The website of the British stock exchange app Freetrade.
Free trade
LONDON – The UK stock trading app Freetrade told its clients on Friday that it had turned off buying US stocks.
Freetrade blamed the halting of US stock purchases by its currency exchange provider and their bank in order to limit the platform’s trading volume. Freetrade uses the British fintech company Currencycloud for currency transactions.
Barclays made an unexpected decision to significantly limit the number of currency transactions it could process for Freetrade, a person familiar with the matter told CNBC. The person preferred to remain anonymous because they were not authorized to speak in public.
Barclays was not immediately available for comment when contacted by CNBC.
The move will affect buy orders placed before the opening of the US market, Freetrade said, while sell orders will also be limited in the open market for a short period of time.
“We have received no warning about what we consider to be an extremely bad decision,” Adam Dodds, co-founder and CEO of Freetrade, said in a statement Friday. “We are very unhappy with this decision and are doing everything we can to rectify the situation.”
“Due to the high volumes, we are currently unable to respond to individual inquiries about this.”
Freetrade, which has more than 300,000 users, says activity is up sharply this week due to wild volatility in the stock markets.
A number of high short stocks, including GameStop and AMC, skyrocketed this week as a flood of amateur investors inspired by the Reddit community WallStreetBets piled on such stocks, resulting in massive losses for some hedge funds.
The American investment app Robinhood received criticism from users on Thursday after restricting trading in thirteen stocks, including GameStop and AMC. The company then said it would resume trading in those securities.
Robinhood said his decision to restrict trading was necessary to meet the capital requirements imposed on broker dealers by the US Securities and Exchange Commission.
“These requirements are there to protect investors and the markets and we take our responsibilities to meet them seriously, including through the measures we have taken today,” the company said.
Robinhood also restricted cryptocurrency trading on Friday, halting direct deposits for crypto purchases “due to extraordinary market conditions.” The move came when bitcoin and meme-inspired token dogecoin saw massive rallies.
The SEC said Friday it was reviewing the “extreme price volatility of certain stocks” and would “act to protect retail investors” from potential market abuse or manipulation.