Why Robinhood and Other Brokerages Restricted Trading This Week
- Stocks like GameStop, AMC require more collateral to clear
- At heart of issue: It takes two days for trades to settle
Stock trader smartphone RF
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The rarely discussed role that clearing firms play in settling stock trades is at the heart of what caused Robinhood and other brokerages to restrict trading of some companies this week.
Larry Tabb, head of market-structure research at Bloomberg Intelligence, explains how the process works in a Q&A below.