Robinhood lifts trading restrictions on Reddit darlings GameStop and AMC days after relaxing limits on both stocks
Trading volumes in both stocks subsided this week, losing ground after massive rallies fuelled by retail investors battling against short-sellers.
Robinhood has removed trading restrictions on the Reddit-trader favorites GameStop and AMC Entertainment, according to an update Friday on the trading platform's website.
The move came only days after Robinhood rolled back restrictions on purchases of both stocks, when traders could buy up to 100 shares of the video-game retailer GameStop and 1,250 of the movie-theater chain AMC. Previously, the limit was set at 20 shares for GameStop and 350 for AMC.
Trading volumes in both stocks have dropped this week after days of massive price rallies fueled largely by retail investors seeking to take on Wall Street heavyweights that had bet against those stocks.
Robinhood's decision to impose limits on trading was met with heavy scrutiny from investors and lawmakers. The company said it had to block purchases in some stocks to meet a tenfold increase in deposit requirements mandated by clearinghouses registered with the Securities and Exchange Commission.
"It was not because we wanted to stop people from buying these stocks," Robinhood wrote. "We did this because the required amount we had to deposit with the clearinghouse was so large - with individual volatile securities accounting for hundreds of millions of dollars in deposit requirements - that we had to take steps to limit buying."
On Monday, the company said it raised $3.4 billion in new funding only days after receiving $1 billion from investors. That marks Robinhood's largest fundraising since its inception in 2013.
GameStop was up about 20% and AMC rose 11% in premarket trading Friday.
The move came only days after Robinhood rolled back restrictions on purchases of both stocks, when traders could buy up to 100 shares of the video-game retailer GameStop and 1,250 of the movie-theater chain AMC. Previously, the limit was set at 20 shares for GameStop and 350 for AMC.
Trading volumes in both stocks have dropped this week after days of massive price rallies fueled largely by retail investors seeking to take on Wall Street heavyweights that had bet against those stocks.
Robinhood's decision to impose limits on trading was met with heavy scrutiny from investors and lawmakers. The company said it had to block purchases in some stocks to meet a tenfold increase in deposit requirements mandated by clearinghouses registered with the Securities and Exchange Commission.
"It was not because we wanted to stop people from buying these stocks," Robinhood wrote. "We did this because the required amount we had to deposit with the clearinghouse was so large - with individual volatile securities accounting for hundreds of millions of dollars in deposit requirements - that we had to take steps to limit buying."
On Monday, the company said it raised $3.4 billion in new funding only days after receiving $1 billion from investors. That marks Robinhood's largest fundraising since its inception in 2013.
GameStop was up about 20% and AMC rose 11% in premarket trading Friday.