Within the aftermath of the Reddit group, r/WallStreetBets’s short squeeze on GameStop (GME) and different shares, Robinhood blocked buyers from buying and selling any of the shares the subreddit customers have been focusing on for the quick squeeze. Whereas Robinhood was not alone in proscribing the buying and selling of sure shares, there are a lot of brokers who didn’t place any restrictions or who did so solely as a result of their clearing homes required it.
A clearing home is an SEC-registered group accountable for protecting monitor of which shares are owned by means of which brokerages. All clearing brokers (platforms like Robinhood that facilitate buying and selling) must be a member of a clearing home. If the clearing home units new limits on shares, its member brokers haven’t any alternative however to conform. Even so, some brokers, like Robinhood, went above and past, blocking extra shares than the clearing home required.
These restrictions have upset many customers who at the moment are seeking to switch their account out of Robinhood and on to a platform that they will belief to permit unrestricted buying and selling. Regardless of the explanation you wish to switch your shares off Robinhood, this fast step-by-step information will provide help to navigate the method and know what to anticipate as you’re making the transfer to a brand new dealer.
Step 1: Choose a brand new dealer.
Earlier than you may provoke a switch, you’ll want to resolve the place that switch goes to go. In any other case, you’re simply cashing out your account which closes out your place in your whole shares and, relying on the worth of your portfolio, may result in a hefty invoice come tax season. The benefit of an account switch is that you just don’t want to truly promote your shares or danger exposing them to taxation. You’re simply transferring your portfolio to a brand new dealer.
Selecting that new dealer will rely on what sort of buying and selling you do, what options you need, and what your motive for leaving Robinhood is. For those who’re motive for leaving is in response to the restrictions, for instance, you’ll wish to cross-reference our suggestions under with this list of brokers who didn’t prohibit buying and selling.
For those who’re simply searching for a dealer who gives options that Robinhood doesn’t (like mutual funds, bonds or tax-protected funding accounts), simply be certain your subsequent dealer has these options. Both method, you may start your seek for the best brokers with this fast comparability desk of a few of our prime suggestions:
Step 2: Resolve Destructive Balances or Account Restrictions
In case you have a margin account with a destructive steadiness or any account with account restrictions, you’ll want to settle up with Robinhood earlier than you may transfer to a brand new dealer. You are able to do this by different depositing money into the account or by promoting off some shares to make up the steadiness owed.
Step 3: Learn Up on Charges, Restrictions and Limitations
Robinhood fees a flat $75 price, no matter whether or not you’re doing a full or partial switch (extra on that later). Nevertheless, some brokers may supply to cowl that switch price for you, making it successfully free. To seek out out if a dealer is keen to cowl the charges, you’ll have to name immediately and ask. It’s normally a “by request solely” or “restricted time solely” supply when it’s accessible.
Different restrictions and limitations on Robinhood’s finish relate to fractional shares and cryptocurrency. For those who maintain both of those, you gained’t be capable to immediately switch them to your new dealer, even when the brand new one gives each. As a substitute, your fractional shares will probably be robotically offered and seem as a money steadiness in your new account.
In the meantime, any cryptocurrencies will stay in your Robinhood account until you money them out earlier than you provoke the switch. Be sure that to do that to keep away from the necessity to request a second account switch.
Further restrictions, limitations, or charges may exist on your new dealer as nicely. Be sure you do your analysis earlier than you make any strikes to keep away from any disagreeable surprises.
Step 4: Open an Account with Your New Dealer
When you’ve achieved your analysis and also you’re assured in your determination, it’s time to open your new account. Though you’re planning to switch accounts, you don’t must undergo any particular onboarding course of to open an account. You possibly can join and open the account as you usually would. The precise switch will occur later.
Step 5: Request an Account Switch
The final motion required in your half is to make the official account switch request. You’ll do that at your new dealer. In some circumstances, the dealer will ask throughout the onboarding course of when you plan to switch any accounts over to your new account. In different circumstances, you’ll have to open up the account after which contact buyer assist to make the request.
In both case, you organize this totally with the brand new dealer who will then draft up the paperwork and file the request with Robinhood’s clearing home. The clearing home will then deal with the precise switch of property and funds. There isn’t any motive to contact Robinhood at any level, besides when settling a destructive steadiness or cashing out your crypto investments.
Full Switch vs. Partial Switch
While you make the request, you may both request a full switch or a partial switch. Because the identify implies, a full switch will fully transfer your whole portfolio over to your new dealer after which shut out your Robinhood account.
When you’ve achieved that, your Robinhood account will probably be restricted as a way to’t make any new trades whereas the switch is in progress. You possibly can nonetheless view your shares and different property within the app to watch modifications. You simply can’t do any rebalancing or trades.
After the preliminary switch is full, you may nonetheless obtain further property in a “residual sweep.” This residual sweep is completed to gather any pending dividend funds, unsettled commerce orders, or property that weren’t included in your portfolio on the time of the primary switch.
A partial switch will probably be rather less difficult. You’re transferring only a choose portion of your property. Any residual dividend funds or unsettled orders will simply be added to your remaining Robinhood account which can nonetheless be open and purposeful—although, you’ll have restrictions on the property which are within the technique of transferring.
Step 6: Wait 5-10 Enterprise Days
Normally, particularly once you’re transferring from one on-line dealer to a different, you may full the complete switch course of on-line in a matter of minutes. After all, in case you have any account restrictions or a destructive steadiness, the method may take longer.
When you’ve made your official switch request, all that’s left to do is wait. Sometimes, it’ll take anyplace from 5-10 enterprise days to confirm and full the account switch. Nevertheless, this varies from dealer to dealer. You’ll get a extra particular estimate after you make your switch request. Additionally, given the surge in Robinhood switch requests, it’d take a bit longer.
Relying in your new dealer, you may be capable to have your account lined. This implies the dealer will principally “lend” you the worth of your property and funds as a way to begin buying and selling instantly. That dealer will then pay themselves again when the switch really completes. Normally, this selection to cowl is barely accessible for bigger portfolios and it’s on no account automated. You’ll have to request this if you’d like it.
If the flexibility to start out buying and selling instantly along with your new dealer is vital, you may contact the brokers you’re contemplating to seek out out which of them will cowl your account. For a neater various, you too can simply deposit money into your new account whilst you watch for the remainder of your property and funds to maneuver over.
Discover Your New Dealer Immediately!
Whether or not you’re searching for a brokerage with the same user-friendly cell buying and selling platform however a greater number of tax-protected investing accounts otherwise you’re on the hunt for a dealer that’s much less prone to prohibit your potential to commerce risky shares, begin doing all your analysis at present! When you’ve chosen your new dealer and skim up on what sort of charges and limitations to count on, you’re able to switch your shares off Robinhood as quickly as doable!
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