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

Oct 19, 2021

https://liquidity-provider.com/app/uploads/2021/10/untitled-design-12.png

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

2 Monster Metaverse Stocks To Buy And Hold For The Next Decade
2 Monster Metaverse Stocks To Buy And Hold For The Next Decade

The term "metaverse" is defined as a real-time virtual reality or mixed reality universe that consists of numerous interconnected, immersive, and interactive three-dimensional setups.

Stocks
Holiday Travel Demand Is Staying Strong. It Looks Immune to Omicron for Now.
Holiday Travel Demand Is Staying Strong. It Looks Immune to Omicron for Now.

By comparison, the busiest day of the Thanksgiving holiday—Nov. 28—reached 85% of 2019 levels. At the time, the Omicron variation was rarely mentioned.

Banks and Finance
Liquidity Provider

How Does the Cryptocurrency Exchange Business Work?
Unlike any other moment in contemporary history, the universal adoption of Bitcoin has been unparalleled. There has been a rapid growth in the number of firms that specialize in bitcoin.

discover
Top 7 Liquidity Providers of 2022

Constantine

Top 7 Liquidity Providers of 2022

People and institutions have traded on the Forex market for a long time because of its relation to fiat trading pairs. However, despite cryptocurrency's quick ascent, traders found a whole new spectrum of applications for the digital money they were utilizing.

FinTech Awards

Contact Us

Contact the Liquidity Provider
for any questions and advertising inquiries b2broker

    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

    Is IUL a Good Investment Strategy? — A Guide for Beginner Investors

    Is IUL a Good Investment Strategy?

    Alexander

    Are Crypto Wallets Safe? — Tips to Ensure Maximum Protection of Your Digital Assets.

    Tips to Ensure Maximum Protection of Your Digital Assets

    Alexander

    Roth IRA Guide: What It Is and What You Need to Know.

    Roth IRA Guide: What It Is and What You Need to Know

    Alexander

    From Gold to Index Funds and Crypto: Where to Invest in 2023 for Long Term?

    From Gold to Index Funds and Crypto: Where to Invest in 2023

    Alexander

    Understanding Algorithmic Trading: A Guide for Beginners

    Understanding Algorithmic Trading: A Guide

    Alexander

    Stop Vs. Stop-Limit Order: How Do They Differ?

    Stop Vs. Stop-Limit Order: How Do They Differ

    Alexander

    Invest in the Intelligent Future: The Best AI Stock Market Leaders of 2023

    Invest in the Intelligent Future: The Best AI Stock Market Leaders of 2023

    Deborah Middleton

    How MEC Rules Can Impact Your Life Insurance Policy

    How MEC Rules Can Impact Your Life Insurance Policy.

    Deborah Middleton

    Navigating the Ethical Landscape of AI: Challenges and Solutions

    Navigating the Ethical Landscape of AI: Challenges and Solutions

    Deborah Middleton

    Managing Your Financials The Right Way – A Startup Guide 

    Managing Your Financials The Right Way - A Startup Guide

    Anna

    A Beginner Guide To The Crypto Analysis Tools.

    A Beginner Guide To The Crypto Analysis Tools.

    Anna

    A Brief Introduction to Scalping

    A Brief Introduction to Scalping.

    Anna

    How to Invest in Stocks: A Beginner’s Guide

    How to Invest in Stocks: A Beginner’s Guide

    Anna

    Tips On Finding Crypto Liquidity Providers In 2023

    Tips On Finding Crypto Liquidity Providers In 2023.

    Anna

    Forex Liquidity in 6 Questions and Tips on How to Become Successful in Trading

    Forex Liquidity in 6 Questions and Tips on How to Become Successful in Trading

    Anna

    A Brief and Comprehensive Guide to Spot Trading.

    A Brief and Comprehensive Guide to Spot Trading.

    Anna

    What is The Difference Between Liquidity Provider and Liquidity Aggregator?

    What is The Difference Between Liquidity Provider and Liquidity Aggregator?

    Tamta

    What Is SWIFT Banking System?

    What Is SWIFT Banking System?

    Tamta

    How Liquidity Providers Drive The Foreign Exchange Market

    How Liquidity Providers Drive The Foreign Exchange Market

    Tamta

    How to Start Investing In Crypto

    How to Start Investing In Crypto

    Tamta

    5 Best Crypto CFD Liquidity Providers 2023

    5 Best Crypto CFD Liquidity Providers 2023.

    Tamta

    The Power Of Liquidity For Crypto Exchanges

    The Power Of Liquidity For Crypto Exchanges

    Tamta

    Institutional Forex Liquidity Explained: Why Do We Need It?

    Institutional Forex Liquidity Explained: Why Do We Need It?

    Tamta

    What Is Return On Investment (ROI), And How Can You Calculate It?

    What Is Return On Investment (ROI), And How Can You Calculate It?
    Latest News - Liquidity Provider: Business & FinTech Media
    • News
      • 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
    [email protected]

    © 2023 Liquidity Provider. All Rights Reserved

    Privacy Policy Cookie Policy
    This site is registered on wpml.org as a development site.