This Dec. 17, 2020 file photo shows the logo for the Robinhood app on a smartphone in New York. (AP Photo/Patrick Sison, File)
Robinhood CEO Vlad Tenev called for real-time settlement of trades in a letter posted on the trading app's website on Tuesday.
"The existing two-day period to settle trades exposes investors and the industry to unnecessary risk and is ripe for change," he wrote.
Tenev said the current settlement period was part of the reason Robinhood curbed the buying of certain stocks last week amid a social media-fueled trading frenzy that pushed up the value of GameStop shares to meteoric heights.
The executive offered a similar explanation to Tesla CEO Elon Musk in a much-watched interview on the social media platform Clubhouse. Musk, who showed support for the Reddit community /WallStreetBets throughout the buying binge, grilled the executive about the restrictions.
In Tenev's view, what happened is that the clearinghouse deposit requirements skyrocketed as trading activity surged, creating a liquidity issue for the trading platform.
"The clearinghouse deposit requirements are designed to mitigate risk, but last week’s wild market activity showed that these requirements, coupled with an unnecessarily long settlement cycle, can have unintended consequences that introduce new risks," he wrote.
The settlement period was previously three days, meaning traders had that long to settle payments until the Securities and Exchange Commission shortened the period to two days back in 2017.
This likely won't be the end of Robinhood's attempts to reframe the narrative around last week's trade restrictions, which garnered widespread criticism from both lawmakers and internet personalities. Barstool Sports founder Dave Portnoy, for instance, has said he lost $700,000 because of the trading restrictions.
Tenev is expected to testify before a House committee on February 18 about the incident.
"Technology is the answer, not the oft-cited impediment," he wrote. "We believe it is important for all relevant stakeholders to convene in the near term to discuss the urgency and necessity of this issue."
Consumer prices saw an 8.6 percent jump in May, with fuel prices showing the biggest surge, climbing 17 percent last month. As inflation continues to climb to levels not seen in 40 years, President Biden took to calling out ExxonMobil and other major oil companies, accusing them of holding back production while continuing to collect huge profits at the cost of the consumer. Mark Avallone, the president of Potomac Wealth Advisors, joined Cheddar's Opening Bell to discuss. “They have reduced long-term expenditures. But why? Because the world is going to alternative energy and as consumers, if we thought that that welcome change to alternatives was going to happen without pain, we might have been mistaken," he said. "The less investment they make in oil because they're getting ready for a new world of electric vehicles, the less we're going to be prepared for oil shocks such as the one we got when Russia invaded Ukraine."
Catching you up on the stories you need to know this morning, the U.S. could soon get its first major gun safety law in years, the House Select Committee investigating the January 6th attack on the U.S. capitol holds its second hearing, and today might just be the day the Supreme Court overturns Roe v. Wade, and decides on new gun laws.
U.S. stocks closed Thursday at their lowest levels of the trading day, as investors continue to eye inflation ahead of the May CPI report out Friday. Art Hogan, Chief Market Strategist for National Holdings, joins Cheddar News' Closing Bell to discuss.
Creating a brand is one of the most important steps in building a business. It can help set you apart from the competition and tells customers what your values are, but many companies don't know how to brand themselves effectively. Tiana Von Johnson, CEO & Chief Brand Strategist of TVJ World, gives expert tips on the do’s and don’ts of branding.
Housing affordability has collapsed to its lowest level on record over the last year. According to the national association of realtors, affordability has dropped by 29%, thanks to surging home prices and mortgage rates. Odeta Kushi, Deputy Chief Economist of First American, breaks down the housing market, and when buyers can expect prices to finally drop.
