Robinhood Needed $3 Billion to Shore Up Volatile Trading in GameStop, Other Stocks – WSJ

Robinhood Markets Inc. blocked trading of volatile stocks such as GameStop last week after a clearinghouse asked for $3 billion to back up the trades, the trading app’s chief executive said in an interview posted online.

Robinhood and other brokers experienced a deluge of demand from users to invest in a handful of popular stocks and options contracts. Wild moves in the value of those stocks and options prompted clearinghouses that process and settle trades to demand increased cash collateral to insulate themselves from possible losses.

“The request was around $3 billion, which is, you know, about an order of magnitude more than what it typically is,” Robinhood Chief Executive Vlad Tenev said. He spoke Sunday night in an interview alongside Tesla boss Elon Musk on a live stream of Clubhouse, an invitation-only social networking app popular in Silicon Valley.

A Robinhood spokesman didn’t immediately respond to a request for comment about the online interview.

Robinhood blocked trading in more than a dozen stocks and related options on Thursday. It loosened restrictions Friday but still allowed only limited trading. Mr. Tenev said the trading app will be able to further relax the “stringent position limits” on the securities on Monday after last week’s capital raise.

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