Robinhood has reduced its stock trading restrictions to 8 companies from 50 ahead of the trading session on Monday. The new restrictions include GameStop, Koss Corporation, AMC Entertainment Holdings, Express Inc., Naked Brands Group, Genius Brands International, BlackBerry Limited, and Nokia Corp.
According to the publication on Robinhood’s website, opening new positions in the securities listed is currently allowed, but limited. There are limits to “the maximum number of shares and options contracts to which you can increase your positions.”
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Investors will be limited to
- 10 shares and 10 options contracts of AMC
- 700 shares and 700 options contracts of BlackBerry,
- 20 shares and 20 options contracts of Express Inc.,
- 1 share and 5 options contacts of GameStop,
- 600 shares and 600 options contracts of Genius Brands International,
- 2 shares of Koss Corp., 600 shares of Naked Brands Group and
- 2,000 shares and 1000 options contracts of Nokia Corp.
Source: Robinhood
The new restrictions, “are aggregate limits for each security and not per-order limits”, and includes shares and options contracts that an investor already holds. Robinhood added that these limits may be subject to change throughout the day.
Investors who already hold a greater number of shares or contracts than the limits listed above will not have their positions sold or closed Robinhood said. However, “the investors will not be able to open more positions of the securities unless they sell enough of their holdings to be below the respective limit.”
Similarly, Investors will not be able to buy new fractional shares of the restricted companies. Investors can sell and close their fractional positions, but can’t open new fractional positions, although they may open new whole share positions according to Robinhood.
Also, any recurring investments in the restricted securities will be skipped until these restrictions are lifted.
“It was not because we wanted to stop people from buying these stocks,” Robinhood said in a blog post on Friday. Robinhood said the restrictions are necessary after its clearinghouse deposit requirements for equities increased last week.
Robinhood has been under scrutiny and facing backlash for its decision to restrict the trading of high-flying stocks that surged after being touted on social media.
On Friday, the Securities and Exchange Commission (SEC) said that it is monitoring developments and will “act to protect retail investors when the facts demonstrate abusive or manipulative trading activity that is prohibited by the federal securities laws.”
Ifunanya Ikueze is an Engineer, Safety Professional, Writer, Investor, Entrepreneur and Educator.
