(Bloomberg) — Wall Street’s top brokers are quietly tightening their rules for who can bet against retail traders’ most-popular meme stocks.

Goldman Sachs Group Inc., Bank of America Corp., Citigroup Inc. and Jefferies Financial Group Inc. are among firms that have adjusted their risk controls at prime-brokerage operations, according to people familiar with the moves. The banks are trying to protect themselves against fallout from extreme surges and dips that have characterized trading in companies including AMC Entertainment Holdings Inc., MicroVision Inc. and GameStop Corp.

The changes mean some hedge funds and other institutional investors now face higher collateral requirements or are limited from shorting certain stocks, the people said, asking not to be identified discussing internal policy decisions.

“Until further notice, Jefferies Prime Brokerage will no longer offer custody on naked options” in GameStop, AMC and MicroVision, the firm said in a memo to clients seen by Bloomberg News. Naked options allow investors to short a stock without owning the underlying securities. Jefferies, which told clients that other stocks may be added to the list, will also no longer permit short sales of those securities.

Representatives of Goldman, Bank of America,Citigroup and Jefferies declined to comment. It’s not unusual for banks to adjust their risk controls as market conditions change.

The measures may change the fortunes of retail investors lighting up Reddit message boards with their forays into day trading. Increased margin requirements could hasten the short squeezes small investors have been rushing to capitalize on. On the other hand, if hedge funds pull back on short bets due to the new restrictions, the Reddit crowd won’t have as many opportunities to chase short squeezes.

Archegos Fallout

Many brokerage firms have been re-examining their risk controls after some of the industry’s largest prime brokers were forced in March to liquidate the multibillion-dollar portfolio of Bill Hwang’s Archegos Capital Management at a discount, though Bank of America and Citigroup were among those that escaped the saga unscathed. The little-known family office collapsed after making a series of wrong-way bets on media and technology companies.

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“Fortunately it didn’t hurt taxpayers, it didn’t hurt investors,” Morgan Stanley Chief Executive Officer James Gorman told lawmakers last month at a House Financial Services Committee hearing. “It hurt Mr. Hwang and his family office and it hurt the banks that were prime brokers to him.”

Morgan Stanley recorded a $900 million loss tied to the ordeal.

The origins of the so-called meme-stock craze — in which retail investors push seemingly random stocks to dizzying heights — are largely unclear, though some analysts have pinned the trend on the fact that no-fee brokerage apps have proliferated just as many Americans are flush with savings.

AMC became the new king of the meme stocks in recent days. Investors have sent the cinema company’s shares soaring more than 2,000% this year alone. GameStop Corp., the original beneficiary of the frenzy on Reddit boards dedicated to stock investing earlier this year, is up more than 1,000%.

Robinhood Markets

It’s not just Wall Street that’s taking a more cautious stance. Policy makers have also signaled concern over prolific retail trading, especially of options that can multiply the risks. After the GameStop turmoil earlier this year, House Democrats questioned the leader of retail brokerage Robinhood Markets Inc., among others, about profiting at the expense of small investors.

Key to some of the debate has been the practice of naked short selling. The strategy allows hedge funds to make bets that exceed the market values of some companies. That’s become a signal for small-time investors that there’s a potential to profit off a short squeeze.

(Updates to add Goldman Sachs to the second, fifth paragraphs.)

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