Thread by @BarbarianCap

Reading the House report on the $GME saga (via @MarcRuby's Substack)

financialservices.house.gov/uploadedfiles/…

this is great... the Head of Data Science (!) was in charge of collateral, using Excel, and did not know about additional undercapitalized broker requirements

of course, you-know-who is also there...

big debate on how to limit positions/trading; RH was 10% of trading in some names

sr ppl did not even know about the collateral details

crazy stats here
9x/40x more trading than Etrade/Schwab (yeah, i know, not directly comparable)
Virtu got more Hood volume than the rest of their 240 BDs combined

the PFOF calc was very different for Hood, and created 60x the revenue during the high volatility period

did not know this: Rh only had access to market makers, was not an exchange member at all

Citadel had no glitches unlike others and managed to renegotate down the PFOF due in the meme stocks

margin call: $3 bn in less than 5 hrs

Instant classic: 6 am text "hypothetically, what happens if a firm can't meet their morning margin?"

R H had to turn off automatic account approvals, and delayed 730,000 applications in queue ... insane numbers

Many people were wondering why the Chief Legal Officer at R H was paid so much... now we know: the guy made THE one call that mattered

sausage-making at the DTCC... tho that probably prevented more serious contagion

it all gets negotiated down considerably... also others were in similar situations ... def systemic

almost Lehman/MF Global situation

moral hazard / TBTF irl

never fails... if you have to say you have no liquidity problems, you have liquidity problems

diff tone in internal comms

they had to obvs, not a bad thing

they did a very good job raising funds, $3+ bn in 3 days... the US capital markets are just amazing

side-by-side restrictions...
$IBKR was the fastest and widest... no surprises there, @IBKR is very strict

did not realize Apex was actually that big

$IBKR started the restrictions on options a day early... thinking being born in a hospital basement during a Soviet bombing raid plays a role...

six companies faced $9.7 bn in margin calls

apparently not unusual to wave the surcharges, 3 firms = 75% of the cases

Ok, done. The rest of the PDF is recommendations on making sure this does not happen again (Narrator voice: it probably will)

here's the WSJ catching up on this today
wsj.com/articles/emplo…?

Ha #KenGriffinLied is one of my top trends, w PDF screenshots as "proof".
No, these are two separate issues.
(1) Citadel capping its PFOF bill (vs the contracted formula) bc of the volatility
(2) RH and others restricting buying (their right) bc of the DTCC capital calls

here is a thread from the FT on the report + statements they got from the players

https://twitter.com/staffordphilip/status/1540994632057856000