How Can Robinhood Restrict Trading on Some Stocks?

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Robinhood users were up in arms recently when the company made the unpopular decision to restrict trading on several stocks, including GameStop (NYSE: GME), AMC Entertainment Holdings (NYSE: AMC), Express (NYSE: EXPR), Naked Brand Group (NASDAQ: NAKD), and Nokia (NYSE: NOK). The move came as the result of rising capital requirements from the Depository Trust & Clearing Corporation, which provides clearing and settlement services for stock trades.

On this clip from Motley Fool Live recorded on Jan. 28, “The Wrap” host Jason Hall and contributors Danny Vena and Dan Caplinger explained how Robinhood is allowed to make such a move.

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