his is two days old news and the GME craze is over now, isn't it? Yet, it showed us how a combined strength of ordinary people can outwit big players.
On the other hand, the financial mafia has learned a lesson too. The following announcement from Revolut shows us that there are games in games behind the curtains that we are (were) not aware of. Quoting the full announcement ...
From today (ie. February the 2nd, 2021), we will only be able to facilitate the selling of GameStop (NYSE: GME) and AMC Entertainment (NYSE: AMC) stocks for the time being. Unfortunately, our broker-dealer in the US, DriveWealth, can no longer offer Buys on these stocks due to increased capital requirements set by the Depository Trust Company (DTC) in the US.
What does this mean for me?
You can only sell out your existing holdings in these stocks. Any outstanding buy orders on these two symbols made after Monday’s (1 February) close will automatically be cancelled prior to market open on February 2 2021.
None of our other stocks are affected at this time and are available to trade as normal.
For customers with no holdings in these 2 stocks, neither GME, nor AMC will appear when searched. This is a standard practice when a position moves to sell only, as we don't want to show you stocks you’re not able to buy at that time. As soon as they become available to buy again, you’ll be able to see them in the app.
Why is this happening?
When a stock is traded, it takes two days for the proceeds to go from the broker to the clearing house. This is known as T+2 settlement. Within this time, the clearing house requires the broker to front cash or capital guarantees to ensure funds are available through the settlement process.
The required amount of capital is usually around 10-15% of the value of a security’s holdings on broker’s books. However, this percentage can vary based on stock volatility. In the case of GME and AMC, the DTC has enforced an increase of capital requirements by 250% upon DriveWealth’s clearing partners.
This increase means that DriveWealth is now obligated to restrict trading in GME and AMC, as each stock has its own capital requirement rather than a broker wide requirement.
When will they be available again to buy?
This is not a decision Revolut has made, simply one that we are obligated to carry out. We are monitoring the situation very closely and will update you when our partner, DriveWealth, re-enables Buys for GME and AMC. We apologise for any inconvenience caused.
Team Revolut
Read the why section above again and think about it.
In the case of GME and AMC, the DTC has enforced an increase of capital requirements by 250% upon DriveWealth’s clearing partners.
In other words, the trades were practically blocked! NOt forgiven, just blocked by a ridiculously high requirement.
I do hope there will be similar battles and wins in the near future. Yet, the final victory of the crypto-powered trustless financial system over traditional banking mafia is still far away.
Disclaimer
I am a happy Revolut user and can only recommend their services. That's why the links to Revolut are referral links. Join their services and enjoy a bit of financial freedom :)
Better and better
