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Robinhood and other brokers curb trading for a second day.
January 28, 2021
By Tara Siegel Bernard and Gillian Friedman
Several retail stockbrokers tried for a second day on Thursday to tame the runaway trading that has pushed the stocks of some companies to stratospheric levels.
Robinhood added more stocks to its growing list of companies — including American Airlines, Koss Corp., and Naked Brand Group — that are subject to trading restrictions, limiting the ability of traders using its app to buy the kinds of options that have sparked an enormous rally in those stocks. Shares of American Airlines were up as much as 30 percent at one point on Thursday.
Several other popular trading platforms, like Charles Schwab and TD Ameritrade, had already curbed trading activities in certain stocks, including GameStop, the video game retailer at the heart of the frenzy, and AMC Entertainment Holdings, the movie theater chain.
“We continuously monitor the markets and make changes where necessary,” Robinhood said in a statement. “In light of recent volatility, we are restricting transactions for certain securities to position closing only, including $AAL, $AMC, $BB, $BBBY, $CTRM, $EXPR, $GME, $KOSS, $NAKD, $NOK, $SNDL, $TR, and $TRVG.”
Robinhood also raised margin requirements for certain securities, which means investors need to keep more of their own money in their accounts when placing trades using borrowed funds from the firm.
Another service that offers free and low-cost trades to casual traders, Interactive Brokers, said Thursday that it had put guardrails around several of the same securities: option trading has been put into “liquidation only” on AMC, Blackberry Limited, Express, GameStop and Koss due to “extraordinary volatility in the markets.”
“We do not believe this situation will subside until the exchanges and regulators halt or put certain symbols into liquidation only,” the company said in a statement. “We will continue to monitor market conditions and may add or remove symbols as may be warranted.”