By Gillian Friedman and Tara Siegel Bernard
Retail stockbrokers placed restrictions on Wednesday on trading of GameStop, AMC Entertainment Holdings and other securities as the companies have become the center of a frenzy that has driven triple-digit spikes in their stock prices in recent days.
TD Ameritrade said it placed restrictions on certain types of trading activity on the companies “in the interest of mitigating risk for our company and clients.”
“We made these decisions out of an abundance of caution amid unprecedented market conditions and other factors,” said Alyson Nikulicz, a spokeswoman for TD Ameritrade, which is part of Charles Schwab.
She said the restrictions vary, depending on the security, but can include limiting certain types of transactions, including short sales — when investors bet on a stock’s decline by selling shares they don’t actually own.
Charles Schwab said shares of GameStop could no longer be traded on margin, meaning trades cannot be placed with money borrowed from the company. And Robinhood, the trading app that has made it easier for inexperienced traders to enter the market, said it would require 100 percent margin for trades of GameStop and AMC, meaning traders must have enough in their portfolios to cover their purchases.
Charles Schwab also has “put restrictions in place on certain transactions” including for GameStop, AMC and the clothing retailer Express, said Michael Cianfrocca, a spokesman for the company.
“It is not uncommon for us to place restrictions on some transactions in certain securities in the interest of helping mitigate risk for our clients,” he said.
William F. Galvin, the Massachusetts secretary of the commonwealth, applauded TD Ameritrade’s decision to restrict trading and said he believed the New York Stock Exchange should go even further and pause trading on GameStop for 30 days.
“It is very clear to anyone looking at the numbers that the whole marketplace is being manipulated here,” he said.
Senator Elizabeth Warren, Democrat of Massachusetts, called on the Securities and Exchange Commission to more tightly regulate the stock market.
“For years, the same hedge funds, private equity firms and wealthy investors dismayed by the GameStop trades have treated the stock market like their own personal casino while everyone else pays the price,” she said in a statement. “It’s long past time for the S.E.C. and other financial regulators to wake up and do their jobs.”
The S.E.C. said it was “actively monitoring the ongoing market volatility” and “working with our fellow regulators to assess the situation and review the activities of regulated entities, financial intermediaries, and other market participants.” Reddit, where a forum of renegade traders has pumped up the trades, said it hadn’t heard from regulators.
Washington officials demurred when asked about the frenzy, with the White House press secretary saying that Treasury Secretary Janet Yellen and others “are monitoring the situation,” and Jerome H. Powell, the chairman of the Federal Reserve saying, “I don’t want to comment on a particular company or day’s market activity or things like that.”
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