In the Clubhouse audio-chat between Musk and Tenev __ CEO of Tesla Musk asked Tenev why they restricted trading last week.
“What happened last week? Why couldn’t people buy the GameStop shares? The people demand answers, and they want to know the truth,” Musk said.
In response, Tenev said that Robinhood didn’t have a choice, due to regulatory capital requirements.
“We had no choice in this case. We had to conform to our regulatory capital requirements.”Tenev said.
Robinhood says restrictions followed a request by the NCSS
Tenev added that to cover trading risk, the National Securities Clearing Corporation (NSCC) requested from Robinhood to get an additional $3 billion deposit. Consequently, the company had to halt the trading to “protect the users” as Tenev claimed. At the moment of the NSCC request _ Robinhood only had $2 billion in venture capital. Clearing agencies oblige Robinhood and other exchanges to keep some accounts with capital to cover the risks.
Furthermore, Tenev said that the clearinghouse requested “about an order of magnitude more than what it typically is.” However, because Robinhood restricted the trading, the NSCC decided to reduce the request to $700 million on Thursday.
