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Thanks, Allen! They think they're a "team". They don't realize that trading stocks is not a team sport.
I very much doubt that they'll have any luck with the ETLS shell. Sheesh, no management. Not even a TA. Delinquent in SEC filings. Couldn't be much worse, really.
Janice, thanks for your posts on ETLS board.
I bought some small there, because it seemed to be moving.
But, it was more the board was trying to make something that wasn't there.
They were fooling themselves and they weren't allowing any other thoughts.
I wasn't arguing anything, because I wasn't qualified to do so.
I got out after the first night you posted and stuck my
little $ in something Monkish.
I appreciate your posts and look forward to more truth without bias.
I won't bother their board, because we all want to win and I won't take away anything the DO make out of ETLS.
Yet again, you earn a person mark.
Thanks again!
Allen
Well *she* thinks *liquidty* is some kind of silly unnecessary notion that has no real relevance to the markets.
LOL!! You're right; she'd enjoy that kind of nostalgic time travel.
Do you even think she knows what liquidity is?
My bet is, if she can't find it in a POS stock PR by a crooked CEO she won't be able to find it.
4kids belongs back in 1934 when trading volume was low and settlement included couriers running paper between brokerage firms. maybe we could bring back the Model T and completely rid ourselves of computers.
short volume posted by finra is exactly that
folks can contact finra directly and ask about
the data they provide daily ~
We have. And we actually understood what we were told.
I would suggest that you take the first step by getting rid of your alias and come out with full disclosure of who you are.
I think that's an excellent idea. At the very least, she should do what she expects of others.
So you want to limit a persons trade to once every 4 days.
fourkids is not
a *great believer* in
*liquidity* ~
What is *fractured* is the intelligence of the microcap investor. Most are easily conned and most are naive in believing what company officers say without ever using logic to refute their statements. The SEC and Congress can't fix intelligence (or lack thereof). All they can do is provide transparency and hope that investors look at it objectively instead of burying their head in *wishful thinking* investments.
Hear hear!!
patrick byrne's comments .. read on macduff
http://norris.blogs.nytimes.com/2009/04/30/is-naked-shorting-gone/?pagemode=print
--
APRIL 30, 2009, 10:39 PM
Is Naked Shorting Gone?
In my Friday column, I report on data that seems to indicate the S.E.C. has solved the naked shorting problem. That data indicates that the number of failed stock trades — in which shares are not delivered on time — is way down.
That column reports that Patrick Byrne, the chairman of Overstock.com, suggested a number of ways that failures could be hidden by Wall Street. But I did not offer detail on those views.
For anyone interested, here is the relevant e-mail exchange:
Mr. Byrne:
I notice that Overstock.com has not been on the Reg SHO list for some time, and that few stocks are on it now. Does that mean the rules have worked, or what other comments would you make?
Floyd Norris
Dear Mr. Norris,
Thank you for asking. As you may know, I have never primarily considered this fight to be about Overstock: it has been a fight to curtail illegal-but-winked at stock manipulation in our marketplace before more companies were destroyed and our marketplace destabilized. I always felt the insistence by some that my fight was about Overstock was part of a cover-up, and so I commend you for asking regarding the greater picture.
If I learned that the percentage of HIV-infection in the public blood supply had dropped, it would give me cheer, but I would not say, “This level of HIV infected blood has reached an acceptable level.” Similarly, seeing this drop in the number of firms on the Reg SHO list and the number of failed shares brings me cheer, but does not make me think the game is won. In particular, until we have data on failures in the other nooks and crannies of the system (broker-level netting, pre-netting, Stock Borrow Program, ex-clearing and off-shore failures) I cannot celebrate victory. However, yes I do think that the rule changes put in place during the latter part of last year made stock manipulation harder, and people have to be more sophisticated to do it.
