Robinhood’s Reckoning: Facing Life After GameStop
The Wall Street Journal reports the clearinghouse that handles Robinhood’s trades demanded it put up a total of $3 billion to cover the day’s trading. The simplicity of the firm’s user interface masked the complexity of the different parties that touch each trade. Clearinghouses can take days to finalize a transaction. To account for the risk that a trade—or a brokerage firm—could fail before the process is complete, clearinghouses require brokerage firms to post collateral each day to guard against potential losses.