“We do not believe this situation will subside until the exchanges and regulators halt or put certain symbols into liquidation only,” Interactive Brokers said in another tweet, noting that it may add or remove other stocks as warranted.
Online brokerages have been under immense pressure in recent days, as individual investors have flocked to the platforms to execute trades to capitalize on this week’s eye-popping gains in the market. GameStop finished up 135% Wednesday to close at a record $347.51, while AMC closed up 301% at $19.90. Both stocks recorded their largest percentage increases on record.
Shares of both companies tumbled Thursday. GameStop was recently trading 24% lower, while AMC plunged 54%.
Some online brokerages already began taking steps this week to ward off risk. Robinhood, Charles Schwab & Co. and TD Ameritrade Holding Corp. increased margin requirements—or the amount that investors can borrow to execute trades—for GameStop and AMC, a move typically done when volatility for a security changes.
Interactive Brokers said Thursday that it had also changed margin requirements. “Long stock positions will require 100% margin and short stock positions will require 300% margin until further notice,” the tweet said.
Retail trading platforms, including Robinhood in particular, have been facing increased scrutiny from regulators. In December, Massachusetts securities regulators filed a complaint against Robinhood, alleging the company aggressively marketed to inexperienced investors and failed to implement controls to protect them.
Robinhood has disputed the allegations. The platform has prided itself on “democratizing” the markets for investors, including for first-time traders. It reiterated that mission in its Thursday blog post.
“We’re proud to have created a platform that has helped everyday people, from all backgrounds, shape their financial futures and invest for the long term,” the post said, adding that it was “committed to helping our customers navigate this uncertainty.”
“We’re determined to provide new and experienced investors with the tools and resources to help them invest responsibly for their long-term financial futures,” Robinhood said.
The trading restrictions drew rebuke online, drawing criticism and commentary from figures including billionaire Mark Cuban and Dave Portnoy, the founder of the popular digital media company Barstool Sports Inc. who also waded into the markets this year. Mr. Portnoy would often stream his trades to his followers on Twitter.
“Either @RobinhoodApp allows free trading like they say they do or they die,” Mr. Portnoy tweeted. “It’s really that simple.”
Robinhood’s Wikipedia page was quickly edited, meanwhile, to reflect the brokerage’s move. “The move was heavily criticised and was viewed as market manipulation and supporting the ‘suits,’” the Wikipedia entry read. It has since been removed.
This week’s sharp rise in stocks like GameStop has exploded beyond a story of, simply, the chance to reap big market gains. It has pitted individual investors—many of whom are trading from their phones, at their homes—against seasoned Wall Street professionals. While trading professionals have lamented their losses and accused individual investors of market manipulation, individuals have doubled down, encouraging their peers not to sell.
Bearish investors who took short positions on GameStop have lost $23.6 billion this year through the close of trading Wednesday, according to financial analytics company S3 Partners, including $14.3 billion on Wednesday.
