Thread by @compound248

Yup:

“Many cus­tomers aren’t aware of the com­pli­cated ma­chinery be­hind each trade... And reg­u­la­tors and in­dus­try watch­dogs de­cide things like how much cap­i­tal and col­lateral brokerages have to post.”

wsj.com/articles/robin…

“Be­hind the scenes, Robin­hood and other bro­kers were deal­ing with a jam in the ma­chine that moves shares from sell­ers to buy­ers.”

“Be­cause of a lag be­tween when in­vestors book new po­si­tions in a stock and when their cash is ac­tu­ally ex­changed for se­cu­ri­ties, bro­ker­ages ...have to main­tain de­posit ac­counts at the clear­ing firms that help fi­nal­ize trades.”

“The De­pos­i­tory Trust & Clear­ing Corp., which op­er­ates the main clear­ing­house for U.S. stock trades, re­quires bro­ker­ages to post more of their own money in riskier times to in­sure against losses.”

“In­dus­try­wide, col­lat­eral re­quire-ments rose to $33.5 bil­lion from $26 bil­lion Thurs­day, DTCC said, an in­crease of nearly 30%. DTCC, which is owned by Wall Street banks and other firms that use its ser­vices, clears more than $1 tril­lion in stock trades daily.”

My primer here, for those interested:

https://twitter.com/compound248/status/1355305908423839748

Plumbing, plumbing, plumbing 🪠

@INVESTMENTSHULK
@RaoulGMI
@AitkenAdvisors