Goldman, Others Tighten Rules On Betting Against Retail Traders' Meme Stocks

This post was originally published on this site

New rules could be on the horizon as Wall Street ponders meme stocks, Bloomberg reported.

Wall Street’s leading brokers are exploring new mandates that could change how people “bet against retail traders’ most-popular meme stocks,” per Bloomberg.

Goldman Sachs, Citigroup, Bank of America and Jefferies Financial Group are “among firms that have adjusted their risk controls at prime-brokerage operations,” Bloomberg reported, citing unnamed sources.

According to Bloomberg, banks are being conservative and trying to prevent negative consequences from the steep highs and lows that came with trading GameStop and AMC.

If the new rules are implemented, some hedge funds and institutional investors could face stricter requirements for collateral, and could be “limited from shorting certain stocks,” the sources said, per Bloomberg.

“Until further notice, Jefferies Prime Brokerage will no longer offer custody on naked options,” in GameStop, AMC and MicroVision, the firm said, according to a memo to clients seen by Bloomberg News, the report stated.

The proposed rule changes could have an effect on “retail investors lighting up Reddit message boards with their forays into day trading,” Bloomberg reported.

In early January, WallStreetBets Redditors started buying GameStop stock, pushing the price up from roughly $17 a share to more than $330. Both GameStop and AMC surged in value as meme stocks soared in popularity.

Later that month, experts were split on what would happen next regarding GameStop’s share price. Robinhood’s platform disrupted the stock market, intentionally or not.

——————————

NEW PYMNTS DATA: CRYPTOCURRENCY PAYMENTS STUDY – MAY 2021

About The Study: U.S. consumers see cryptocurrency as more than just a store of value: 46 million plan say they plan to use it to make payments for everything from financial services to groceries. In the Cryptocurrency Payments Report, PYMNTS surveys 8,008 cryptocurrency users and nonusers in the U.S. to examine the ways in which they plan to use crypto to make purchases, what crypto they plan to use — and how merchant acceptance can influence merchant choice and consumer spend.