The Robinhood trading app logo is displayed on a smartphone.
Olivier Douliery | AFP via Getty Images
Robinhood began easing trading restrictions on Monday, raising the trading limit on GameStop from one share to four shares.
Unraveling restrictions comes amid a new cash injection for the pioneer of free stock trading.
The brokerage also raised the limits for AMC Entertainment, Express, Koss, and some of the other eight restricted stocks. Here are the new restrictions.
Robinhood restricts trading on certain stocks
Source: Robinhood
Amid an increase in the capital requirements of the SEC and the Depository Trust & Clearing Corporation, Robinhood imposed restrictions on certain stocks and options last week amid an insane retail investment in heavily shorted names. Reddit-obsessed traders raised GameStop’s stock by more than 400% in an effort to destroy the hedge fund’s name shorting.
As GameStop’s stock increased, regulatory agencies increased the amount Robinhood needed to deposit with its clearing houses in case the trades caused large losses. JMP Securities estimated requirements increased by a whopping $ 7.5 billion to $ 33.5 billion.
The limited list tells clients how many stocks and options contracts they can buy in relation to a particular security and Robinhood appears to be reversing some of its restrictions. Now Robinhood customers can buy 4 GameStop shares instead of just one.
GameStop shares last fell 17% after losing more than a third of their value. Robinhood customers who own more than four shares of GameStop cannot purchase new shares.
Customers can purchase 75 AMC shares, higher than the previous limit of only 10 shares. Robinhood customers can now buy 200 shares of Express, instead of the previous 20-share limit. However, if a customer owns more than 200 shares of Express, they will no longer be able to buy shares from the controversial retailer.
The trading limits of Nokia and Blackberry remained the same.
Robinhood’s policy change comes amid news that the pioneer of free stock trading has raised an additional $ 2.4 billion from investors to support its record customer growth, the company said in a blog post on Monday. This adds to the $ 1 billion raised last week to support Robinhood’s balance sheet in anticipation of rampant speculative trading. The company also used credit lines for more funds.
The new funding round was led by Ribbit Capital, as well as existing investors ICONIQ, Andreessen Horowitz, Sequoia, Index Ventures and NEA, Robinhood said.