Forced sale of the stock to meet margin calls was not mentioned. Where do you get your information on this? CNBC?
I’m in the business. If you don’t think anyone was on margin I’ve got a bridge to sell you that links Manhattan and Brooklyn.
Robinhood sells the trade data to make their money since they don’t charge a commission. Part of that is market-making on the platform akin to high frequency trading. In order to make those markets you need capital and the trading volumes rose so fast they couldn’t process fast enough. And that includes knowing their margin position exposure in real time.
As they caught up and noticed how much was under water (the intra-day price swings were so large they triggered a number of exchange shut downs to match buy and sell orders) and gap opens, both up and down, put the entire exchange at risk of bankruptcy.
Trust me, a few days from now, when everyone has a chance to breathe and catch up on the trading patterns, you’ll see I’m right. Add a day for settlement of money and you really have a problem with tracking the money accurately for a platform designed to handle people like my 25-year old son playing with a few thousand dollars (and when he started, only about $50).