Reddit Users Has Found a New Tactic in the War Against Wall Street: Cutting Brokers Out Altogether

Oct 19, 2021

Reddit Users Has Found a New Tactic in the War Against Wall Street

A long-running trend among individual investors came to a climax on Thursday, with numerous meme stocks ending the day burning.

Since being booted out of January's short squeeze by online brokers seeking to avoid margin calls, retail investors have been hunting for a solution to their multi-front attack on short selling hedge funds, and they appear to have found it after months of research.

Completely eliminating the brokers

An increasing number of retail investors have abandoned their pitchforks, torches, and TD Ameritrade accounts in favor of direct registration platforms like Computershare, which have seen a rise in revenue from the meme community.

Users on Reddit filled message boards with screenshots purporting to show that they had transferred their trading accounts to transfer agents, which let them directly own shares in a firm rather than via the more common 'street' ownership. A broker frequently retains an investor's shares on its books and keeps track of your ownership of the asset without the broker or the individual ever physically holding the shares.

Of course, indirect ownership has its benefits.

However, the trend toward direct registration—in some ways, the equivalent of a Gen Xer's late-teen child discovering their Sony DiscMan hidden in an old briefcase and deciding that this was the pinnacle of music technology—began just a few weeks ago, when self-described 'Apes' realized that using zero-commission trading apps didn't mean they were buying stock in a company, but rather paying a broker to hold their stock via a "street" account.

"We've witnessed a big rise in direct registration transactions in several U.S.-listed 'meme-stocks' in the last few weeks," Paul Conn, president of Computershare's Global Capital Markets, told MarketWatch's MemeMoney.

"Retail investors have requested their broker or bank to move their interests out of the "street name" system and into the company's share register, which Computershare manages as agent for the relevant firm."

Computershare refuses to offer specific figures on the magnitude of the inflows it saw. If photos of what they describe as freshly active accounts uploaded to Reddit are any indication of interest, the Abbotsford, Australia transfer firm is seeing a constant stream of new business.

"There are a lot of benefits to direct registration, including the opportunity to receive dividends and other business communications directly from the corporation," says Conn.

"Registered investors also receive their proxy and have the opportunity to attend a company's shareholder meeting, ask questions, and vote in person." "Another benefit is the opportunity to instantly transfer ownership," he noted.

Direct registration in meme stocks, on the other hand, has another significant benefit for Reddit's retail Apes: it prevents brokers, short sellers, and market makers from creating a situation in which the number of shares sold short in any given business exceeds the total number of shares outstanding. Naked shorting, in which investors profit from stock bets without actually owning the stock, is illegal on Wall Street, but many Redditors believe it is alive and well, thanks in part to indirect ownership. Short bets are inherently risky since a wrongway gamble might result in a never-ending loss.

"When the music stops, there aren't enough shares to go around," said Susanne Trimbath, CEO of STP Advisory Services and an economist who has helped educate ordinary investors on market structure.

"These inexperienced investors are attempting to stop the music."

The music was still playing on Thursday, and it provided a good melody for some meme stocks.

"These inexperienced investors are attempting to stop the music."

The music was still playing on Thursday, and it provided a good melody for some meme stocks.

BlackBerry, Clover Health, and Palantir all ended the day higher, as did AMC (which appeared to finally profit from the #AMCSqueeze trending on Twitter).

"This buying spree is among the brokers," Trimbath wondered. "At this point, it's easier to come up with money than it is to come up with shares."

Many retail investors agreed, and they used memes to draw attention to their disruption.

Despite a strong start, GameStop shares fell 0.02 percent on Thursday.

It is important to note that direct registration is not a panacea for all market structure issues.

Importantly, although direct registration may put more pressure on short sellers, it also puts Apes at risk of large losses if the stock drops sharply.

Subscribe Our Newsletter

‘Stagflation’ Is Coming. What You Need To Know.
‘Stagflation’ Is Coming. What You Need To Know.

Given this background, it's understandable that investors and economists are concerned about the worst-of-both-worlds situation of high prices and declining growth. It's the economic call of the day, which shouldn't come as a surprise.

Banks and Finance
Stock Market News Live Updates: S&P Pulls Back From Record, Nasdaq Sheds 1.4%
Stock Market News Live Updates: S&P Pulls Back From Record, Nasdaq Sheds 1.4%

Stocks were down on Monday as investors expected the Federal Reserve's fiscal policy pronouncement later this week. The S&P 500 fell below last week's record high.

