The Robinhood trading app has removed all restrictions on trading GameStop Corp (NYSE:GME) and other stocks.
Previously, amid a tidal wave of retail investor demand sparked by Reddit’s WallStreetBets forum, the commission-free app had halted trading of GameStop and others including AMC Entertainment Holdings Inc (NYSE:AMC), Blackberry Ltd (NYSE:BB), Nokia Oyj (NYSE:NOK) and Bed Bath & Beyond Inc (NASDAQ:BBBY).
In the past couple of weeks, Robinhood partially relaxed its restrictions, but limited investors to purchasing a maximum 500 shares of GameStop, 350 of AMC, 700 shares of Blackberry, 1,000 shares of Nokia Oyj, before increasing these limits this week.
On Thursday, the app operator said all restrictions had been lifted, but rather than provide a boost for the shares, as some investors had hoped, GameStop’s shares plunged 42% to US$53.5 and AMC tumbled 21% to US$7.09.
Robinhood previously said last month's decision to fully halt trading, which led to multiple lawsuits from frustrated investors, was because a clearing house had demanded it provide US$3bn in collateral.
This week Robinhood announced that it has raised US$3.4bn in investment “to invest in record customer growth”.
Rival apps, such as China’s Webull, saw a rush of demand during the trading halt, but these apps were also forced to restrict trading, citing "extreme volatility" of the stocks. Brokers in the UK, including FTSE 250-listed IG Group and free-trading app Trading 212, also imposed restrictions.
Meanwhile, US Treasury Secretary Janet Yellen met fellow financial regulators, including trading and securities regulator the Securities and Exchange Commission (SEC), to discuss the market volatility and the grey areas of potential market manipulation around social media-inspired trading rallies.
“The regulators believe the core infrastructure was resilient during high volatility and heavy trading volume, and agree on the importance of the SEC releasing a timely study of the events,” the US Treasury Department said in a statement.
“Secretary Yellen believes it is imperative to uphold the integrity of these markets and ensure investor protection.”
In compiling its study, the SEC is reportedly looking at thousands of posts on Reddit and other social media platforms for signs of potential fraud.