Former U.S. Securities and Exchange Commission (SEC) Chairman Jay Clayton has predicted more regulation on Wall Street in the wake of the GameStop fiasco, while platforms Ameritrade and Robinhood have also announced a halt to GameStop (GME) trading.
Ameritrade, a popular U.S.-based trading platform owned by Charles Schwab, and Robinhood, an American financial services company, decided to stop trading GameStop (GME) following the latest controversy. At the same time, former SEC Chairman Jay Clayton noted that traditional financial markets need new and important regulations because they do not operate in the best interest of everyone.
Ameritrade and Robinhood discontinued GameStop (GME) operations
GameStop, a video game company that has struggled for years to keep up with digitalization in the industry, is one of the most important agenda items of recent days. According to CNBC, GameStop shares, which have been in gradual decline for some time, have caught the attention of Wall Street giants, and they have begun to open short positions in GameStop shares.
However, individual investors have decided to act against the entrenched status quo. The price of GameStop stock rose by three digits within days as a result of millions of people rallying together in a group on Reddit, leaving The Wall Street giants in reverse. The move, which started on Reddit, soon had a snowball effect.
The loss suffered by investors who opened short positions on GameStop stock exceeded $ 23 billion, according to estimates from financial analysis firm S3 Partners. The Nasdaq CEO announced that they may stop trading the shares if similar conditions occur.
After Robinhood and Ameritrade suspended GameStop transactions, the wallstreetbets Group on Reddit reacted by inviting members to delete the Robinhood app.
Former SEC Chairman Jay Clayton confirms interest from individual investors
All eyes are now on GameStop, and leading names are making statements about how the system can be improved. Former SEC Chairman Jay Clayton, who is tasked with protecting investors, said he “applauded” the participation of retail investors. But Clayton warned that if regulators were to detect any possible manipulation behaviour, they would have to “root it out.”
On January 28, Maxine Waters, Chairman of the U.S. House of Representatives Financial Services Commission, announced an investigation into short position sales. Sherrod Brown, the soon-to-be chairman of the Senate Banking Committee, also called for a reexamination of stock market rules.
The short position sale has been the focus of wide-ranging discussions, especially after certain securities such as GameStop (GME) have experienced extreme volatility in the last two days. Individual investors, organized through Reddit and buying through Robinhood, began buying GME heavily because the short positions taken by some large hedge funds were soon due to expire.
Robinhood and several other platforms, which target individual investors, have recently stopped buying GME. Many people have interpreted this as the platforms being in collusion with the conservation funds in question. Waters stated that:
For small investors, large investors Vlad Tenev Robinhood top manager of one of the actors challenging the GameStop event, Reddit cofounder Steve Huffman, Kenneth Griffin, Citadel Investment Companies Securities and Capital from individual investors is Gabriel Plotkin top manager top manager with Melvin Keith Gill testified in the U.S. House of Representatives.
The House Financial Services Committee said in late January that the rapid rise in GameStop shares and the restriction Robinhood placed on trading from the stock-trading platforms “has the game been stopped? Short sellers, winners and losers when social media and individual investors collide,” he held a session titled.
Robinhood’s mission is to “democratize the financial system”, Robinhood Senior Manager Vlad Tenev said in a speech at the video conference session, noting that they believe that the financial system should be built to work for everyone, not just for the chosen few.
“SORRY AND SORRY”
At the end of January, many brokerage firms saw a “tremendous” increase in some share prices, Tenev said, recalling that on January 28, an unprecedented event occurred, so limited trading was allowed by imposing a trading restriction on certain shares.
Emphasizing that Robinhood does not impose transaction restrictions to help hedge funds, Tenev claimed that they have imposed transaction restrictions on some shares in order to meet increased regulatory deposit requirements.
“Despite the unprecedented market conditions in January, what happened at the end of the day is unacceptable for us. I’m sorry and I’m sorry. Know that we’re doing everything we can to make sure this doesn’t happen again.” said.
“WE HAVE NO ROLE IN THE DECISION TO LIMIT TRANSACTIONS”
American individual investors play an important role in Capital Markets, said Kenneth Griffin, Senior Manager at Citadel Securities, an investment firm.
“We have no role in Robinhood’s decision to limit transactions in GameStop or similar stocks,” Griffin said, noting that Citadel Securities played a key role in meeting the needs of individual investors in the week of January 24. I learned of Robinhood’s decision to limit its transactions after it was first made public., “he said.
Melvin Capital Chief Executive Gabriel Plotkin said many investors had suffered losses because of the unprecedented incident.
“I would like to clarify that Melvin Capital has absolutely no role in the decisions of its trading platform,” Plotkin said of the trading restrictions Robinhood has imposed on some shares. Melvin Capital closed all of its positions at GameStop days before the platforms imposed these restrictions., “he said.
ANALYSIS FROM REDDIT TO WALLSTREETBETS
Reddit co-founder Steve Huffman explained that the wallstreetbets Forum, which is organized by investors, is one of the many financial and investment-related communities on Reddit.
Huffman noted that since the time of sharp rises in stocks, robots called “bots” have analyzed whether foreigners or other bad actors are effective on the wallstreetbets forum, but they have not encountered such a situation.
Reddit user and one of the individual investors who bought GameStop shares, Keith Gill, also expressed that his investment in GameStop shares had gained value and he felt “very lucky” for this.
Stating that the idea that GameStop shares influence the market by encouraging investors is “illogical”, Gill argued that social media sharing does not cause billions of dollars to be invested in GameStop shares.
In the last week of January, contention between small and large investors in the American stock market was raised by trading in GameStop shares.
GameStop, the US video game dealer whose stock market value has fallen due to economic difficulties, was among the most “short-sold” shares by the end of last year, which investors predicted would fall further.
Melvin Capital, a mutual fund, tried to make money from falling prices by short-selling GameStop’s shares, which were around $ 17-18 last year, but a group of investors who met on the social media platform Reddit noticed this situation and organized the stock purchase.
Amateur investors, organized through a forum called WallStreetBets, raised the price by buying GameStop shares, while the share price, which was previously around $ 17-18, exceeded $ 400.
GameStop shares, which Wall Street forecast would see the value of big investment companies fall further, rose nearly 1,700 percent last month amid heavy buying by small investors, causing investment companies to suffer losses