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Although the trading of GME stocks in the past days have pumped their valuation, social brokerage platform Robinhood and others have either halted the trade of the shares or limited it.
The shares of the American video game, consumer electronics, and gaming merchandise retailer, GameStop Corp (NYSE: GME) shares are 0.31% down in the pre-market on Monday after the 67.87% surge on Friday to $325 per share. Per a CNBC report, the shares of GameStop, which is now one of the retail investors’ delight has gained over 1,600% this year, has caused a mark-to-market loss of almost $20 billion to hedge funds with short positions against the stock.
The retail buy-up in the shares of GameStop also features those of other heavily shorted stocks including AMC Entertainment Holdings Inc (NYSE: AMC), and BlackBerry Ltd (NYSE: BB) amongst others. The continuity of these buy-ups are bound to continue as more members who are intrigued by the revolutionary actions of the investors organized on the Reddit chatroom r/wallstreetbets (where the entire GameStop frenzy began) continues to join the page, a move that has sent the group’s membership above 7 million subscribers.
Although the trading of these stocks in the past days have pumped their valuation, social brokerage platform Robinhood and others have either halted the trade of the shares or limited how many shares can be stocked by an individual investor. The volatility has reportedly stirred the Central Wall Street Clearinghouses to demand tenfold liquidity from Robinhood in order to be able to conduct a seamless settlement for the highly volatile stocks.
New Robinhood Censorship on GameStop Shares and Others
The Robinhood platform halted the trades of about 50 stocks in the past week but has trimmed the list to 8 according to a CNBC report. Based on the new restriction, a defined number of shares and call options each investor or trader can buy.
For AMC Entertainment Holdings, each investor can buy 10 shares and 10 options contracts, Nokia traders can still buy as much as 2000 shares and 1000 call options, while Blackberry investors can amass as much as 700 shares and options each. The restriction is based on the level of volatility of each stock in the past week and as such, GameStop investors can only purchase 1 share and 5 options contract each.
According to Robinhood’s highlight on these changes, if traders already hold more shares or contracts than the pre-defined, their positions will not be sold or closed, but they will not be able to open new positions. As part of the new measures, Robinhood also raised margin requirements or the amount of money in a client’s account that they will be using leverage to buy a security.