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GameStop (NASDAQ: GME) was leading a rally since the start of the year. However, major exchanges like Robinhood and IG have been restricting trading in the stock. The online brokerages restricted trading in several emerging stocks such as Blackberry and AMC.

IG — one of the UK’s largest trading platforms said in a statement: "Due to the recent extreme volatility and in order to prioritize the service we give our existing clients, we are not allowing any new positions to be opened on the US stocks GameStop and AMC Entertainment."

Due to extreme volatility, and to prioritise the service we give our existing clients, we are not allowing any new positions to be opened on the US stocks GameStop and AMC Entertainment.

These restrictions will be reviewed regularly.

— IG (@IGcom) January 30, 2021

"These restrictions apply to all IG accounts and will be reviewed regularly. You will still be able to close any open positions that you have in these stocks. Any orders that you have already placed on these two stocks will remain." continued the statement.

However, the angry platform traders reacted furiously to the statement. Matthew Lowden, an IG user said: “considering the actions currently under investigation in the US... We are now seeing UK-based trading platforms restrict the purchase of certain stocks which is against the principles of free markets? Are you investigating?”

Who benefits from the IG trading restrictions

Additionally, Traders implied that the GameStop restriction is in favor of other financial firms and hedge funds. WallStreet financial firms made bets on GameStop to lose its value and wanted to profit from “short selling”.

Traders make a profit from short selling by making money as the price falls and buy the stock later. However, Redditers moved against the wave and invested heavily in the stock. GameStop saw a % 1,500 price increase since the start of the year.

The price surge resulted in great losses to major investment firms that made a bet against GameStop. In consequence, traders believe that the restrictions are an attempt to save Wall Street traders that wanted to profit from shortselling GameStop.

Watchdogs will investigate the restrictions

The UK's Financial Conduct Authority said that it will be: "The FCA is aware of the situation and continues to closely monitor trading in UK markets. UK investors should take care when trading shares in highly volatile market conditions that they fully understand the risks they are taking. This applies to UK investors trading both US and UK stocks.
"Firms and individuals should also ensure they are familiar with, and abiding by, all regulations including the market abuse and short selling regimes in the jurisdiction they are trading in."

Meanwhile, Robinhood — a U.S. based brokerage also halted trading in the GME stock.  Elon Musk asked Robinhood’s chief executive Vladimir Tenev, whether the restrictions are in favor of Citadel Securities. Citadel is a company that made a bet against GameStop. However, Tenever denied. The Securities and Exchange Commission is currently investigating the reason behind the restrictions.