On Thursday, Robinhood temporarily restricted trading on GameStop and other heavily-shorted stocks to meet financial requirements such as clearinghouse deposits based on the volume of trades.
The company suffered a strong backlash from Reddit-charged day traders and U.S. lawmakers for its decision to freeze stock trading in GameStop and other companies.
In a statement late on Thursday, Robinhood explained, “We made a tough decision today to temporarily limit buying for certain securities. As a brokerage firm, we have many financial requirements, including SEC net capital obligations and clearinghouse deposits. Some of these requirements fluctuate based on volatility in the markets and can be substantial in the current environment.”
On Friday, Robinhood resumed trading in the shares of GameStop and other companies. However, investors could only increase their GameStop position by five shares. For other traders whose current positions in the stock exceed the limit, the company won’t force them to sell but they won’t be able to buy more.
