NorthWest Biotherapeutics Inc (NWBO)

[biosectinvestor]

The regulations are very tight these days so it should not be possible. However, there are so many trades going on right now it may be that even the brokerages, the small ones particularly, may be worrying that their operations simply can’t keep up. It would be less of a problem were the counterparties on the short positions unlikely to go bust. So there might be a few hours or a day’s delay on those sometimes. I don’t know. But in the context of the current crisis, they might also have a hard time procuring the shares to lend themselves and there could be a massive mispricing of the trade. It depends upon the operational capacities of these firms and a firm like Robinhood is outsourcing all of that effectively, I believe, to Citadel.

So it can be quite a dangerous time for those firms operationally and with regard to the risk they may have already structured into trading contracts with firms that otherwise have been viewed as low risk and high value clients.

Though they can manage it by having cash collateral. But everything is moving so fast on an intraday basis, it must be nerve wracking for their risk management personnel.

The positive, in terms of short risk for Robinhood is they probably have zero risk to short hedge funds given that they are a retail operation. But, if things reverse, Robinhood could be on the hook to retail investors and lawsuits.