Stocks
Get the ultimate solution: B2BinPay Get the ultimate solution: B2BinPay
Sponsored
Constantine

Triple Net Lease: Meaning, Benefits, and Strategies Explained
In commercial real estate, lease terms can differ quite a bit. One interesting type is the triple net lease, or NNN. It’s a setup where tenants handle more of the property responsibilities. This gives landlords a more hands-off investment. So, what is an NNN lease, and why do investors, big chains, and developers often prefer […]

discover
Where to Exchange Currency Without a High Fee

Alexander

Where to Exchange Currency Without Paying a High Fee — Planning Your Travel Beforehand

When planning an overseas trip, one aspect that often gets overlooked is currency exchange. Many travelers find themselves in a difficult situation...

Forex Business
Contact us bg

Contact Us

Contact the Liquidity Provider
for any questions and advertising inquiries

    Please fill out this contact form to get in touch with us

    / 3000

    By clicking “Get in touch” button, you agree to the privacy policy

    Successful!
    Thank you for your request.
    We will contact you shortly.
    Close

    Alexander

    Crypto Nodes That Pay: Your 2025 Guide to Top Passive Income Opportunities in Crypto

    crypto nodes that pay

    Alex

    Pi Network: Scam or Groundbreaking Crypto? The Full Analysis

    Pi Network Explained

    Constantine

    Triple Net Lease: Meaning, Benefits, and Strategies Explained

    Triple Net Lease

    Constantine

    Hanging Man Pattern: How to Identify and Trade It Effectively

    Hanging Man Pattern

    Alex

    5 Infinite Banking Mistakes That Could Cost You Thousands

    Infinite Banking Mistakes to Avoid

    Aleksander

    Solana Firedancer: Solving Solana’s Biggest Problems with a New Engine

    Solana Firedancer explained

    Alexander

    What Is an Interest Coverage Ratio? How to Use This Financial Metric to Evaluate Company Health

    Interest Coverage Ratio Explained

    Hazem

    After-Hours Trading: Can You Trade After Financial Markets Close?

    After-Hours Trading Explained

    Alexander

    How to Scale a Crypto Exchange Business and Stay Competitive

    how to scale crypto exchange business

    Constantine

    Crypto CrypticStreet Review: The Future of DeFi and Secure Crypto Trading

    Crypto CrypticStreet Review: The Future of DeFi and Secure Crypto Trading

    Alexander

    Bitcoin Power Law Explained: How It Shapes BTC’s Long-Term Growth

    Bitcoin Power Law Explained: How It Shapes BTC’s Long-Term Growth

    Hazem

    Megaphone Pattern​: What Is It? How to Use It In Trading

    Megaphone Pattern​: How to Read & Trade with It

    Constantine

    Top 5 Liquidity Bridge Providers in DeFi

    Top 5 Liquidity Bridge Providers in DeFi

    Hazem

    Max Funded IUL Explained: Is It a Legitimate Financial Strategy?

    Understanding Max Funded IUL

    Alexander

    Tax Refund Timeline: When Will You Get Your Tax Return?

    how long does it take for tax refund

    Constantine

    Crypto Liquidity — What is it, and How to Measure It?

    What is Crypto Liquidity and How to Measure It?

    Constantine

    AI in Finance: A Game-Changing Trend Shaping the Industry

    AI in Finance

    Hazem

    5 Ways to Make Money with ChatGPT and Build Your Wealth

    Make Money with ChatGPT

    Constantine

    Top AI Companies to Invest in April 2025

    Top AI Companies to Invest in March 2025

    DeepSeek vs ChatGPT: Which AI Technology is Better For You?

    DeepSeek vs ChatGPT: Feature-by-Feature AI Tool Comparison

    Constantine

    Top Solana Meme Coins in 2025: Best Presales and Where to Buy

    Solana Meme Coins 2025

    Alexander

    How Renewable Energy Stocks Can Supercharge Your Portfolio

    How Renewable Energy Stocks Supercharge Your Portfolio

    SEC Crypto Regulations: What Financial Advisors Need to Know

    SEC Crypto Regulations: Insights for Financial Advisors

    Hazem

    The Cup and Handle Pattern – How Trade Using This Bullish Indicator?

    Cup and Handle Pattern – How to Predict Price Breakouts?
    liquidity-provider-logo
    • News
      • Stock Market Forecast
      • Stocks
      • Banks and Finance
      • Companies
      • Crypto
      • Forex
      • AI
      • Technology
      • DeFi
      • NFT
    • Articles
      • Crypto Payments
      • Trading
      • Crypto Exchange Business
      • Forex Business
      • Fintech
      • Liquidity
      • FinTech Awards
      • Blockchain
      • Investing
      • NFT
      • DeFi
    • More
      • Videos
      • Liquidity Providers List
      • Crypto Payment Providers
      • White Label Brokerage Platforms
      • Broker CRM Platforms
    [email protected]

    © 2024 Liquidity Provider. All Rights Reserved

    Privacy Policy Cookie Policy
    This site is registered on wpml.org as a development site. Switch to a production site key to remove this banner.