Robinhood Alters Margin Call Requirement As Volatility Surges

Robinhood remains wary of the expected surge in market volatility heading into the hotly contested U.S presidential election. The retail trading platform has asked users to raise their cash reserves on several widely held stocks. The app is poised to hike its margin-maintenance requirements on stocks affected by election-related volatility.

Margin Call Requirements

The commission-free stock trading app has risen the ranks to become one of the biggest apps for trading the markets on making it easy for traders to invest in margins. The use of margin has allowed traders to borrow money as loans to buy stock and options, thus boost investment gains.

Faced with increased volatility levels that continue to trigger wild swings, the retail trading app has confirmed it could issue margin calls once users fall short of the minimum. Anyone who fails to resolve their margin call face the risk of some of their stock holdings sold to cover the call.

It is not unusual for stockbrokers to alter margin requirements as market volatility increases. This is in part because most of the traders rack up so many losses than their invested capital can cover. Just like other market providers, Robinhood continuously monitors and adjusts market requirements based on the level of volatility.

Robinhood Hacked

The push to alter margin requirements comes hot on the heels of reports that hackers did gain access to almost 2,000 accounts on the Robinhood platform. The company was forced to send users notification urging them to use the two-factor authentication mode to protect their accounts from unwarranted access.

Amid the security concerns, Robinhood has continued to grow in popularity in pioneering commission-free stock and ETF trading. Its popularity has grown tremendously in the aftermath of the COVID-19 pandemic that saw an influx of people flocking the market to bet on stocks. The app currently plays hosts to more than 13 million users. Conversely, the startup has seen its value surge to highs of $12 billion.

By reading our website you agree to the terms of our disclaimer, which are subject to change at any time. Owners and affiliates are not registered or licensed in any jurisdiction whatsoever to provide financial advice or anything of an advisory nature. Always do your own research and/or consult with an investment professional before investing. Low priced stocks are speculative and carry a high degree of risk, so only invest what you can afford to lose. By using our service you agree not to hold us, our editor’s, owners, or staff liable for any damages, financial or otherwise, that may occur due to any action you may take based on the information contained within our newsletters, website, twitter, Facebook or chat. We do not advise any reader to take any specific action. Our releases are for informational and educational purposes only. Never invest purely based on our articles. Gains mentioned on our website, twitter, Facebook, and on our website may be based on EOD or intraday data. We may be compensated for the production, release, and awareness of this article. We will disclose any and all compensation on the article page. This publication and its owner never hold positions in the securities mentioned in our articles. Our information may contain Forward-Looking Statements, which are not guaranteed to materialize due to a variety of factors. We do not guarantee the timeliness, accuracy, or completeness of the information on our site. The information in our disclaimers is subject to change at any time without notice. We are not held liable or responsible for the information in press releases issued by the companies discussed in these write-ups. Please do your own due diligence