Artful Dodger
"Neko no me"
So what are you saying? I thought naked short selling is banned. What happened to 1million shares? Are those trade still unsettled ? If so I thought it is max 3 days to settle them.Care to elaborate .. ELI5?
Nevermind, I googled. Seems there are many ways to naked short sell. (I guess at some point they will have to covered it?)
EDIT: I'm going to leave the following "as-is" since many retail investors believe market makers aren't allowed to naked short sell stocks.
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Learn yourself about the short-selling exemption for market makers (SEC Regulation SHO). I have posted about it here extensively since last fall.
Read the "Key Points About Regulation SHO". There's lots there, but don't miss the short selling exemption for market makers:
"Selling stock short without having located stock for delivery at settlement. This activity would violate Regulation SHO, except for short sales by market makers engaged in bona fide market making."
Guess who gets to decide what is "bona fide market making"? That's right, the market makers. It's the dogs watching the kennel with Regulation SHO.
You also asked "I guess at some point they will have to covered it?" The answer to the time allowed to cover by market makers is layed out in Regulation SHO itself:
"Rule 203(b)(3) applies to fails to deliver in threshold securities if the participant’s fails to deliver persist for 13 consecutive settlement days. Although as a result of compliance with Rule 204, generally a participant’s fail to deliver positions will not remain for 13 consecutive settlement days, if, for whatever reason, a participant of a registered clearing agency has a fail to deliver position at a registered clearing agency in a threshold security for 13 consecutive settlement days, the requirement to close-out such position under Rule 203(b)(3) remains in effect."
So again, market makers get special treatment. They have 13 trading days to cover their short sales even before there is a requirement to REPORT the short sale.
Seach this forum for 'failure to deliver' reports, which are released twice a month. That's what members are talking about when people mention the FTD report. It's evidence of naked shorting. But it's also very poor evidence, only reporting just the crumbs of evidence left over after the crime scene cleanup (covering) is already done. Disgraceful situation.
Perhaps you should also read this SEC comment on Regulation SHO where they justify the practice:
"The current NASD short sale rule contains an exemption for qualified market makers. The application of a short sale rule to market makers would dramatically reduce their ability to quickly adjust inventory positions, thereby lessening liquidity throughout the marketplace."
The SEC is broken. They are a textbook example of Regulatory Capture. Retail investors are being defrauded by the owners of FINRA, the market makers themselves.
Let's talk again tomorrow (or on the weekend) once you've read more about this an had a few sleeps. I expect your mind will be opened to the current market action.
Regards,
Lodger
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