Ultimately, what has to happen is that we go to requirements for pre-borrow and hard-delivery. That is what it will take to really end things. Incidentally, that is where the discourse was some months ago when it log-jammed within the SEC: on one side, the good guys arguing for pre-borrow and hard-delivery; on the other side, SIFMA and the Managed Funds Association arguing against them (on the grounds that if they were forced to stop doing that thing they have all along sworn they were not doing, it would dramatically affect liquidity). I believe (and have a source from within the SEC who tells me) that the current debate over the uptick rule was largely manufactured to shift the discourse. It is a red herring.
Respectfully,
Patrick Byrne
Thank you for your prompt reply.
Is there evidence available on the scale of the “failures in the other nooks and crannies of the system (broker-level netting, pre-netting, Stock Borrow Program, ex-clearing and off-shore failures)” that you refer to? Netting sounds as if it removes the possibility of manipulation. Is there a reason to think otherwise?
Floyd Norris
Dear Floyd,
First, just to make sure you know what I am talking about, I am sending you this section from an essay I wrote last August 3rd:
Let us look at where these unsettled trades can reside within the piping of the “factory” that is our nation’s stock settlement system, The Depository Trust & Clearing Company (“DTCC”). I will use Goldman and Morgan as hypothetical examples only.
“Desked trades” – Imagine Goldman takes your order for 1,000 shares of stock, but stashes your order in a desk and sends you statements saying that you have those 1,000 shares in your account (and use your money towards the $10 billion they pay themselves at the end of the year for being so clever). They have written a CDF to you without your knowledge: there is a 1,000 share failure-to-deliver to you at Goldman (which no one else knows about, incidentally).
“Pre-netting” – Goldman has one client sell 5,000 shares and another buys 3,000. The seller never delivers. Goldman “pre-nets” the trades before submitting them to the DTCC. Hence, the DTCC sees only 2,000 shares of the failure.
“CNS netting” – Goldman submits to the DTCC’s Continuous Net Settlement system that it sold 2,000 shares that it does not deliver. Imagine Morgan Stanley was on the other side of that particular trade. But maybe Morgan has a client who sold 1,000 to a Goldman client, and which that Morgan client failed-to-deliver. The DTCC nets the two trades, and therefore sees just 1,000 shares of failure (Goldman to Morgan).
“Stock Borrow Program” (“SBP”) – The DTCC looks at that 1,000 share failure, and says, “We have 400 shares we can loan Goldman from our Stock Borrow Program”, i.e., from the accounts of other BD’s within the DTCC. That reduces the failures it sees to 600.
“Ex-clearing” – Suppose Goldman and Morgan apply to the DTCC to move 500 of those fails ex-clearing, and the DTCC approves. Those 500 FTD’s are turned into a derivative contract between Goldman and Morgan. As a private contract, it is not regulated by the SEC, and the DTCC does not even know when that contract gets cleaned up, if ever.
“Offshore Failures” – Suppose someone sells 1,000 shares into this market from a foreign offshore exchange? There is a different terminology to describe such failures, and therefore the data is hard to get to. What is clear, however, is that there is little pressure to clean up failures among exchanges.
In this example, there are 100 failures at the CNS level. Yet there were 7,000 failures throughout the system. Therefore, we should remember that, however many unsettled equity trades there are at the CNS level, it is likely to be a fraction, and maybe a quite tiny fraction, of the total unsettled trades in the system.
What is the ratio of total fails in the system to those trapped in the CNS system? No one seems to know (and in fact, while the individual pieces of data are known individually, I strongly suspect that no one party has the bird’s eye view of how many of these there are at all levels). The estimates I am told range from 3 to 15. For ease I will refer to this as, “The Iceberg Principle” and the ratio of total failures to CNS failures as “I”.
So how big a problem is this?
·The last reported size of the failures-to-deliver at the CNS level are $8.7 billion.
·By Iceberg Principle, total failures = I X $8.7 billion ˜ $30 to $120 billion.
·By Feynman Principle, total cost to cover = F X I X $8.7b = F X ($30 to $120 billion).
