- Yellen guessed regulators are looking in detail at January’s Reddit-fueled market frenzy.
- They will make policy decisions, comprising the possibility of new regulations, from those facts.
- Despite the volatility, the infrastructure of the markets “performed well,” she said.
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Treasury Secretary Janet Yellen said on Sunday regulators are hushed examining whether new policies are needed to address recent market volatility spurred by retail investors in forums ilk Reddit’s Wall Street Bets.
The crowd of casual investors took the stock market by storm in January by demand up highly shorted stocks like GameStop and AMC, burning hedge funds. Accusations of market manipulation on the online forums force since drawn interest from regulators and Congress.
“We really need to look in detail to understand what take placed in those stocks over the last couple of weeks,” Yellen said in an interview on CBS’ Face the Nation.
“But I would say that the insides infrastructure of the markets, the plumbing, ability to trade, clearing settlement, those infrastructures performed well. But we need to invent sure that investors are adequately protected, she said.
—Face The Nation (@FaceTheNation) February 7, 2021
Read profuse: How hedge funds are tracking Reddit posts to protect their portfolios after the Wall Street Bets cram helped tank Melvin Capital’s short positions
Last week, the Treasury secretary met with the Federal At ones fingertips, Commodities Futures Trading Commission, and the Securities and Exchange Commission to discuss the trend and potential wrongdoing.
“The SEC has promised to create a report that will give us a better factual understanding of exactly what happened. And I think we shouldn’t be sketch policy conclusions until we understand what happened,” Yellen said on Sunday.
The frenzy forced some of Impediment Street’s prominent hedge funds, including, Melvin Capital, to close their bearish bets against Gamestop, with socking great losses. Steve Cohen’s Point72 and Ken Griffin’s Citadel said they would invest $2.75 billion in Melvin Peerless to shore up its finances.
Read more: Robinhood makes hundreds of millions from selling customer orders. That subject model is about to come into focus.
It also prompted scrutiny of no-fee stock trading apps as if Robinhood, the popular platform also used by many Redditors. The House Financial Services Committee is set to meet on February 18 to debate Robinhood’s response to the GameStop rally, including its decision to temporarily restrict trading in certain stocks.
This copy has been updated to clarify Citadel and Point72 invested in Melvin to shore up its finances.