Vlad Tenev on the GameStop short squeeze and clearinghouse deposit requirements

Last week, we witnessed something the stock market has never quite experienced before.  Short squeezes on a small number of stocks triggered wild gyrations in prices, massive volatility that prompted clearinghouses to take swift action to protect the plumbing that handles stock trading every day. 

In a matter of days, our clearinghouse-mandated deposit requirements related to stocks increased ten-fold.  These deposits are the collateral we post to ensure our access to clearinghouse services on behalf of our customers.  They are what led us to put temporary buying restrictions in place on a small number of securities that the clearinghouses had raised their deposit requirements on.  As we noted in a blog on Friday, it was not because we wanted to stop people from buying these or any stocks — we built Robinhood to provide access to investing for all.  And it certainly wasn’t because we were trying to help hedge funds.

~ Vlad Tenev, "Robinhood CEO: We're helping those left behind by Wall Street, not hedge funds," USA Today, January 31, 2021