[maxerickson]

Getting the underlying assumptions wrong or at least completely out of step with day to day operations is what I am getting at. It didn't happen overnight that they had extended customers more margin than they were able to secure.

[swampthing]

As I understand it, the deposit requirements imposed on Robinhood were not because of the margin accounts.

[rokobobo]

That's correct. The DTCC requires brokers to post collateral until settlement of the trades, and even fully funded customer accounts accounts with <100% leverage can not be touched, the customer money cannot be used as collateral.

On top of that, my opinion of the DTCC (I worked at a self-clearing firm for a while, so we had to interact with them) is that they are intentionally dumb and conservative when it comes to asking for collateral. And until now, this hasn't really drawn much attention, mostly because the rest of the firms out there are a lot better capitalized than RH. My guess for why they're better capitalized is just that they're larger (in AUM), older, and operate in more markets.

I don't like RH, but I wouldn't blame them for getting blindsided by the DTCC to the amount that they did. Props to them for being able to raise the cash, I hope it wasn't all equity, since they won't need that cash in a couple of months. I saw recently that they had $12B in AUM--it doesn't make sense to run with $3B in operating capital.