I don't buy the suggestion that DTCC deposit requirements left Robinhood and other brokers unable to facilitate all transactions. It is a backwards rationalization, trying to put technical reasons to a fear-driven decision.
First of all, they limited opening trades for all accounts, not just accounts buying on margin or with unsettled funds. If you have a cash account and you buy a stock, your broker has plenty of time (2days) and plenty of funds (all of them) to clear your trade.
Secondly, many brokerages only blocked options transactions. These don't clear through DTCC at all. They clear through OCC and net purchases of options actually capitalize the clearinghouse and can in some cases actually be advantageous to the broker by getting their accounts long premium (if the broker is net short premium, the OCC charges them more).
It's more likely that the brokerages didn't have enough staff to reconcile the trades, or that Robinhood's fake margin accounts (Robinhood Instant) left them in a position where they had to choose between telling people that they have to wait for funds to settle, or limiting trades.
Any brokerage that limits trading in an asset for which the exchanges and clearinghouses are functional is harming its customers by preventing their market access. Weird hand-wavey apologetics about the DTCC or OCC don't explain why the retail brokerages had to limit trading in cash accounts.
First of all, they limited opening trades for all accounts, not just accounts buying on margin or with unsettled funds. If you have a cash account and you buy a stock, your broker has plenty of time (2days) and plenty of funds (all of them) to clear your trade.
Secondly, many brokerages only blocked options transactions. These don't clear through DTCC at all. They clear through OCC and net purchases of options actually capitalize the clearinghouse and can in some cases actually be advantageous to the broker by getting their accounts long premium (if the broker is net short premium, the OCC charges them more).
It's more likely that the brokerages didn't have enough staff to reconcile the trades, or that Robinhood's fake margin accounts (Robinhood Instant) left them in a position where they had to choose between telling people that they have to wait for funds to settle, or limiting trades.
Any brokerage that limits trading in an asset for which the exchanges and clearinghouses are functional is harming its customers by preventing their market access. Weird hand-wavey apologetics about the DTCC or OCC don't explain why the retail brokerages had to limit trading in cash accounts.