Interactive Brokers restricts trading of GameStop, other stocks

GREENWICH — Interactive Brokers Group, one of the world’s largest electronic brokerages, is imposing new restrictions on its clients’ trading of stocks and options in response to the market frenzy surrounding companies such as video-game retailer GameStop.

Greenwich-based Interactive announced Thursday it would only allow “liquidation” — a reference to selling — for options of GameStop, movie theater giant AMC Entertainment, software company BlackBerry, fashion retailer Express and consumerelectronics specialist Koss “due to the extraordinary volatility in the markets.” Options represent contracts that give buyer the right to buy or sell shares at a specific price by a certain date.

In addition, Interactive said that clients’ long stock positions will require 100 percent margin and short stock positions will require 300 percent margin “until further notice.” Margin requirements relate to customers’ account deposits and equity.

“We do not believe this situation will subside until the exchanges and regulators halt or put certain symbols into liquidation only,” Interactive said in the announcement of the changes. “We will continue to monitor market conditions and may add or remove symbols as may be warranted.”

Other brokers such as Robinhood have also announced similar restrictions.

Connecticut’s largest investment firms are also tracking the market upheaval.

Point72, the Stamford hedge fund founded by billionaire investor and Greenwich resident Steven Cohen, announced this week a $750 million investment in

the Melvin Capital Management hedge fund. Melvin is led by Gabriel Plotkin, who worked as a portfolio manager at Point72’s predecessor firm.

Melvin has been acutely affected by some of its “short” investments, which had anticipated declining prices in the likes of GameStop. Undermining the

short sellers’ strategy, GameStop shares have surged in recent days. Its shares closed Wednesday at about $348, catapulting 135 percent from Tuesday.

Melvin closed out its short position in GameStop on Tuesday after sustaining a large loss.

The recent trading frenzy has been driven in large part by a Reddit

message board, WallStreetBets, whose participants have rushed to invest in those companies.

Until the recent fluctuations, Melvin had ranked among the top-performing funds on Wall Street.

Courtney Crow / New York Stock Exchange via Associated Press In this photo provided by the New York Stock Exchange, trader Samantha Tavares, right, works with colleagues on the floor on Wednesday. In response to stock market volatility surrounding companies such as GameStop, Greenwich-based brokerage Interactive Brokers Group announced new trading restrictions affecting stocks and options of GameStop and several other companies.

Frederick J. Brown / AFP via Getty Images People enter a GameStop store in Alhambra, Calif., on Wednesday.

Thomas Peterffy, founder of Interactive Brokers Group