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."

Share:
More In Business
Jill Zarin and Ally Shapiro Talk New Crystal Manifestation Candles, 'Ultimate Girls Trip'
Coming off of their face masks endeavor, Jill Zarin of "The Real Housewives of New York City," and her daughter Ally Shapiro, CMO of JIll & Ally, join Cheddar News to discuss their latest product: crystal manifestation candles. "We have tigers eye, we have amethyst, we have lapis, and alone those could be almost the price of the candle," said Zarin. "We were really able to do it in an affordable way, and if you don't know how to manifest or what that even means, we do it for you on the candle." Zarin also dished on the new season of "Real Housewives Ultimate Girls Trip."
Abruptly Shuttered CNN+ Streaming Service Was a 'Tough Sell'
One month after its launch, new streaming venture CNN+ announced it was shutting down. Seth Schachner, the managing director of StratAmericas and digital business executive, joined Cheddar News to talk about the high-profile media flop. "That's a really, really different beast than what HBO Max is, which is video streaming, entertainment features," he said. “It's a tough sell when you really look at these things in the cold light of day as to whether or not they actually fit together."
Meta To Take Nearly 50% Cut Of Digital Asset Sales
Meta wants creators to make money from the metaverse, but it's going to take a large chunk of the cut. The tech giant is planning to keep nearly 50% of all digital asset sales within Horizon Worlds, the virtual reality platform that's considered an integral part of the company's unfolding metaverse. Rolf Illenberger, Co-founder and Managing Director of VRdirect, joined Cheddar to discuss why Meta is taking heat for this move, and what it could be doing as an alternative to help support creators, small businesses, and consumers.
Load More