(Reuters) – Cash App’s clearing broker has temporarily halted purchase of AMC Entertainment and Nokia Oyj’s stocks through the mobile payment platform, the unit of Square Inc said in a blog post on Tuesday.
This comes a day after online brokerage Robinhood tapped almost $3.4 billion in emergency funding from investors to boost its strained finances, following a retail trading frenzy in heavily shorted shares of companies such as GameStop Corp.
The massive jump in trading volumes raised deposit limits at Robinhood’s clearinghouse, with its deposit requirements tied to equities rising ten-fold, forcing it to place curbs on some transactions.
Cash App said on Tuesday central clearinghouse DTC increased capital requirements on Axos – the clearing broker used by the app- by more than 250%. (https://bit.ly/3cD9RJ1)
The app allows users to buy and sell both stocks and Bitcoin, while also providing money transfer services.
Clearing brokers are required to provide funds in the form of deposits to support trading, but Axos has not provided the necessary additional capital, restricting buying of shares of AMC and Nokia, the company said.
Cash App said it was monitoring the situation and working to make the stocks available for purchase as soon as possible.
(Reporting by Noor Zainab Hussain in Bengaluru; Editing by Shinjini Ganguli)
