I consistently wonder if any OTC message board posters understands the OTC trading platforms being used.
Do they know it's a 2 tiers trading platform. That what they see is bids and asks between M&Ms. Not their individual order and another retail order. Are they aware the M&M sees orders from brokers clients before those orders are closed. That M&Ms can close the order before it makes it to the Inter-dealer Quotation system. And if their broker account isn't with a broker/dealer covering the stock (a Market maker) their order is on a third tier. Brokers and non market maker broker/dealers have to send client orders to M&Ms. More possibility for collusion.
Really basic; There are brokers & broker/dealers. The OTC market is a place trades only registered broker/dealers can trade. And to trade, that broker/dealer needs to request and become a market maker from FINRA. To be a market maker they must hold a specified amount of company stock to be able to close matching orders they receive on the 1st tier, from a broker, broker/dealer, or which is not market makers. Or personal client. Also M&Ms can and do have personal trade accounts which they can trade in-front with. Close orders they receive, then close orders they place. Buy low, sell high on the Inter-dealer Quotation system.
An M&M has several options for trade orders they receive. They can close matching orders from their inventory or client order stack, before sending to the Inter-dealer Quotation system. Which is what retail sees. They can close orders from their personal account before placing on that system. They can contact any other M&M to negotiate a close threw e mail, phone, ETC. Or they can send the order to another M&M on the electronic system. The 2nd tier of the OTC platform, the OTC Link® ATS system.
All this naked shorting, placing up walls chit is chit from the old OTCBB days. Now days they have so many options on how to manipulate trading it's crazy. But since OTC markets "a privately owned company" inception, naked shorting become way way harder. FINRA requires more stringent reporting & broker/dealer rules.
I'm not saying M&M tricks aren't still prevalent. There is still small odd size order signaling, false bid/ask builds stacks, share swapping and the like to manipulate direction. But that manipulation isn't aimed at controlling price, as much as altering direction to close as much order volume seen on the 1st tier, as possible.
The old days M&Ms made more money front trading from their personal account then trade volume fees. That's why you saw the naked shorting and walls to drive price or hold runs. Now days FINRA reporting rules have closed the huge dark hole the OTCBB left open. Trading on foreign exchanges have something called ADR receipts reporting by FINRA. So M&Ms can't hide naked shares, saying they hold inventory overseas like before. There still is a FINRA OTCBB system, but it can only be use for companies that are SEC-reporting. NO pinks.
On the OTC soooo much happens before retail sees the Inter-dealer Quotation system quote, one can't ever know what is really happening. Why can NITE put up a 10,000 ask and you see 250,000 close at that only ask stack price? How does EFRD put up a 1,000,000 bid and it disappears, when CDEL has the 100,000 at the same bid order. It's all happening before the Inter-dealer Quotation system.
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