Interactive Brokers, based in Greenwich, is lifting trading restrictions on GameStop

GREENWICH – Interactive Brokers Group announced on Friday that it was lifting the controversial trade restrictions it announced the day before in response to the hype surrounding companies like video game retailer GameStop.

« All previously announced restrictions on options trading have been lifted, » Interactive Brokers said in a tweet sent from the company’s Twitter account at around 5:45 pm. The tweet gave no explanation for the decision.

The reversal came after Greenwich-based Interactive announced on Thursday that it would only liquidate options – an indication of the sale – for options from GameStop, cinema giant AMC Entertainment, software company BlackBerry, fashion retailer Express and consumer electronics specialist Koss to allow. due to the exceptional volatility in the markets. “Options are contracts that give buyers the right to buy or sell shares at certain prices on certain dates.

Many clients and elected officials were outraged by Interactive Brokers’ restriction on options trading, which came with similar restrictions imposed by other major brokers such as Robinhood. Critics said the new rules unfairly restrict retail investors from trading in the companies in demand, while benefiting large investment firms who cut their stocks in anticipation of their prices falling.

A customer filed a class action lawsuit against Interactive Brokers and several other brokers in the US District Court in Colorado Thursday for manipulating the market with the new restrictions.

After the brokers ‘new rules were announced, the affected companies’ share prices fell. GameStop shares fell 44 percent to around $ 194 on Thursday.

“The defendants created a one-way buy-sell situation in which private investors who had already bought the above securities and others could (only) sell / liquidate their holdings in order to remove the buying liquidity from these stocks and to counteract selling pressure Allows the purchase of the equity, ”says the complaint. « The end result was that all of these stocks, as well as the plaintiffs and other class members who held them, suffered massive losses on their stocks. »

Interactive Brokers declined to comment on the lawsuit.

While Interactive Brokers’ most recent announcement came after the market closed on Friday, GameStop and AMC had risen again following Robinhood’s earlier announcement to resume limited trading in previously restricted securities.

GameStop ended Friday at $ 325, up 68 percent from Thursday. AMC ended the day at about $ 13, a jump of 54 percent.

The soaring stocks in these companies have been fueled by discussion on social media – especially among Reddit users, who advocated buying these stocks to fight short sellers.

But many customers were still upset about the effects of the short-lived restrictions on Friday night.

« Well done, but too late, » tweeted one user, @epaveseDC. « Granted, you’re not Robinhood, but trust goes both ways and you’ve hurt ours. I want us to be friends again, but it takes more than words. »

During an interview on Thursday over CNBC’s « Closing Bell, » Interactive Brokers founder and chairman Thomas Peterffy defended the regulations as a necessary safeguard for clients, his company and the clearing houses they work with.

« The broker stands between these customers and the clearing house, » said Peterffy. “So if some option holders are making money, the clearing house has to give us the money to give to our customers, while other option holders, sellers or buyers on their own side lose money, we have to collect money from them and there is the clearing house. If our customers cannot pay their losses, we have to raise our own money. « 

Interactive also announced on Thursday that long customer positions would require a margin of 100 percent and short equity positions would require a margin of 300 percent « until further notice ». The margin requirements relate to criteria such as customer deposits and equity.

Interactive Brokers is the # 862 company on last year’s Fortune 500 list and has had a significant customer base over the past several months. At the end of last year, 1 million customer accounts were exceeded, an increase of 50 percent over the previous year.

Interactive Brokers’ own shares closed at around $ 61 on Friday, down 4 percent from Thursday.

pschott@stamfordadvocate.com; Twitter; @ Paulschott

pschott@stamfordadvocate.com; Twitter; @ Paulschott

Interactive Brokers, based in Greenwich, is lifting trading restrictions on GameStop
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