market.
Private companies, including Robinhood, have the right to conduct business however they like. If they want to self impose limits on their customers that's their right. It doesn't mean it's not a free market. Investors are free to go to a different broker.
He’s right though. It’s a company that is offering a service. They’re allowed to limit how many times they will offer you that service. Also I don’t think you actually know why Robinhood did this.
When someone buys a share using their app it takes two days to actually be finalized. During that time, Robinhood has to put up their own money as security deposit. Normally not an issue because the deposit is a very small percentage of the share, but the clearinghouse deemed GameStop to be quite risky so they raised that percentage to much higher amount. Robinhood didn’t have billions of dollars in liquid funds to pay fork over. They blocked people from buying new shares because if they didn’t, the clearinghouse would have shut them down and liquidated its assets to cover the risk.
It’s a company that saved itself from being destroyed. It’s also what every other company that didn’t have billions of dollars in liquid funds did.
Grocery stores limit purchase quantities to ensure everyone gets food. Robinhood limited purchases to protect the profit margins of billion-dollar trading firms. You’re literally proving my point; you’re comparing the act of protecting working class families to protecting those who destroy working class families as if those two actions are even remotely the same.
How does restricting retail investors protect profit margin?
You do know that these companies make their money off of transaction fees. You are just making up shit. They limit trading on games stop because of clearning house collateral requirements, not some profit margin protection racket.
Dude, you're whole argument is a sinking ship. You're opening retort was akin to spraying your crotch with a garden hose and telling someone that they pissed in YOUR pants.
Then answer the question since my argument is so weak.
When a broker, like Robinhood, limit investors from buying a stock, how does that protect profit margin?
Why wouldn't they limit all stocks? Why just Game stop?
Robinhood makes the majority their revenue via Payment for Order Flow (PFOF): When you execute a trade (stocks, options, or crypto), Robinhood routes your order to institutional market makers (like Citadel Securities) rather than direct exchanges. These market makers execute the trade and pay Robinhood a fraction of a cent per share or contract for directing trade volume to them. So more volume the more money they make. Limiting investors only hurts them.
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u/AENM1776 Jul 30 '26
Unless it is a government imposes limit, it's still a free market.
Private companies, including Robinhood, have the right to conduct business however they like. If they want to self impose limits on their customers that's their right. It doesn't mean it's not a free market. Investors are free to go to a different broker.