Robinhood CEO Vlad Tenev called for real-time settlement of trades in a letter posted on the trading app's website on Tuesday. 

"The existing two-day period to settle trades exposes investors and the industry to unnecessary risk and is ripe for change," he wrote. 

Tenev said the current settlement period was part of the reason Robinhood curbed the buying of certain stocks last week amid a social media-fueled trading frenzy that pushed up the value of GameStop shares to meteoric heights. 

The executive offered a similar explanation to Tesla CEO Elon Musk in a much-watched interview on the social media platform Clubhouse. Musk, who showed support for the Reddit community /WallStreetBets throughout the buying binge, grilled the executive about the restrictions. 

In Tenev's view, what happened is that the clearinghouse deposit requirements skyrocketed as trading activity surged, creating a liquidity issue for the trading platform. 

"The clearinghouse deposit requirements are designed to mitigate risk, but last week’s wild market activity showed that these requirements, coupled with an unnecessarily long settlement cycle, can have unintended consequences that introduce new risks," he wrote. 

The settlement period was previously three days, meaning traders had that long to settle payments until the Securities and Exchange Commission shortened the period to two days back in 2017. 

This likely won't be the end of Robinhood's attempts to reframe the narrative around last week's trade restrictions, which garnered widespread criticism from both lawmakers and internet personalities. Barstool Sports founder Dave Portnoy, for instance, has said he lost $700,000 because of the trading restrictions. 

Tenev is expected to testify before a House committee on February 18 about the incident. 

"Technology is the answer, not the oft-cited impediment," he wrote. "We believe it is important for all relevant stakeholders to convene in the near term to discuss the urgency and necessity of this issue."

Share:
More In Business
Starbucks’ Change Flushes Out a Debate Over Public Restroom Access
Starbucks’ decision to restrict its restrooms to paying customers has flushed out a wider problem: a patchwork of restroom use policies that varies by state and city. Starbucks announced last week a new code of conduct that says people need to make a purchase if they want to hang out or use the restroom. The coffee chain's policy change for bathroom privileges has left Americans confused and divided over who gets to go and when. The American Restroom Association, a public toilet advocacy group, was among the critics. Rules about restroom access in restaurants vary by state, city and county. The National Retail Federation says private businesses have a right to limit restroom use.
Trump Highlights Partnership Investing $500 Billion in AI
President Donald Trump is talking up a joint venture investing up to $500 billion for infrastructure tied to artificial intelligence by a new partnership formed by OpenAI, Oracle and SoftBank. The new entity, Stargate, will start building out data centers and the electricity generation needed for the further development of the fast-evolving AI in Texas, according to the White House. The initial investment is expected to be $100 billion and could reach five times that sum. While Trump has seized on similar announcements to show that his presidency is boosting the economy, there were already expectations of a massive buildout of data centers and electricity plants needed for the development of AI.
Load More