So respectfully, Wall Street, I believe you are Oak Ridge, Tennessee, blithely going about your jobs at the factory, taking for granted “the piping” that is our settlement system. I believe you have manufactured, and are sitting squarely on top of, a financial atomic bomb. That’s not good for you, of course, and if it goes critical, America is downwind.
Second: So now your questions are: Doesn’t netting remove the possibility of manipulation? And, What evidence is there regarding the size of failures in those crevices?
a) Netting does not remove the possibility of manipulation, but masks it instead. Assume Goldman has a client selling 1,000 shares of stock ABC, and Morgan has a client who buys those 1,000 shares, but the shares never deliver. However, Morgan has another client who sells 1,000 shares, and Goldman has one who buys those 1,000, but they also never deliver. In total, there have been 2,000 shares sold but not delivered. However, by pre-netting the brokers’ fails, those failures disappear. Collectively the two sellers have weighed down the market with 2,000 shares of phantom stock, but the netting makes 0 fails show at the DTCC.
b) What is the evidence supporting my claims regarding the size of the failures in those other crevices? I am 100% confident of my claims because I possess incontrovertible proof that, for one particular stock whose name for legal reasons I cannot disclose (but you may be able to guess), the failures maintained by just one broker in just the ex-clearing crevice have been, at times, greater than the sum total of the failures showing up in the CNS system: Thus to me, this is a settled question.
For one not in a position to review such evidence, however, you will have to do what I have done, which is, interview people in the settlement industry, find out where trade failures can persist, and for how long, and why. I think any fair-minded researcher will quickly be told of how much slop there is in these stock settlement niches, how easy it is to take things ex-clearing, how deep the offshore failures run, and so forth. Then the fair-minded researcher will try to get some data from the SEC, or DTCC, and will discover that he is stonewalled on even the most basic information, a fact which would, I think, raise the suspicions of that fair-minded researcher. Indeed, this is where some members of your esteemed profession have rubbed me raw, because instead of saying, “Why can’t the Establishment release the data, if there is really nothing there?” (as until a few years ago I would have expected any journalist to reason), instead almost all of them have said, “Well, I agree there is evidence of settlement failures, but the Establishment says there’s no problem, and they won’t release the data to show me one way or another, so I’ll just stop digging.” After all, remember that we are not debating the properties of some newly-discovered subatomic particles: this data is knowable, and is in fact, known. Good luck trying to get anyone to release it to you (without filing the kind of massive, one-in-a-lifetime lawsuit against an entire industry, as I have done).
I hope this helps.
Patrick
4kids, I thought you were an educator. you post the data, why not explain what it means?
Have you come to terms yet with the FACT that short sale volume DOES NOT represent short sales executed by short sellers? Do you know that a large majority of the short sale volume reported are sales executed on behalf of LONG invstors but trades simply routed through a market maker or specialist condcting a riskless transaction? You see, if they are reported to the market (not hidden) they would likewise be reported in short interest every 2-weeks and yet - poof, they are not.
I see you call up Patrick Byrne's quote. How old is it? Didn't teh deepcapture team try and correct you several times and you siimply dismissed their corrections? Now you call upon their words?
You are very long winded without taking much responsibility for anything. Why is that? You are making a big deal out of teh short voluem reports, yet you don't yet know what they stand for. Interesting!
short volume posted by finra is exactly that
folks can contact finra directly and ask about
the data they provide daily ~
i strongly believe NSS is a factor
particularly on co.s on the OTC
where *few* pay attn and exploitation
is easy
as patrick byrne pointed out to
the ny times .. there are many ways
for NSS to be *hidden* .. regardless
it's my *opinion* and it's one that
is shared by others including the
german gov't .. i'm grateful i lasted
long enough on ihub to see *changes*
when i first arrived .. the experts said
NSS didn't exist ~ that penny stocks were
never shorted and then when the SEC had to
admit to NSS (under the ever incompetent
chris cox) folks were *then* told it was
to provide liquidity
--
personally
what i pay attn to is volume traded
and the percentages .. it's pretty easy to
see when volume blows out ~ the question
becomes is it legit dilution or something
else entirely .. i look forward to effective
regulations consistently applied and loopholes
being eradicated across all levels ~
--
4kids
all jmo
you only make it about you with your loony ideas and baseless rhetoric.
answer the question. Do you propose a rule that would only allow an individual to trade a stock every 4-days. Isn't that what you propose if you can't trade until after settlement. you realize that T+3 is in place to deal with international trade and the delays associated with international settlement.
