I've worked in "FinTech DevOps" for the past 10 years and this reminds me of a story from a past job:<p>We hired the Global Head of Clearing [0] from a big bank and on their first day they were giving a presentation on their background and how financial clearing works.<p>Someone asked "What is your nightmare scenario?"<p>The response:<p><i>We have a large overnight position in a security. Our Prime Broker (PB) [1] comes back and says "We disagree with you on the position so you can't trade." Even if it turns out that the PB is wrong, by the time it all gets sorted out, the market has moved so much in that security that it bankrupts us. I've seen it happen to other firms and it's not pretty.</i><p>I also started at Knight right after their big outage. [2] People like to talk about the big tech outages sinking financial firms but it can just as easily be plain old issues with bookkeeping that can blow up a firm.<p>0 - <a href="https://www.investopedia.com/terms/c/clearing.asp" rel="nofollow">https://www.investopedia.com/terms/c/clearing.asp</a><p>1 - <a href="https://www.investopedia.com/articles/professionals/110415/role-prime-broker.asp" rel="nofollow">https://www.investopedia.com/articles/professionals/110415/r...</a><p>2 - <a href="https://www.thestreet.com/investing/stocks/knight-capital-shuts-down-trading-on-electrical-outage-11752932" rel="nofollow">https://www.thestreet.com/investing/stocks/knight-capital-sh...</a>
“We determined it was prudent to draw on our credit line during the week of Feb. 24 in light of market volatility. That capital was returned in full last week.”<p>Headline should read "Robinhood used credit that was available to them and paid it back"<p>But that wouldn't generate the desired panic or clicks now would it
As a small investor (investing around few thousand USD), how do I know which app to trust?
There is Robinhood and Stash for ETFs and Stocks and then there are robot-wealth mangers like WealthFront etc.<p>Should I always stick to big firms like Vanguard or Fidelity?
Thing I don't like about firms like Vanguard and Fidelity is that you cannot buy fraction of a unit which Robinhood/Stash allow you to do.<p>Any advice?
I hope they aren't insolvent yet, there's a 3-6 business day waiting period for transferring your positions/balances to a different broker with ACATS.<p>Does anyone know what happens to any open positions in the event that they do become non-operational?
It's almost always a prudent decision for a company to draw on loan facilities if they think things are going south. Draw while you still can and before you trip a covenant.
Let me reword some things in the article:<p>> and is now backed by venture capital firms including Index Ventures, Andreessen Horowitz and Sequoia<p>So these big players (aka "Smart Money") have granular access to everyone's personal & financial details, have access to trading information, are gaining deep knowledge on how Retail (aka "dumb money") operate/trade, their patterns, per age/gender/region/etc. That information is priceless, and then this happens: Sardine Feeding Frenzy: Whale, Shark, Dolphin and Sea Lions | The Hunt | BBC Earth <a href="https://www.youtube.com/watch?v=6zOarcL1BSc" rel="nofollow">https://www.youtube.com/watch?v=6zOarcL1BSc</a>
> Robinhood said last week that a confluence of factors -- record account sign-ups along with highly volatile and historic market conditions -- led to unprecedented stress on the firm’s infrastructure.<p>> That heavy load caused the so-called Domain Name System, or DNS, to fail.<p>Not a developer. Is it not customary just to hard-code IP addresses instead of domain names when the app is communicating with your own servers? I would assume that would make every interaction faster and is something that would be done anyway.