Wednesday, September 12, 2012 6:58:56 PM
MMs do not "short" penny stocks. As part of making a market, they may have periodic short positions throughout a trading day if they fill buy orders for more shares than they have in inventory, but they also often have inventory when they fill sell orders. Having an inventory does not mean that they are going "long" any more than having a temporary net short position is "shorting." This kind of temporary short position is legal and necessary for efficient trading. The grey market shows how trades work when MMs don't make a market.
This article shows why retail traders don't short penny stocks: http://investorshub.advfn.com/boards/read_msg.aspx?message_id=79347899
This excellent post explains why the FINRA daily short data does not show true short positions and that the bi-weekly report is the only reliable one. It also explains that when new shares are entering the market, they are reported as short until the stock is delivered. http://investorshub.advfn.com/boards/read_msg.aspx?message_id=64374107&txt2find=marketmaker
The short data for All OTC stocks including those quoted on OTC Markets (fka Pink Sheets) is sent to FINRA twice a month by broker/dealers. FINRA compliles it and publishes a semi monthy report. These bi-weekly reports show the aggregate short postion by all market makers as of that settlement date.
The MDGC bi-weekly reports so no significant aggregate short postions. They can be found here: http://www.otcmarkets.com/stock/MDGC/short-sales or by entering the ticker on the OTCBB short interest page: http://www.otcbb.com/asp/OTCE_Short_Interest.asp
Explanation from FINRA (contact information for questions is included):
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