Please don't duck the questions, defend your proposals using DATA and LOGIC and not some dreamt up garbage. Have the COURAGE to defend the proposals you spam so frequently. You ask the SEC to defend theirs position and rules- why not try it yourself. Defend your position if YOU have all the answers.
I would suggest that you take the first step by getting rid of your alias and come out with full disclosure of who you are. You see, I do that because I have no fear in defending my position and stand behind my work and my name. People con the message boards because they have no fear when hiding behind an alias.
Do you still stick to your analysis of the short sale and NSS figures you been posting ?
this isn't about *me*
this is about a broken system
that doesn't have loopholes a
truck can be driven thru ...
can't wait to see what next week's
*installment* has to show ~
--
4kids
all jmo
as janice would *post* christ on a crutch
let's expand horizons
they suck because they like most others *imo*
in washington are corporately owned ~
the problem has become the *greed*
(for lack of a better word)
has overtaken to the point where the
street and *others* would eat their
young if it proved profitable enough
again ~ i look forward to consistency
i look forward to agencies not having
turf wars and data on publicly traded
co.s being *shared* including all shares
of every publicly traded co. being tagged
and tracked and *delivered* b4 they can
be *re used* .. i look forward to every
publicly traded co. having to file but
not with the consequences of sox which
has crippled legit micro caps which then
created loopholes that could be exploited
i look forward to every poster who posts
on a SMB (please note the word stock) being
held accountable for what is posted including
having to disclose *compensation* regardless
of which side of the trade they are on
i look forward to having the answers known
re: the rumors of the PRIMARY MM on the OTC
taking a stake in SMB located overseas
if true the possibilities are mind boggling
and i can only hope those that illegally manipulate
a stock's pps regardless of who and how it's done
are dealt with accordingly .. it's little wonder
*retail* has any faith in anything the SEC has done
as i've said for years .. they are either complicit
(yep that would mean they aid/abet and collude)
or they are just damn incompetent ~ not a lot of
room for *in between* here .. *imo*
i can only hope the experiment of may 6th had some
unintended consequences of its own ~ and the SEC
can't pull the SOS it always does .. the image i've
had for at least 3 years now is that of an ostrich
--
4kids
all jmo
as always
great post .. great info and please god
may there truly be some *independent* thinking
at that panel
thanks
--
4kids
all jmo
Is The SEC Still Working For Wall Street?
By Simon Johnson
May 28, 2010 at 6:04 am
(The underlined words are links in the original copy linked at the bottom of this post)
The Securities and Exchange Commission (SEC) under Mary Shapiro is trying to escape a difficult legacy – over the past two decades, the once proud agency was effectively captured by the very Wall Street firms it was supposed to regulate.
The SEC’s case against Goldman Sachs may mark a return to a more effective role; certainly bringing a case against Goldman took some guts. But it is entirely possible that the Goldman matter is a one off that lacks broader implications. And in this context the SEC’s handling of concerns about “high frequency trading” (HFT) – following the May 6 “flash crash”, when the stock market essentially shut down or rebooted for 20 minutes – is most disconcerting. (See yesterday’s speech by Senator Ted Kaufman on this exact issue; short summary.)
Regulatory capture begins when the regulator starts to see the world only through the eyes of the regulated. Rather than taking on board views that are critical of existing arrangements, tame regulators talk only to proponents of the status quo (or people who want even more deregulation). This seems to be what is happening with regard to HFT.
HFT is a big deal – perhaps as much as 70 percent of all stock trades are now done by “black box” computer algorithms (i.e., no one really knows how these work), and there are major open questions whether this operates in a way that is fair for small investors. (Disclosure: in 2000-2001, I was on the SEC’s Advisory Committee on Market Information; I was concerned about closely related issues, although market structure has changed a great deal over the past 10 years.)
