![]() ![]() 13 and said it has placed “restrictions in place on certain transactions in GME and other securities.” “We made these decisions out of an abundance of caution amid unprecedented market conditions and other factors.”Ĭharles Schwab, which bought TD Ameritrade but operates it as an independent retail brokerage, said that it has tightened margin requirements in some of those stocks, including GameStop.Ī Schwab spokeswoman said that the platform changed its margin requirements, limiting how much an investor can borrow, on Jan. SEC Chairman Gary Gensler said during a hearing before the Senate Banking Committee earlier this month that the agency is “pretty close” to issuing a comprehensive report on the incident, which may include recommendations for new regulations.“In the interest of mitigating risk for our company and clients, we have put in place several restrictions on some transactions in $GME, $AMC and other securities,” a spokeswoman for TD Ameritrade told MarketWatch, referring to the ticker symbols of the companies. The SEC has been investigating a number of issues related to the meme-stock phenomenon after some brokers restricted trading in GameStop and other equities because intense retail interest in these stocks triggered massive broker collateral obligations to a central equity clearinghouse. “This case demonstrates the SEC’s ability to quickly investigate and expose complex trading schemes, including those conducted during times of significant market volatility,” said Joseph Sansone chief of the SEC’s Market Abuse unit, in a statement. “After certain broker-dealers closed Gu and Lee’s accounts in early March 2021, Gu was able to continue the scheme through mid-April 2021 by lying to broker-deals about his trading strategy, using accounts in the names of other people, and accessing these accounts through virtual private networks to hide his activity,” according to an SEC press release announcing the charges. ![]() Gu and Lee used these market dynamics to their advantage, correctly surmising that they could earn larger fees than normal by ordering out-of-the-money put options on these and other stocks, the SEC said. ![]() The agency alleges that Gu and Lee were “able to generate illicit profits by using broker-dealer accounts that passes rebates back to their customers to place initial orders on one side of the market, and then using broker dealer accounts on the other side of the market.”ĭuring February through April of this year, the prices of meme stocks that became favorites of retail traders active on social media, including GameStop Make fees are typically smaller than take fees, with market makers pocketing the difference.Īccording to the SEC’s complain, certain brokers will pass make and take fees on to their clients, while others don’t. They pay these fees to ensure that there will be someone on the other side of trade for those placing marketable orders, who in turn pay a “take” fee. Market makers will pay brokers a “make” fee for placing non-marketable limit orders, or orders that would be unprofitable to make at the time of the trade because of the current price of the underlying security. The SEC said in a complaint Monday that investors Suyun Gu and Yong Lee took advantage of the maker-taker model in options markets that market makers use to attract orders and increase market liquidity.
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