Vlad Tenev, Robinhood’s CEO, very a lot occupied the recent seat in right now’s listening to earlier than the Home Monetary Providers Committee ove
Vlad Tenev, Robinhood’s CEO, very a lot occupied the recent seat in right now’s listening to earlier than the Home Monetary Providers Committee over January’s market volatility.
Not one of the representatives appeared significantly focused on placing the screws to Reddit CEO Steve Huffman, and plenty of appeared to offer Keith Gill the identical props the remainder of us did.
These aren’t the market manipulators you’re in search of
Gill, in all equity, was probably the most likeable character concerned, introducing his remarks by saying “Just a few issues I’m not: I’m not a cat and I’m not an accredited investor.” Gill, who actually began this chain of occasions by posting about his funding into GameStop in June 2019, even doubled down on his opinion that GME stays a great purchase right now, at present costs. That is even though wild GME buying and selling has attracted felony investigation.
That lack of scrutiny in direction of Gill and Huffman does a lot to quell widespread concern that the occasions surrounding explosive buying and selling in GameStop (GME) shares on the finish of January would kick off probes into social media platforms’ position in potential market manipulation.
That is even because the Home Antitrust Subcommittee introduced right now extra hearings to scrutinize the largest gamers in social media. Reddit, for now, appears to have flown underneath the radar.
Congressman Warren Davidson, who sits on the committee, famous this uncommon space of consensus, telling Cointelegraph: “I used to be hopeful proper out of the gate as a result of early on within the information cycle AOC was sticking up for the Reddit customers, saying these individuals ought to have a proper to commerce. After which Ted Cruz, on the opposite finish of the political spectrum mentioned, ‘properly, we agree.’”
Tenev’s enterprise mannequin
Although broadly, Republicans had been extra lenient than Democrats in addressing Robinhood’s exercise, and particularly the agency’s controversial shut-off of shopping for however not promoting of GME and different high-volatility shares, everyone needed solutions from Tenev.
The character of Robinhood’s income mannequin, which is predicated on the sale of order circulate, whereas promoting itself as commission-free, fell underneath mass scrutiny, as did it’s dependence on a $three billion injection of capital to fulfill collateral necessities.
“I consider a vulnerability was clearly uncovered in your small business mannequin,” mentioned Congressman Anthony Gonzales whereas questioning Tenev. “We simply can’t stay in a world the place my constituents can have their shares liquidated if you happen to can’t make a capital name.”
Many known as out Robinhood’s claims to be busy democratizing finance. Tenev constantly pushed the determine of $35 billion as Robinhood customers’ whole positive factors, which Rep. Jim Himes mentioned “you and anyone else schooled in finance know is meaningless with no rate-of-return.”
However whereas right now’s listening to revealed a whole lot of hostility in direction of Tenev, it wasn’t all that instructional.
Regardless of Chairwoman Maxine Waters’ admonition that “This isn’t political theater in any respect,” there didn’t appear to be any concerted sense of options to the epic buying and selling that fueled GameStop’s (GME) meteoric rise on the finish of January.
Actual-time answer?
Some proposals, together with from Tenev himself, in addition to Davidson, had been that the scenario wouldn’t have developed in any respect if the U.S. had buying and selling that settled the day of, somewhat than two days later — termed T-Zero somewhat than T-2. Tenev famous “The prevailing 2-day interval to settle trades exposes traders and the system to danger.”
Kenneth Griffin, CEO of Citadel, which he described as “the biggest market maker on the planet,” disputed the probability of a real-time system for securities buying and selling within the subsequent a number of years, saying: “The difficulty is every little thing has to work completely.” Actual-time buying and selling, he mentioned, “requires that each little bit of the workflow is completely synchronized throughout the events.” Davidson disagreed, saying “Clearly in your small business the know-how exists for buying and selling corporations which might be engaged in high-frequency buying and selling.”
Davidson famous the potential position of blockchain. The potential of safety tokens to resolve points with intermediaries and brokers has been one of many long-promised advantages of blockchain, although that’s altering.
In the present day’s listening to was just the start, Chairwoman Waters affirmed. She mentioned the committee aimed to carry two extra with totally different witnesses.