The technical, “fact-gathering” activities of bodies like the SEC are of critical importance in both building an overall consensus – do we have a problem, what should we do about it – and also in creating the basis for regulatory action (e.g., the SEC does not even collect the data needed to understand how HFT contributed to the May 6 disaster). And anyone who has ever put together a relatively complicated discussion of this nature can attest that how you frame the issues is typically decisive, i.e., what is presented as the range of reasonable alternative views?
On Wednesday, the SEC will hold a “market structure roundtable” to discuss “high frequency trading, undisplayed liquidity, and the appropriate metrics for evaluating market structure performance.” But who exactly will be at this discussion?
The names of panelists for this discussion are not yet public and probably not yet final – but the preliminary list is far too much slanted towards proponents of HFT (6 out of 7 seats at the table; see Senator Kaufman’s speech for details), with hardly any representation of people in the markets (e.g., “buy side” mutual funds) who think HFT is potentially out of control or unfair. It looks very much like someone is setting up a love fest for HFT – and a boxing match with 6 tough guys against one lonely critic.
To be fair, after coming under heavy pressure from a leading member of the Senate Banking Committee over the past 48 hours, the SEC is backpedaling quickly and indicating that the panel invitations can be broadened. This is encouraging – perhaps the agency is finally overcoming its tin ear problem.
But nothing other than a balanced panel on June 2 would be acceptable. At the very least, the SEC needs to increase the panel to 10 people – 5 for and 5 against. And all the issues need to be on the table – including exactly who benefits from HFT, how much money they make in this fashion, and whether or not long-term investors (and the broader economy) really gain from such arrangements.
The SEC must understand that it has a long way to go to restore its credibility. Wednesday’s quasi-hearing is an important test and many people will be watching carefully.
http://baselinescenario.com/2010/05/28/is-the-sec-still-working-for-wall-street
Pounding the table but saying nothing will not yield results.
Whether you want to ADMIT it or not, the SEC has made many strides relative to short selling and NSS. I have read your poundings and to be honest, you are living in the past with your views.
Today we have transparency on fails in settlement.
Today we have more reporting cycles for short interest data.
Today we have regulators who are taking enforcement action against those that continue to violate Reg SHO rules.
Is it a perfect world free of mistake or fraud - nope. But then again, name one person alive that has never made a mistake. to think that a one size fits all will work in a complex arena like the stock market is naive. In fact, the presentations for reform you have suggested would do more harm then good when applied at a full market level.
All that being said, lets take short sale volume - the metric most misunderstood. The data is used in appropriately by peope who want to fit a square peg in a round hole. They want to suggest that the data alone supports massive NSS when it fact it does nothing of the sort. people need to EDUCATE first on what is tabulated in that column before yelling at the rooftops what they think it means because they discredit all their opinions when their statements are devoid of fact.
What is *fractured* is the intelligence of the microcap investor. Most are easily conned and most are naive in believing what company officers say without ever using logic to refute their statements. The SEC and Congress can't fix intelligence (or lack thereof). All they can do is provide transparency and hope that investors look at it objectively instead of burying their head in *wishful thinking* investments.
The fight against NSS abuses has come a long way. There is far more scrutiny and far more transparency than ever before. To deny that is being disengenious and I have a very public opinion on this subject.
exactly ..
some of us have been pounding the table
for a few years now .. i'm just glad that
more and more are becoming *aware*
as someone pointed out to me recently
knowledge is power .. i have little
respect for a *fragmented* market and
an incompetent SEC .. here's to change
that actually isn't a prerequisite to
exploiting additional loopholes
--
4kids
all jmo
4kids, thanks for the info and link.
http://norris.blogs.nytimes.com/2009/04/30/is-naked-shorting-gone/?pagemode=print
Despite all the egg on his face, it's good to see that Floyd Norris is at least talking to Patrick Byrne.
