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Robinhood CEO calls on SEC to revise ‘outdated’ buying and selling guidelines

02/18/2021

Robinhood CEO Vlad Tenev denied that the platform was serving to hedge funds, calling on the SEC to do away with a two-day settlement rule.

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

In his ready remarks, Robinhood CEO appeared to position accountability for the platform’s inventory buying and selling suspensions on the U.S. Securities and Alternate 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 change its buying and selling guidelines to permit clearinghouses to help real-time settlement as an alternative of a two-day settlement interval. “There is no such thing as a purpose why the best monetary system the world has ever seen can’t settle trades in actual time. Doing so would drastically mitigate the danger that such processing poses,” he wrote. Robinhood beforehand launched a weblog submit 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 threat administration causes.”

Tenev additionally denied studies 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 shopping for for GameStop inventory and another shares that had been allegedly pumped via the r/Wallstreetbets Reddit neighborhood. Following commerce restrictions, the neighborhood 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) introduced plans to carry a digital listening to dedicated to the GameStop saga in early February. The listening to is scheduled for 12:00 PM ET and also will characteristic Reddit CEO Steve Huffman, Melvin Capital CEO Gabriel Plotkin and Citadel CEO Kenneth Griffin.