this looks like a move by an outfit called robin hood which is supposed to be taken from
the rich and giving to the poor and doing exactly the opposite nope yeah that's it
done how's it going guys it's your friendly neighborhood nerd man data scientist andrew as
well as meatball the golden core gel graduate and today we are going to tell you exactly the updates
on robin hood the lying ceo as well as where gamestop is going and what you need to know as
always i'm gonna include exactly what gamestop is doing fluctuating its little thing down in
this corner right down there and you can follow along and stay until the end of the video then
watch real time it's fluctuating up and down the amount of positive energy coming from the comments
section is electric almost every one of you is giving the same amount of positive energy except
this person who says that this kind of insight is not really what a data scientist perspective can
provide well today i promise you one thing if you smash that like button if you subscribe to
the channel i promise you that i'm gonna make it boil down so that then joe schmo the normal person
can understand and also provide a technical statistical there's even confidence intervals
about exactly what's happening with robin hood and gamestop and why robin hood is continuing
to restrict gamestop buys in my first video i explain exactly what a short is and what's
happening with gamestop and overshorted asset in the second video i explained why the dip was
happening and what the hedge funds institutions are doing to interact with that dip and three i
explained exactly what happens if you decide to sell your stocks the prisoner's dilemma of the
gamestop world now today i'm going to talk about robin hood and how it ended up being the largest
players in favor of the hedge funds you probably have heard that robin hood is one of many brokers
that decided to restrict the buying of gamestop and therefore created a market where people could
only sell people could not buy any more stock in which case hey guess what supply and demand does
guess what buying and selling does to the price of a stock it plummets it the excuse that robin
hood gave was that it was running out of liquidity and if you don't know exactly what that means that
means that every time you decide to buy a stock robin hood has to put aside a certain amount of
money just as collateral so that you can get as close to real time as possible the price of that
stock however the volatility of the stock price combined with how many people were trying to buy
made it so that robin hood could not afford to back up the volume of buys with the cash on hand
that's liquidity however if this is true the ceo of robinhood went on cnbc last week and lied just
straight up lied and what did he lie about well at the very least we can verify that robin hood has
cash on hand to put out a super bowl ad amid the gamestop saga so they have money for a super bowl
ad but not enough to hold down the four okay okay sometimes you get to get your priorities straight
however what does this interview say about robin hood and its actual financial liquidity
but it it sounds to me though that you're suggesting that there was a liquidity problem
inside the firm and my question about that then raises all sorts of new questions about whether
there's a systemic issue uh underneath the system and underneath the company unto itself
no no there was no liquidity problem and to be clear this was done preemptively evo
keanu reeves is the ceo of robin hood and he is making a lie right here he is either
lying about the liquidity of robin hood or he's lying about something else even more sinister
and that's something that i'm going to cover in this document with the statistical section coming
up soon let's get to this timestamp if you want to hear a data scientist perspective right away
i took a second to have lunch so you can see that gme is going up and down wildly
this could be attributed to the fact that jamie just got a brand new cto an ex-amazonian on board
and that means that hey diamond handers bag holders i'm talking to you i'm talking to
me i'm talking to people like me talking people like you gme is mobilizing they're getting ready
and they're not going to leave you behind in the dust moving back to robin hood
the point is that they have lied about one thing or another either having not enough liquidity
or it's not about having it enough liquidity it's about another thing it's about this
it's about that the reason we did it was because uh robinhood is a brokerage firm
lots of financial requirements including sec net capital requirements and clearing house deposits
and they can be substantial in the current environment where there's a lot of volatility
you're suggesting that there was a liquidity problem no no there was no liquidity problem what
skinny adam driver is trying to say is that it's not my problem look away don't look at the big
super bowl ad that we're putting out we don't have enough money actually not having enough money
is not the big deal i think louise rossman figured out exactly how to make this make sense for
example let's say that your landlord comes and asks you where is the rent you know is my rent
ready and you say oh i don't have enough money to pay this month and then you try and figure out
exactly what is happening with his rent situation and then you look in his checkbook and say hey it
turns out you do have enough money and then i'd say to the landlord oh it was never about my money
it was about a completely different issue either way scary keanu reeves has made it clear it's not
about liquidity it's about something else and that is the statement that he is currently sticking
