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Obligation Warehouse (OW)

DTCC Set To Launch Service To Automate Matching Of Broker-To-Broker Ex-Clearing Trades

-- Service Will Also Offer Real-Time Access to Track, Manage and Resolve Fails

New York, February 16, 2011- The Depository Trust & Clearing Corporation (DTCC) announced today plans to launch Obligation Warehouse (OW) to automate the matching and confirmation of broker-to-broker trades that are currently confirmed and settled directly between the trading parties rather than through DTCC (known as ex-clearing), and to give Member firms real-time access to track, manage and resolve their failed obligations.

The service, an offering of DTCC’s clearing agency subsidiary, National Securities Clearing Corporation (NSCC), is expected to be fully functional by June 2011, with implementation beginning in March 2011 following the Securities and Exchange Commission’s (SEC) recent approval of NSCC’s related rule filing..........

While most equity, bond and UIT trades are fed directly to NSCC for clearing from the various U.S. marketplaces and trading platforms, currently amounting to an average of more than 80 million daily transactions, there are an unknown number of trades that brokerage firms confirm and settle directly with their counterparties. Fails in those trades have never been tracked in a central location prior to the development of OW. (bold is mcokpba emphasis)

http://www.dtcc.com/news/press/releases/2011/press_release_obligation_whse.php

http://www.investorvillage.com/smbd.asp?mb=14368&mn=70&pt=msg&mid=10258476

FINRA Rule Filings

Tomorrow will begin the first day of new FINRA market rules that will affect short sellers across the exchanges. These new rules will massively change how traders and market makers deal with short and naked short selling of stocks.
According to these FINRA rule filings, three new laws and regulations go into affect starting on February 28th, and in this, it will remove a universal exemption used by market makers to get away with failing to deliver stock according to current SEC rules.
There’s 3 new laws gaining attention in the NSS market reform arena: FINRA 4320 goes into effect on 2/28/11. It mandates 13 day buy-ins for open delivery failures FINALLY applying to shares of non-reporting corporations. FINRA 2010-043, also starting on 2/28/11 reinstates the “short sale exempt” (SSE) marking requirements for trade reporting and the OATS system. Those MMs accessing the bona fide MM exemption from executing pre-borrows or “locates” before admittedly naked short sales must now FORMALLY acknowledge the accessing of that universally-abused exemption. Being that these trades are theoretically being made to “inject liquidity” then the excuse to hide the related trade data from the public’s eyes goes out the window. You can’t have it both ways and claim the bona fide MM exemption and later claim that the related trade data needs to be kept secret because it might reveal a “proprietary trading strategy”.
Truly bona fide MMs that are able to legally access that universally-abused exemption cover their naked short position on the next downtick after their short sale when buy side liquidity is in need of being ejected as share prices fall. The 3rd new rule which is in effect now states that the offers and bids that MMs post must be of approximately the same size. No longer can the offers be of 1 million shares and the offsetting bid good for the minimum 5,000 shares.
What this means for investors and traders is that many of the games large brokers and market makers use to manipulate a stock by holding down investor interest through short selling, or by using a small sell to offset a large buy to keep a stock from moving in a particular direction, will be illegal, and open to investigation.
Examples of this type of manipulation occur when investors put in bids to purchase say, $100,000 shares of XYZ stock at the current market price of say 10.00 per share. The market maker will purchase those shares in the open market in blocks as they can accumulate shares until the purchase is completed. Then, a market maker will bring down the price through manipulation, by selling short a block of say 5000 shares at $9.95. The ratio of strong buying to selling was 20:1, but after both transactions took place, the stock actually fell $.05.
Thus the market maker controls the market of stock through manipulation, instead of simply allowing for the equity to move according to natural market forces.
Horror stories abound of market maker manipulation and naked short selling. There was even a proven case where an investor owned 150% of the shares that a company legally had in the market. This means, 50% of the investors shares were invisible and were created out of thin air, established through naked short selling by a broker, or market maker.
Tomorrow begins a new day for the US markets, and new rules that could prove interesting for investors. If the SEC and FINRA follow through with enforcing these new rules, then we could see the markets skyrocket upwards as short sellers desperately battle to purchase their necessary stock back at any price.
Europe is also looking to vote on something along those same lines about Naked Shorting on Monday, Feb 28th. It looks like a global initiative.

http://short-stoppers.com/

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=60652683


Fails to deliver must have been a significant problem if the DTCC created a whole new system just to track them. Since FTDs on ex-clearing have never been centrally tracked, I have to wonder just what is the level of untracked FTDs in RCCH?


