[JumpCrisscross]

> I don't understand how the volatility in $GME would lead a market maker to simply stop quoting the underlying stock altogether. If the price starts flying around you just widen your spread.

People after the financial crisis liked to talk about fat tails. Risk models assuming narrow tails, reality having a taste for extreme events. This is a fat-tail event. We don't have great models for stocks as volatile and as correlated as GME is right now. Which means for even cash equities trading, we don't have a great sense around what the appropriate spread should be.

Market making has sometimes been described as vacuuming up nickels in front of bulldozers. These are bulldozin' times. You don't want to fill a bunch of sell orders in GME right before it gaps down 80%.

[AndrewBissell]

I mean, we can see that this idea that the stock is too risky to quote is not true because there is a two-sided market in it right now, which can be traded on multiple platforms. The only actually existing peculiarity here is that Robinhood is not allowing customers in possession of 100% margin to open a new long position.

[JumpCrisscross]

> we can see that this idea that the stock is too risky to quote is not true because there is a two-sided market in it right now

On exchanges. Those are buyers and sellers as well as market makers. Robinhood connects to a subset of the latter.

[whimsicalism]

> Those are buyers and sellers as well as market makers.

Nope, pretty much just market makers.

[whimsicalism]

Hopefully others realize that downvotes on HN do not change the reality of how market makers function.