Why did brokers restrict trading in GameStop?

LAST week's unexpected price surge for stocks including GameStop, AMC and Koss prompted brokerages in the US to restrict trading for certain counters. Some brokerages in Singapore followed suit, sparking an outcry from a number of their users. The Business Times breaks down the story.

What happens when a trade is placed?

Brokers have to go through a middleman called a clearinghouse. Clearinghouses are financial institutions that act as intermediaries between buyers and sellers. They make sure that both parties are able to honour their contractual obligations when a trade is executed.