It's amazing that an individual has to explain the (purposefully?) complicated stuff to Congress, the press and the rest of us: the other nooks and crannies of the system - broker-level netting, pre-netting, Stock Borrow Program, ex-clearing and off-shore failures.
The best hope for a level playing field occurred two days ago, IMO. If the SEC is blind, the rest of us don't stand a chance.
http://sec.gov/news/press/2010/2010-86.htm
SEC Proposes Consolidated Audit Trail System to Better Track Market Trades
May 26, 2010 — The Securities and Exchange Commission today proposed a new rule that would require the self-regulatory organizations (SROs) to establish a consolidated audit trail system that would enable regulators to track information related to trading orders received and executed across the securities markets.
yep ~ and i'm grateful not every *system*
is as corrupt or incompetent as the us system
is ~ but what has been revealed in the past
48 hours by the SEC .. talk about christ on
a crutch .. seriously beyond the pale as to
the gross incompetence or outright *collusion*
with those *select* entities who can and do
exploit loopholes daily in their continued
profiting for destruction ~
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=50621466
--
4kids
all jmo
hmm the old *liquidity* argument
fascinating when the OS on some
OTC stocks no. into the BILLIONS
yep i can see where *liquidity* would be
a factor with billions of shares *available*
to *trade*
interesting commentary by patrick byrne to floyd norris
from april 2009 ~ from an individual who had the money
and the time to *ascertain* aspects *retail* never could
APRIL 30, 2009, 10:39 PM
Is Naked Shorting Gone?
In my Friday column, I report on data that seems to indicate the S.E.C. has solved the naked shorting problem. That data indicates that the number of failed stock trades — in which shares are not delivered on time — is way down.
That column reports that Patrick Byrne, the chairman of Overstock.com, suggested a number of ways that failures could be hidden by Wall Street. But I did not offer detail on those views.
For anyone interested, here is the relevant e-mail exchange:
Mr. Byrne:
I notice that Overstock.com has not been on the Reg SHO list for some time, and that few stocks are on it now. Does that mean the rules have worked, or what other comments would you make?
Floyd Norris
Dear Mr. Norris,
Thank you for asking. As you may know, I have never primarily considered this fight to be about Overstock: it has been a fight to curtail illegal-but-winked at stock manipulation in our marketplace before more companies were destroyed and our marketplace destabilized. I always felt the insistence by some that my fight was about Overstock was part of a cover-up, and so I commend you for asking regarding the greater picture.
If I learned that the percentage of HIV-infection in the public blood supply had dropped, it would give me cheer, but I would not say, “This level of HIV infected blood has reached an acceptable level.” Similarly, seeing this drop in the number of firms on the Reg SHO list and the number of failed shares brings me cheer, but does not make me think the game is won. In particular, until we have data on failures in the other nooks and crannies of the system (broker-level netting, pre-netting, Stock Borrow Program, ex-clearing and off-shore failures) I cannot celebrate victory. However, yes I do think that the rule changes put in place during the latter part of last year made stock manipulation harder, and people have to be more sophisticated to do it.
Ultimately, what has to happen is that we go to requirements for pre-borrow and hard-delivery. That is what it will take to really end things. Incidentally, that is where the discourse was some months ago when it log-jammed within the SEC: on one side, the good guys arguing for pre-borrow and hard-delivery; on the other side, SIFMA and the Managed Funds Association arguing against them (on the grounds that if they were forced to stop doing that thing they have all along sworn they were not doing, it would dramatically affect liquidity). I believe (and have a source from within the SEC who tells me) that the current debate over the uptick rule was largely manufactured to shift the discourse. It is a red herring.
Respectfully,
Patrick Byrne
Thank you for your prompt reply.
Is there evidence available on the scale of the “failures in the other nooks and crannies of the system (broker-level netting, pre-netting, Stock Borrow Program, ex-clearing and off-shore failures)” that you refer to? Netting sounds as if it removes the possibility of manipulation. Is there a reason to think otherwise?
