LogFAQs > #950070272

red sox 777 posted...

LOTM, sorry, but you have no idea what you're talking about. It is not a market maker's job to set a price and eat liability if he can't find counterparties at that price. If there is a mismatch of buyers and sellers at a price point then then price has to move! If everyone wants to buy at $300 then the price should go up. There is a price at which there will be more long shares available to sell. A higher price. How much higher, I don't know, possibly very much higher in this case. At that price possibly some people who have made poor financial decisions will be going bankrupt.

What does that mean? They've already taken on too much risk - Robinhood or Apex or someone. They have not protected themselves for this situation which people on WSB have been publicly predicting would happen for months. They have failed as brokers or market makers (not really sure where the failure is). And the SEC or NYSE or someone should be regulating them to make sure they maintain appropriate risk management.

They would be taking on that liability under the hypothetical scenario where they were forced to facilitate all of these trades in some fixed time. But there's an easy way to limit that liability: they just don't buy/sell the volatile stock. I see no reason why they should be forced to do so if the risks are too high for them.

As for protecting themselves, I don't see what you're suggesting they should have done either. Bought up a bunch of GME stock a month ago so that they could have safely facilitated more trades based on this pump and dump maybe taking off?

I agree that the people massively shorting GameStop were dumb (though not because they were likely to be wrong; there just wasn't much upside given the unlikely but massive downside risk).

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Congrats to azuarc, GotD2 Guru champ!