Robinhood issues warning to raise cash buffers on widely-held stocks - Business Insider

Robinhood warns day traders to raise their cash buffers on 'widely-held stocks' hours before market open

10/16/2020 11:34:00 AM

Robinhood warns day traders to raise their cash buffers on 'widely-held stocks' hours before market open

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Steve Jennings/Getty Images for TechCrunchTrading platform Robinhood warned day traders on Thursday night to raise their cash buffers on "several widely-held stocks" hours before market open, or they could face an account deficit.The trading platform said it would increase the minimum amount required to be held in user accounts from October 16 onwards to "help protect" customers from increased election volatility.

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"If you hold any of the affected stocks on margin, your buying power may decrease or your account may be in a deficit after these changes go into effect," Robinhood said."If you do not resolve the margin call, we may need to sell off some or all of your stock to cover the call," it said.

Visit Business Insider's homepage for more stories.Retail trading platform Robinhood warned users late on Thursday to raise their cash reserves on "several widely-held stocks," hours before market open.The company, which has spearheaded commission-free stock and ETF trading, said it would increase the margin maintenance requirements for those stocks affected by election volatility. It maintains the move would help protect customers from increased election volatility.

Packy McCormick, a day trader,at 9.42 pm ET on Thursday.Other users blasted the move, withoneeven saying "I'm not sure how this could be legal."Investing on margins means that traders can borrow money as loans from Robinhood to buy stocks and options, making it possible to boost investment gains. Margin maintenance, meanwhile, is the minimum amount required to be held in the account to avoid stumbling blocks with Robinhood.

"If you hold any of the affected stocks on margin, your buying power may decrease or your account may be in a deficit after these changes go into effect," the warning read. Read more: Business Insider »

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