Floyd Norris
Dear Floyd,
First, just to make sure you know what I am talking about, I am sending you this section from an essay I wrote last August 3rd:
Let us look at where these unsettled trades can reside within the piping of the “factory” that is our nation’s stock settlement system, The Depository Trust & Clearing Company (“DTCC”). I will use Goldman and Morgan as hypothetical examples only.
“Desked trades” – Imagine Goldman takes your order for 1,000 shares of stock, but stashes your order in a desk and sends you statements saying that you have those 1,000 shares in your account (and use your money towards the $10 billion they pay themselves at the end of the year for being so clever). They have written a CDF to you without your knowledge: there is a 1,000 share failure-to-deliver to you at Goldman (which no one else knows about, incidentally).
“Pre-netting” – Goldman has one client sell 5,000 shares and another buys 3,000. The seller never delivers. Goldman “pre-nets” the trades before submitting them to the DTCC. Hence, the DTCC sees only 2,000 shares of the failure.
“CNS netting” – Goldman submits to the DTCC’s Continuous Net Settlement system that it sold 2,000 shares that it does not deliver. Imagine Morgan Stanley was on the other side of that particular trade. But maybe Morgan has a client who sold 1,000 to a Goldman client, and which that Morgan client failed-to-deliver. The DTCC nets the two trades, and therefore sees just 1,000 shares of failure (Goldman to Morgan).
“Stock Borrow Program” (“SBP”) – The DTCC looks at that 1,000 share failure, and says, “We have 400 shares we can loan Goldman from our Stock Borrow Program”, i.e., from the accounts of other BD’s within the DTCC. That reduces the failures it sees to 600.
“Ex-clearing” – Suppose Goldman and Morgan apply to the DTCC to move 500 of those fails ex-clearing, and the DTCC approves. Those 500 FTD’s are turned into a derivative contract between Goldman and Morgan. As a private contract, it is not regulated by the SEC, and the DTCC does not even know when that contract gets cleaned up, if ever.
“Offshore Failures” – Suppose someone sells 1,000 shares into this market from a foreign offshore exchange? There is a different terminology to describe such failures, and therefore the data is hard to get to. What is clear, however, is that there is little pressure to clean up failures among exchanges.
In this example, there are 100 failures at the CNS level. Yet there were 7,000 failures throughout the system. Therefore, we should remember that, however many unsettled equity trades there are at the CNS level, it is likely to be a fraction, and maybe a quite tiny fraction, of the total unsettled trades in the system.
What is the ratio of total fails in the system to those trapped in the CNS system? No one seems to know (and in fact, while the individual pieces of data are known individually, I strongly suspect that no one party has the bird’s eye view of how many of these there are at all levels). The estimates I am told range from 3 to 15. For ease I will refer to this as, “The Iceberg Principle” and the ratio of total failures to CNS failures as “I”.
So how big a problem is this?
·The last reported size of the failures-to-deliver at the CNS level are $8.7 billion.
·By Iceberg Principle, total failures = I X $8.7 billion ˜ $30 to $120 billion.
·By Feynman Principle, total cost to cover = F X I X $8.7b = F X ($30 to $120 billion).
So respectfully, Wall Street, I believe you are Oak Ridge, Tennessee, blithely going about your jobs at the factory, taking for granted “the piping” that is our settlement system. I believe you have manufactured, and are sitting squarely on top of, a financial atomic bomb. That’s not good for you, of course, and if it goes critical, America is downwind.
Second: So now your questions are: Doesn’t netting remove the possibility of manipulation? And, What evidence is there regarding the size of failures in those crevices?
a) Netting does not remove the possibility of manipulation, but masks it instead. Assume Goldman has a client selling 1,000 shares of stock ABC, and Morgan has a client who buys those 1,000 shares, but the shares never deliver. However, Morgan has another client who sells 1,000 shares, and Goldman has one who buys those 1,000, but they also never deliver. In total, there have been 2,000 shares sold but not delivered. However, by pre-netting the brokers’ fails, those failures disappear. Collectively the two sellers have weighed down the market with 2,000 shares of phantom stock, but the netting makes 0 fails show at the DTCC.
b) What is the evidence supporting my claims regarding the size of the failures in those other crevices? I am 100% confident of my claims because I possess incontrovertible proof that, for one particular stock whose name for legal reasons I cannot disclose (but you may be able to guess), the failures maintained by justone broker injust the ex-clearing crevice have been, at times, greater than the sum total of the failures showing up in the CNS system: Thus to me, this is a settled question.
