The website of the UK stock trading app Freetrade.
LONDON – UK stock trading app Freetrade announced on Friday that it had turned off buying US stocks.
Freetrade made the suspension of US stock purchases due to a move by its currency exchange provider and bank to limit the platform’s trading volume. Freetrade uses the British fintech company Currencycloud for foreign exchange transactions.
Barclays made an unexpected decision to significantly limit the volume of foreign exchange transactions that could be processed for Freetrade, a person familiar with the matter told CNBC. The person preferred to remain anonymous as they did not have the authority to speak publicly.
Barclays was not immediately available for comment when contacted by CNBC.
The move will affect buy orders placed before the US market opened, Freetrade said, while sell orders will also be restricted for a short time upon market opening.
“We received no warning, which we consider to be an extremely bad decision,” said Adam Dodds, co-founder and CEO of Freetrade, in a statement on Friday. “We are deeply dissatisfied with this decision and are doing everything we can to correct the situation.”
“Due to the high volume, we are currently unable to answer individual questions about it,” added Dodds.
Freetrade, which has more than 300,000 users, says there has been a surge in activity this week due to the wild volatility in the stock markets.
A number of sharply shortened stocks, including GameStop and AMC, soared this week as a flurry of amateur investors was inspired by the Reddit community WallStreetBets, causing massive losses for some hedge funds.
US investment app Robinhood was criticized by users Thursday after restricting trading in 13 stocks, including GameStop and AMC. The company subsequently said it would resume trading in these securities.
Robinhood said its decision to restrict trading was necessary to meet the capital requirements imposed by the US Securities and Exchange Commission on broker-dealers.
“These requirements are there to protect investors and markets, and we take our responsibility to adhere to them seriously, including through the measures we have taken today,” said the company.
Robinhood also restricted cryptocurrency trading on Friday and stopped instant deposits for crypto purchases “due to exceptional market conditions”. The move came when bitcoin and meme-inspired token dogecoin saw major rallies.
The SEC said Friday it is examining the “extreme price volatility of certain stocks” and will “protect retail investors from potential market abuse or manipulation.”