Charles Schwab, TD Ameritrade Haven't Halted Any Stock Trading This Week

By Chris Wack

Charles Schwab Corp. said Friday that neither Charles Schwab & Co. nor TD Ameritrade halted buying or selling any stocks this week.

The financial company said neither firm restricted buying or selling basic options, though both firms did adjust margin requirements on select stocks to ensure clients had sufficient assets to pay for stock purchases. Both firms also restricted certain advanced options strategies, it said.

In recent days, certain stocks, including GameStop Corp. and AMC Entertainment Holdings Inc., have become part of what is being called a "short-squeeze," with volumes jumping and prices fluctuating wildly.

Schwab said both firms put in place some restrictions on certain types of options transactions to help mitigate risk. For example, they aren't allowing clients to sell naked call options in order to mitigate an unlimited risk situation. These decisions are based on risk and volatility and are made on an individual security basis.

Both firms, as normal course of business, review and alter margin requirements in highly volatile securities. As margin requirements increase, clients are required to hold more equity in their accounts to make trades in these securities.

For GameStop, for example, both firms changed the requirement to 100%, thereby removing margin from the security. This process began Jan. 13, and since that time, clients have been restricted from using GameStop as collateral for a margin loan; before Jan. 13 clients could do so in a limited way.

Write to Chris Wack at [e-mail]

(END) Dow Jones Newswires

January 29, 2021 11:13 ET (16:13 GMT)

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