The GameStop Corp. logo on a laptop and the Robinhood application on a smartphone.
Tiffany Hagler-Geard | Bloomberg | Getty Images
Robinhood will continue to restrict trading on Monday in short squeeze names like GameStop, which have seen explosive rallies and unprecedented volatility over the past week.
Customers can only buy one share of GameStop stock and five options contracts. However, the millennial-favored stock trading app has reduced its list of restricted stocks from 50 on Friday to eight as of Monday.
“The following table shows the maximum number of stock and options contracts that you can add to your positions,” Robinbood said in an updated help message on Sunday. “These limit values can change during the day.”
The eight names are GameStop, AMC Entertainment, BlackBerry, Koss, Express, Nokia, Genius Brands International, and Naked Brand Group. Robinhood also restricts the purchase of option contracts in these securities.
If traders already hold more stocks or contracts than the limits listed above, their positions will not be sold or closed, but they will not be able to open new positions, Robinhood said.
The move to extend the restrictions came after Robinhood announced that Wall Street’s central clearinghouse had mandated a ten-fold increase in the company’s deposit requirements last week to ensure proper settlement. Clearinghouses try to protect investors and markets by making sure brokers have the funds necessary to process trades. This process takes two days.
The company also increased the margin requirements, or the amount of money on a client’s account, when using leverage to purchase a security.
The popular trading platform took advantage of lines of credit and last week raised $ 1 billion in new funds from investors to help meet clearinghouse requirements.
A speculative buying frenzy hit Wall Street last week as a new wave of home stay traders continued to use social media, in this case Reddit’s WallStreetBets forum, to coordinate massive short squeezes. Stocks of GameStop, a troubled video game retailer, rose 400% last week, ending January rallying 1,625%. AMC was up 277% last week while Koss was up more than 1,800%.
Many on Wall Street became increasingly concerned that this retail craze could cause more pain to brokers like Robinhood, and the brief shortages would force large hedge funds to sell other positions to raise money, causing turmoil in the broader market .
The stock futures were down early on Sunday trading.
Subscribe to CNBC PRO for exclusive insights and analysis as well as live business day programs from around the world.