Robinhood has narrowed its stock trade restrictions from fifty to eight companies on Sunday, including GameStop, Koss Corporation, AMC Entertainment Holdings, Express Inc., Naked Brands Group, Genius Brands International, BlackBerry Limited, and Nokia Corp.
According to the company’s support page, investors will be limited to 10 shares and 10 options contracts of AMC, 700 shares and 700 options contracts of BlackBerry, 20 shares and 20 options contracts of Express Inc., 1 share and 5 options contacts of GameStop, 600 shares and 600 options contracts of Genius Brands International, 2 shares of Koss, 600 shares of Naked Brands Group and 2,000 shares and 1000 options contracts of Nokia.
The new restrictions, which are aggregate limits for each security and not per-order limits, include shares and options contracts that an investor already holds. These limits may be subject to change throughout the day.
Robinhood notes that investors who already hold a greater number shares or contracts than the limits listed above will not have their positions sold or closed. However, they will be unable to open more positions of the securities unless they sell enough of their holdings to be below the respective limit.
Investors will also be unable to open new fractional shares but may open new whole share positions according to the limits listed. Recurring investments for the listed securities will also be skipped until the restrictions are lifted.
Events last week turned Wall Street on its head as Reddit users colluded to buy massive amounts of GameStop stock, with the explicit aim of hurting hedge funds that profit off shorting the typically falling stock. A lot of that GameStop trading happened on Robinhood.
Nasdaq came to many short buyers’ rescue when it halted the trade of GME tokens calling it a manipulation owing to its social media hype. Robinhood followed suit and halted all buy trades for spot and options.
BlackBerry has already stated they see no reason for the surge in their shares and Nokia has now followed suit with a Nokia spokesperson stating:
Nokia is not aware of any material, undisclosed corporate developments or material change in its business or affairs that has not been publicly disclosed that would account for the recent increase in the market price or trading volume of its shares.
The sudden surge has drawn questions from regulators, who are monitoring trading amid fears of illegal activity. However, the amateur investors say they are just playing Wall Street at its own game. In online forums they accused Robinhood of enacting its own form of market manipulation by restricting purchases of GameStop and other shares.
The issue has also caught the attention of the White House and other officials. Press secretary Jen Psaki said President Joe Biden’s economic team, including newly-appointed Treasury Secretary Janet Yellen, was “monitoring the situation”.
US stock exchange Nasdaq’s chief executive Adena Friedman said exchanges and regulators should watch whether anonymous social media posts could be driving “pump and dump” schemes.
Jacob Frenkel, a former lawyer at the Securities and Exchange Commission, the main US financial regulator, said:
“Such volatile trading fuelled by opinions where there appears to be little corporate activity to justify the price movement is exactly what SEC investigations are made of.”
