I'm really ignorant about all this securities trading stuff. Can somebody enlighten me to what this change actually means? Or maybe point to some "beginners guide", after which I'd understand what he is talking about?
T+0 means securities and funds change hands instantaneously (or maybe EOD) rather than on the present two-day lag. That two-day process is managed by a clearinghouse that requires members like Robinhood to put up large amounts of money, which Robinhood doesn't have in spades, for clearing and collateral. He's trying to blame that requirement for Robinhood's most recent miserable failure.
That far I could vaguely guess, but I don't see any connection between these fact.
First off, what do you mean by "Robinhood's most recent miserable failure"? The story as I know it: WSB pumped up GME, somebody (Melvin's Capital) majorly fucked up and lost money, somebody (Blackrock, Citadel, some lucky traders) gained something from the situation, basically, business as usual. Then Robinhood screwed over it's customers, by forbidding them to perform some operations, motives for which remain questionable and may result in a prosecution (because of affiliation with Citadel), but AFAIK that's very theoretical and right now Robinhood didn't really suffer any loss.
None of this really fits the description of "miserable failure" on Robinhood's part, as far as I can tell. So what do you mean? Am I missing some details?
Is he blaming T+2 for forcing him/Robinhood to prevent users to buy stock? How so?
Second, I still don't quite understand what T+2 means. All trades look instantaneous to every particular seller (including all Robinhood clients), right? Also, all trades are recorded by a centralized entity (NYSE), so there also cannot be any disagreement between brokers about how much who owes whom. Actual money/securities movement between brokers is T+2, but in the essence that is just some bureaucratic bullshit, and shouldn't affect broker's clients' (including all Robinhood users) ability to buy stock, right? Also, whatever the current regulations are, Robinhood somehow performed under them until now, so it somehow managed to meet whatever clearinghouse requires of them, right?
So, in the essence, I still don't understand what the fuss is about, and how Tenev could possibly blame T+2 for anything (which, btw, I don't see him explicitly do: he doesn't say that it was because of some clearinghouse requirements he was forced suddenly to shut down free trade of stock on his platform, does he?)
> what do you mean by "Robinhood's most recent miserable failure"?
I mean "failure" in the literal sense. It's not a particularly reliable brokerage.
"FINRA said in a statement that the brokerage failed to make sure clients were getting the most favorable prices possible from October 2016 to November 2017." (19 Dec 2019)
> Is he blaming T+2 for forcing him/Robinhood to prevent users to buy stock? How so?
In a sense, he's blaming T+2 for tying up his firm's money, which his firm uses to make margin loans and put up collateral.
> I still don't quite understand what T+2 means
It means that if I buy stock from you today, I pay you (and you give me the shares) in two days' time. The trade is instantaneous but its settlement (where we actually exchange the goods for the dough) is not. That transaction is carried out through a clearinghouse.
> all trades are recorded by a centralized entity (NYSE)
NYSE is one stock exchange. It doesn't record all the trades. Look up DTC and NSCC.
