"We are worried about the integrity of the marketplace and the clearing system," Peterffy said Thursday on CNBC's "Closing Bell."
On Thursday, Interactive Brokers put option trading into liquidation on a handful of highly volatile stocks like GameStop, AMC Entertainment and Koss, which have garnered an army of retail investors looking to crush hedge funds shorting the names. The firm also raised margin requirements, or how much money an investor using leverage and derivatives must have in their brokerage account after a stock purchase, on certain securities.
Short selling is a strategy in which investors borrow shares of a stock at a certain price in hopes that the market value will fall below that level when it's time to pay for the borrowed shares.
"We are concerned about the ability of the market and the clearing systems, through the onslaught of orders, to continue to provide liquidity. And we are concerned about the financial viability of intermediaries and the clearing houses," Peterffy said.
Clearing is the trusted transfer of securities and funds between the buyer and seller, an essential function on Wall Street. Some other online brokers are self-clearing, meaning that they have their own clearing firm, while others rely on a third party to clear the transactions. Robinhood, E-Trade, TD Ameritrade, Charles Schwab and Vanguard are among those that already self-clear.
Peterffy said Interactive Brokers did not receive any pressure from market makers to put parameters on stock and option trading.
"The broker stands between these customers and the clearing house," said Peterffy. "So when some option holders make money, the clearing house has to give us the money to give it to our customers, while other option holders, sellers or buyers on their own side lose money we have to collect money from them and give it to the clearing house. If our customers are unable to pay for their loses we have to put up our own money."
Interactive Brokers has $10 billion in equity to cover these payments if need be, but Peterffy said he can't say the same about other brokers with full confidence.
Peterffy also called what has been going on with GameStop's stock this week "illegal" and "manipulation." He said Interactive Brokers clients will be able to trade the speculative names once the trading becomes "normal" again.
Peterffy also said he does not know if there are large institutions on the squeezing side of GameStop's massive rally.
"May they are all just individuals but I doubt that because this requires a lot of money," said Peterffy.
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