with i promise you some statistics so that's why i want you to point to this article by stu2b50
back on sunday of last week first what happened on that fateful day gamestop stock had massive
volatility and given the cries of buy and hold from wall street bets i'd assume on robin hood
a broker targeted at retail investor it'd be heavily imbalanced towards buy trades however
as volatility increased the dtcc that's the depository trust and clearing corporation
increased the deposit requirements for brokers basically when you submit a trade on a broker
the exchange of money for stock doesn't actually happen until two days later and the firm that
handles that exchange is called a clearing firm before then robin hood just sends records so john
bought two gme for 600. mary sold one gme for 290. if that's all that happened that day then robin
hood would need to provide 310 to the clearing firm and receive one star you see mathematically
back to math class that's a credit risk what if robin hood doesn't have the money on settlement
the clearing firm would be on the hook so the dtcc requires that brokers put up a deposit beforehand
on that day the dtcc massively increased deposit requirements for brokers and as they quote a
spokesman for the dtcc wouldn't specify how much it required from specific firms but said that by
the end of the day industry-wide collateral requirements jumped to 33 billion up from 26
billion so there is that liquidity issue right there oh i don't have what is that difference
seven and a half billion dollars the dtcc said that there are new requirements for how much
collateral you have to put up so therefore robin hood's in the clear right well robin hood legally
could not submit trades on gamestop until they could muster the deposits for gamestop that they
needed so they quickly scrounged up some capital so that they could continue on friday all right
seems like robin hood's in the clear clear ring clip clearing firm you get it robin hood actually
has their own clearing firm robin hood security so for some reason it's still a dtcc member and must
listen to what the sec regulates so why only buys well the deposit requirement is deposit equals the
minimum of the 99 percent two diver plus gaap risk measure or the deposit floor calculations and then
plus market to market whatever that means you can understand as essentially there's two possible
values that this deposit could have and right now it is one or the other the variable to look at is
the very first one the volatility component is designed to capture the market price risk
associated with each member's portfolio at a 99th percentile level of confidence the var charge is
the volatility component applicable to most net unsettled positions and usually comprises the
largest portion of a member's required deposit procedure 15 of the rules currently provides that
the var charge shall be calculated in accordance with a generally accepted portfolio volatility
margin model utilizing assumptions based on reasonable historical data and an appropriate
volatility range as such nscc currently calculates a member's var charge utilizing the var model and
incorporates an ewma volatility estimation so remember when we were talking about john
and mary john buy 600 and mary sells 290 well that's the broker's net unsettled cash positions
so generally speaking that 99 var is 99 of the time the broker's net unsettled will not be higher
than x if you remember confidence intervals hey you wanted the data science stuff so here is the
confidence interval that we wanted to talk about for simplicity's sake usually distributions look
like a normal curve so the y-axis is probability and the x-axis is robin hood's net unsettled
positions so the more positive the more money they'd owe theoretically so he sees that green
bar go up that means that they owe more and more money so if people buy more than sell then it
would shift more to the right this is because if people buy more than sell then they have to put
up more collateral which means that they have a lot more unsettled positions than normal and now
the most important part is that if we stretch out the distribution which is what happens when it's
a super volatile market then the green bar the one that measured how many unsettled positions
robin hood currently has it goes even further to the right so now buys make it worse cells
make it better robinhood could not execute buys because it would increase the deposits they need
which they legally must obligate by so sales on the other hand do not have this problem they would
not push the 95 boundary more to the right so the final decision these brokers halted buys of gme
robin hood weeble both of which you can find links up and down below if you have not transacted yet
you want to get some diamond hands seems like this final article's conclusion is that robin hood is
like a young janky broker they have to have more money but as we've proven as we've seen already
robin hood's ceo counters his own point so what is next well the most important thing that you can do
is remember to like this video subscribe to this channel a ton more personal finance stocks trading
as well as industry insights memes and more meatball the dog you probably say bye bye bye yeah
through all this i really appreciate it if you look down at the links below i have a 66 day guide
to the data science world i also have exactly what you need if you're looking for a shopping
spree use one of the amazon links down below and finally i have to say i appreciate you for
saying to the end let's make sure we have these diamond hands and for now but not for forever
peace
you