Due to huge market volatility, Robinhood has suspended all 24-hour trades until further notice. The exchange has activated BOATS, or Blue Ocean Alternative Trading Systems, which it uses for 24-hour markets.
JUST IN: Robinhood halts 24 hour trading. pic.twitter.com/3Ba7Mj6lyn
— Watcher.Guru (@WatcherGuru) August 5, 2024
The X community has been highly critical of the decision, with some expressing anger. Members have had mixed reactions, with some stating that the “big guys” withdraw their money, causing a decline and leaving everyone else at a disadvantage when trading is halted. Another user with the handle “@_larry_ton,” tweeted
Some users have expressed frustrations about withdrawal issues, stating phrases like “so the stealing begins,” “You can’t sell, only buy,” and “Robinhood is a joke since Gamestop.”
Meanwhile, another user noted that the downturn that caused this isn’t limited to crypto, highlighting significant declines in major tech stocks: Google is down 11%, Amazon 10%, Microsoft 9%, NVIDIA 11%, and Apple 10%.
What is Robinhood’s BOATS?
BOATS is a risk control system that keeps stocks from trading more than 20% above or below the price set toward the end of extended trading hours. The system mitigates large price movements using price bands based on the 7:30 PM ET market price.
This means individual securities in the 24-hour market don’t trade outside these bands. If the limit price exceeds the bands, the system may reject the order.
Robinhood users can still place orders during extended trading hours or market hours, and the pricing bands don’t impact those.
However, you can’t buy or sell a cryptocurrency or stock trading at $10 at 7:30 PM ET at less than $8 or more than $12 between 8 PM ET and 4 AM ET on the following day. BOATS can reject orders for assets whose limit prices are outside this range.
Why do exchanges halt 24-hour trading in volatile markets?
By suspending trading, exchanges can help prevent panic selling or buying that could exacerbate volatility.
Trading suspensions provide a cooling-off period, giving investors time to make more informed decisions rather than reacting impulsively.
Extreme volatility can lead to order imbalances and technical issues within the trading systems, disrupting the normal flow of transactions.
High volatility can strain exchanges’ technological infrastructure, leading to system failures or delays. Suspensions can prevent these issues and allow exchanges to ensure their systems function correctly.
