Exhibit 60 (Dkt. 568-60, S.D. Fla.)

Summary

Exhibit 60 (Document 568-60) in Case 1:21-md-02989-CMA, entered on the FLSD docket June 8, 2023, is a three-page printout of a Robinhood blog post by the Robinhood Team, What happened this week, at blog.robinhood.com/news/2021/1/29. Citing questions after the week's temporary restrictions on certain securities, the post explains that Robinhood sends orders to market makers, that Robinhood Securities works with a clearinghouse to record trades, and that settlement takes two days, known as T+2. It says clearinghouses are SEC-registered organizations that set deposit requirements, which clearing brokers like Robinhood Securities must meet each trading day by 10am ET.

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Case 1:21-md-02989-CMA Document 568-60 Entered on FLSD Docket 06/08/2023 Page 1 of 3




                                Exhibit 60
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blog.robinhood.com /news/2021/1/29/what-happened-this-week

What happened this week
Robinhood Team ⋮




The mechanics behind your trades

With the extraordinary market activity this week, and the temporary restrictions we put in place on certain
securities, we’ve received questions about how Robinhood works, trading, clearing and settlement, and
clearinghouses. Here’s an overview of the mechanics—or the plumbing—behind your trades. Let’s dive in.

Settling trades

When you buy or sell a stock, Robinhood sends your orders to market makers that execute your trades.
Market makers send a record of the trade to Robinhood Securities, which works with a clearinghouse to
record the trade. It takes two days for the clearinghouse to transfer the stock to the buyer and funds to the
seller. This is known as “clearance and settlement.” In other words: everyone getting what they agreed to
when the trade executed. In the industry, this is referred to as the trade date plus two days to settle, or “T+2.”

Meet your clearinghouse




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Clearinghouses are SEC-registered organizations that act as the central depository for securities. They keep
a record of the stocks owned through a brokerage. Clearing brokerages, like Robinhood Securities, are
members of clearinghouses. These clearinghouses have membership rules, approved by the SEC, that
govern the activity of their members. Clearinghouses establish financial requirements for members including
deposit requirements designed to reduce risk to the clearinghouse.

Clearinghouse requirements

To clear and settle customer transactions, each trading day by 10am ET, clearing brokers like Robinhood
Securities have to meet those deposit requirements to support their customer trades between the trade date
and the date the trades settle. We withdraw money on some days, and deposit money on other days,
depending on that day’s requirement.

How do clearinghouses determine how much is required?

It’s pretty technical, but the process basically works as follows: clearinghouses look at a firm’s customer
holdings as a portfolio. They use a volatility multiplier, looking at specific stocks, to quantify their risk. The
clearinghouse may assign significant additional charges based on how much of one stock a firm’s customers
hold. If a firm’s customers have more buy than sell orders, and the securities they’re buying are more
volatile, the deposit requirement will be higher. Clearinghouses can also require additional deposits if certain
thresholds are met.

What happened this week

The amount required by clearinghouses to cover the settlement period of some securities rose tremendously
this week. How much? To put it in perspective, this week alone, our clearinghouse-mandated deposit
requirements related to equities increased ten-fold. And that’s what led us to put temporary buying
restrictions in place on a small number of securities that the clearinghouses had raised their deposit
requirements on.

It was not because we wanted to stop people from buying these stocks. We did this because the required
amount we had to deposit with the clearinghouse was so large—with individual volatile securities accounting
for hundreds of millions of dollars in deposit requirements—that we had to take steps to limit buying in those
volatile securities to ensure we could comfortably meet our requirements.

Our goal is to enable purchasing for all securities on our platform. This is a dynamic, volatile market, and we
have and may continue to take action to make sure we meet our requirements as a broker so we can
continue to serve our customers for the long term.

Rest assured, our position remains firm—we stand with our customers and will continue to provide
you with the resources and tools you need to become a confident, informed investor.




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gov.uscourts.flsd.590042.568.60.pdf

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a718311b75457816078237bddebf203607d05e3d7e4bd43c8c70c1514d36c29c

Our copy

gov.uscourts.flsd.590042.568.60.pdf

Original

archive.org