By Leah Hutton (Luxembourg)
There is a widespread rumor which has forced the Robinhood CEO to air his opinion about it. This rumor states that the coerced stop of buying orders of GME being targeted by a Reddit group is for a different reason, but Vlad Tenev has expressed utterly that the decision to halt buy orders came as a result of operational considerations. In an interview, on Thursday, Vlad Tenev debunked the rumor has false, pushing towards the audience another perspective for the stop of buy orders.
THE ROLE OF MARKET VOLATILITY
Market volatility is the same as market’s temporariness. This is the factor behind the loftiness of deposit specifications at multiple brokerage that receive cash. The greater the amount of cash available to be cleared into these brokerages, the better customers are permitted to buy, perhaps stocks that are unfettered.
Around this period, there was a high demand for focusing investment around these groups of stocks which came as a result of the criss-crossing of social media and finance, Vlad Tenev claimed. He purported that President Donald Trump’s claim covertly described cleansing products as possible health vaccine to combat the alarming spread of Covid-19. He said Clorox and Lysol are the victims of market’s temporariness as they would have felt wealthy and gracious at the start of the dynamic when they had so much to supply as demand was incredibly high.
The role of market’s temporariness is a crucial point of consideration for Robinhood. The protection of customers is of utmost priority to the fiscal institution as claimed by the CEO. To safeguard the interest of their customers, the decision is as result of their utmost benefit, thus an technical implication.
OPERATIONAL AND TECHNICAL CONSIDERATION
Robinhood is a stockbroker encumbered with unlimited fiscal specifications that encompass deposits that importantly given to diverse brokerage. Market’s temporariness is the background behind this operational consideration as customers must protected at all cost. Fiscal specifications fluctuation is hinged on the temporariness of this market, thus, to safe guard his customers, Robinhood CEO has decided to prevent the purchase of stocks identified with a Reddit trading group named WallStreetBets (WSB).
The market’s volatility nourishes trading with so much unpredictability, meanwhile customers bear the brunt of this flurry fluctuation. He further claimed that the market environ is quite unpredictable, corroborated by the recent trader activity’s gust. Recently, the share prices of some enterprises mounted a greater height, because WSB wanted to short squeeze big U.S institutional hedge funds waiting to stake against these companies. Vlad Tenev claimed that a handful amount of small business traders chose to abandon their position because there were calls to hold onto this platform, thus keeping faith, staying and maintaining positions just to increase stock prices. Unfortunately, the calls to hold onto this platform did not yield anything good in return, these businesses’ share prices have fallen back over the last 24 hours thus leading to lawsuits being filed against Robinhood.
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