According to this interview[0], a similar firm's CEO is saying it's not that simple, and their clearing firm stopped the trades due to the costs
> Our clearing firm gave us a call and said we're going to have to stop allowing new opening positions... there is a two-day settlement between if you buy the stock today, those brokerage firms that you bought that stock on have to fund that trade with the clearing central house called DTC for two whole days... our clearing firm simply cannot afford the cost to settle those trades. We cannot use customer funds to front that cost due to regulation.
I'm not an expert, but based on this link[0] from another comment section, a similar firm's CEO is saying the their clearing firm stopped the trades due to the costs
> Our clearing firm gave us a call and said we're going to have to stop allowing new opening positions...
> there is a two-day settlement between if you buy the stock today, those brokerage firms that you bought that stock on have to fund that trade with the clearing central house called DTC for two whole days...
> our clearing firm simply cannot afford the cost to settle those trades. We cannot use customer funds to front that cost due to regulation.
Exactly, stopping buying prevents people from (potentially) making money by buying the stock low, whereas stopping selling (potentially) prevents people from losing money on the stock they already own, from the platform which they bought it.
I can't imagine the backlash if the completely froze the stocks while the market kept going.
> Our clearing firm gave us a call and said we're going to have to stop allowing new opening positions... there is a two-day settlement between if you buy the stock today, those brokerage firms that you bought that stock on have to fund that trade with the clearing central house called DTC for two whole days... our clearing firm simply cannot afford the cost to settle those trades. We cannot use customer funds to front that cost due to regulation.
[0] https://finance.yahoo.com/video/heres-why-robinhood-restrict...