Robinhood CEO calls on SEC to revise ‘outdated’ trading rules

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United States lawmakers are set to grill Robinhood CEO Vlad Tenev over the GameStop buying and selling frenzy at a Congressional listening to later as we speak.

In his prepared remarks, Robinhood CEO appeared to put accountability for the platform’s stock trading suspensions on the U.S. Securities and Change Fee. Tenev stated that the corporate blocked buying and selling to fulfill “regulatory deposit necessities” outlined by the SEC. The exec particularly criticized an SEC rule that requires equities transactions to clear over two days:

“It takes a number of days for the clearinghouse to course of the transaction […] This is named “T+2” settlement, denoting the commerce date plus a two-day ‘settlement interval.’ This T+2 settlement cycle is codified by SEC Rule 15c6-1(a), which prohibits broker-dealers from effecting the acquisition or sale of a safety later than the second enterprise day after the execution of the commerce.”

Tenev referred to as on the authority to switch its buying and selling guidelines to permit clearinghouses to help real-time settlement as an alternative of a two-day settlement interval. “There isn’t a motive why the best monetary system the world has ever seen can not settle trades in actual time. Doing so would drastically mitigate the chance that such processing poses,” he wrote. Robinhood beforehand released a weblog put up excoriating two-day settlement on Feb. 2.

In his testimony, Tenev additionally referred to a Jan. 30 investor alert by the SEC that made it clear that broker-dealers had the proper to reject or restrict buyer transactions for “authorized, compliance, or danger administration causes.”

Tenev additionally denied reviews that Robinhood blocked buying and selling on the request of hedge funds, stating that any allegation that Robinhood acted to assist hedge funds or different pursuits to the detriment of their clients is “completely false and market-distorting rhetoric.”

Robinhood’s GameStop saga began on Jan. 28 when the corporate halted buying for GameStop stock and another shares that have been allegedly pumped by means of the r/Wallstreetbets Reddit group. Following commerce restrictions, the group speculated that Robinhood may have acted to guard the pursuits of hedge funds like Citadel and Melvin Capital on the expense of retail traders on Reddit.

Home Consultant Maxine Waters (D-CA) announced plans to hold a virtual hearing dedicated to the GameStop saga in early February. The listening to is scheduled for 12:00 PM ET and also will function Reddit CEO Steve Huffman, Melvin Capital CEO Gabriel Plotkin and Citadel CEO Kenneth Griffin.