[hong_kong]

https://www.cnbc.com/2021/01/28/interactive-brokers-restrict...

“The broker stands between these customers and the clearing house,” said Peterffy. “So when some option holders make money, the clearing house has to give us the money to give it to our customers, while other option holders, sellers or buyers on their own side lose money we have to collect money from them and give it to the clearing house. If our customers are unable to pay for their loses we have to put up our own money.”

Explanation from the CEO of Interactive Brokers, which also limited GME trading.

[llbeansandrice]

This makes sense to me in terms of restricting buying on margin. But plenty of people put their own money into RH accounts and were buying stock. I don't see how that's relevant to RH paying a clearing house?

I suppose they had a huge influx of new accounts and RH gives you an advance up to like $1000 before the money is actually moved from your bank account and into your brokerage account but I'm still skeptical that this reasonably leads to "not supporting" stocks.

[kahrl]

You are correct. It's not relevant.

[lovehashbrowns]

But when you buy a stock, like just straight up purchase it, the cash is already there, on-hand, in your account. There's no Robinhood putting up their own money because YOUR cold hard cash is there, in the RH account. That is used for the purchase. So why stop people from buying the stocks?

This answers my question, I think: https://news.ycombinator.com/item?id=25951475

[svnt]

He was reading that off his screen. When the interviewer pressed him on why they did it he said “We did it to protect ourselves... and also of course our customers” in his best Disney villain voice.

[kasey_junk]

Note Robinhood clears themselves so the same dynamic applies but is more direct.