‘Sheriff’ tussles with Robinhood

What stopped the WallStreetBets short squeeze on surging meme stocks? Risk.net has been delving through clearing house NSCC’s rule book to find out why it hit Robinhood – broker of choice to many of the retail punters betting heavily on the shares – with a $2.2 billion special margin charge just after 5am on January 28. According to the clearing house’s rule book, a broker’s excess net capital premium charge starts building when a substantial amount of its deposit requirements is higher than its total net capital. On January 28, Robinhood’s total value-at-risk deposit was around $1.4 billion – far higher than its net capital of roughly $486 million.

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