The Depository Trust & Clearing Corporation (DTCC) announced today plans to launch Obligation Warehouse (OW) to automate the matching and confirmation of broker-to-broker trades that are currently confirmed and settled directly between the trading parties rather than through DTCC (known as ex-clearing), and to give Member firms real-time access to track, manage and resolve their failed obligations....

While most equity, bond and UIT trades are fed directly to NSCC for clearing from the various U.S. marketplaces and trading platforms, currently amounting to an average of more than 80 million daily transactions, there are an unknown number of trades that brokerage firms confirm and settle directly with their counterparties. Fails in those trades have never been tracked in a central location prior to the development of OW.

http://dtcc.com/news/press/releases/2011/press_release_obligation_whse.php

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=60084295

JimThorpe – “Tell me you thoughts on how after a global lock we got to 0002?”

Brad S – “It's pretty simple when you think about it, we've seen by the postings on this board that the global lock took a lot of shares out of play. There are a lot less shares on the auction block now than before the global lock went into effect.”

Fourkids 9pets post about RCCH MM Monthly volume

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=61650597

My comment – Brad S your post made me sit up straight in my chair last night. Your comment and Fourkids 9pets' post did get me thinking. With slight (or major depending on your view) editing of your comment we are wonderfully close in our thinking.

It is pretty simple when you think about it, we’ve seen by the postings on this board that the global lock took a lot of air shares out of play. There are a lot less real shares on the auction block now than before the global lock went into effect.

Dakota Dad and I read your post the same way. Neither of us has a link for you but please be patient, I believe the proof you want is coming.

The trend will be very positive if demand overtakes supply as you suggest. I thought this first week of April might be when that occurred. I will hedge my time speculation by thinking about the dialogue between Go-Gold and JimThorpe when they were discussing the DTCC lifting of the “global chill” being delayed until the SEC Genderme Issue is settled. Court date middle of May 2011 I believe.

Previously the SEC denied that there was any naked short “problem.” But when REGSHO was passed the SEC (with very little explanation) added a grandfather clause to “prevent volatility” in the market in case of or because of the "possibility" of the nonexistent problem! Similar logic behind your request for a link to the naked shorts from Mars problem that doesn't exist

The recently passed FINRA regulations will hopefully address the “nonexistent Mars problem” RCCH grandfathered shares in June. Just a matter of time. I am willing to wait. Exciting times ahead, glad I have a ringside seat.

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=61674156

JimThorpe – “Tell me you thoughts on how after a global lock we got to 0002?”

Brad S – “It's pretty simple when you think about it, we've seen by the postings on this board that the global lock took a lot of shares out of play. There are a lot less shares on the auction block now than before the global lock went into effect.”

Fourkids 9pets post about RCCH MM Monthly volume

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=61650597

My comment – Brad S your post made me sit up straight in my chair last night. Your comment and Fourkids 9pets' post did get me thinking. With slight (or major depending on your view) editing of your comment we are wonderfully close in our thinking.

It is pretty simple when you think about it, we’ve seen by the postings on this board that the global lock took a lot of air shares out of play. There are a lot less real shares on the auction block now than before the global lock went into effect.

Dakota Dad and I read your post the same way. Neither of us has a link for you but please be patient, I believe the proof you want is coming.

The trend will be very positive if demand overtakes supply as you suggest. I thought this first week of April might be when that occurred. I will hedge my time speculation by thinking about the dialogue between Go-Gold and JimThorpe when they were discussing the DTCC lifting of the “global chill” being delayed until the SEC Genderme Issue is settled. Court date middle of May 2011 I believe.

Previously the SEC denied that there was any naked short “problem.” But when REGSHO was passed the SEC (with very little explanation) added a grandfather clause to “prevent volatility” in the market in case of or because of the "possibility" of the nonexistent problem! Similar logic behind your request for a link to the naked shorts from Mars problem that doesn't exist

The recently passed FINRA regulations will hopefully address the “nonexistent Mars problem” RCCH grandfathered shares in June. Just a matter of time. I am willing to wait. Exciting times ahead, glad I have a ringside seat.

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=61674156