For one not in a position to review such evidence, however, you will have to do what I have done, which is, interview people in the settlement industry, find out where trade failures can persist, and for how long, and why. I think any fair-minded researcher will quickly be told of how much slop there is in these stock settlement niches, how easy it is to take things ex-clearing, how deep the offshore failures run, and so forth. Then the fair-minded researcher will try to get some data from the SEC, or DTCC, and will discover that he is stonewalled on even the most basic information, a fact which would, I think, raise the suspicions of that fair-minded researcher. Indeed, this is where some members of your esteemed profession have rubbed me raw, because instead of saying, “Why can’t the Establishment release the data, if there is really nothing there?” (as until a few years ago I would have expected any journalist to reason), instead almost all of them have said, “Well, I agree there is evidence of settlement failures, but the Establishment says there’s no problem, and they won’t release the data to show me one way or another, so I’ll just stop digging.” After all, remember that we are not debating the properties of some newly-discovered subatomic particles: this data is knowable, and is in fact, known. Good luck trying to get anyone to release it to you (without filing the kind of massive, one-in-a-lifetime lawsuit against an entire industry, as I have done).
I hope this helps.
Patrick
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=49584255
I included that for other posters. You may want to search for a Mac equivalent.
Well, a Windows scanner wouldn't be of any use to me.
I've never had an "attack".
Yes, you have. You just didn't know it unless you have R/T monitoring set up to tell you.
Recently iHub has been getting hit with a particular trojan, the HTML/Infected.WebPage.Gen - Malware (Trojan), which may be used to perform malicious activities on your computer and possibly download additional malware.
BTW, since you're Mac, you're still vulnerable.
Probably you're just being pinged.
Nope. Good Windows online scanner:
http://windowsecurity.com/ > Security Tests > Trojan Scan > Select Deep Scan (and go walk the dog).
Today Germany...... tomorrow, the world! <g>
Berlin poised to extend short selling ban
By Gerrit Wiesmann in Berlin
May 25 2010 14:55
The German government is planning to ban the naked short selling of all German stocks listed on the country’s exchanges in a sweeping enlargement of last week’s contentious bar on the naked short selling of some securities.
The move is part of a national crackdown on financial-market speculation, which Berlin thinks has gone unregulated for too long as European Union and G20 members search for agreement about new rules at an international level.
In a surprise move last Tuesday, Berlin decided partially to ban naked short selling – the practice of selling securities such as shares and bonds that are not owned or borrowed – of eurozone sovereign bonds and credit default swaps. as well as the shares of a group of 10 leading German financial stocks. That caused consternation in other European capitals, largely because of its unexpected, unilateral nature.
National securities regulators in Europe are in intense discussions over how to respond to the German ban, with a possible announcement on greater co-operation as early as this week.
Berlin’s announcement also enraged international partners, who had not been briefed about Germany’s decision to go it alone. It was not immediately clear how involved other capitals have been informed of the latest move.
People briefed on the matter said the government was now following through on a promise to turn last week’s ban into more permanent legislation. The cabinet could sign off on a bill next month.
These people said that a draft bill now being circulated in the German capital would ban market participants from selling certain securities without owning them, or having an option to buy them, at the time of the “naked” sale.
The proposals would also be extended to some euro currency-derivatives, these people said. Berlin would also seek to make more transparent who was selling securities short and in what volume.
http://www.ft.com/cms/s/0/84bbacde-67ff-11df-af6c-00144feab49a.html?ftcamp=rss
Because I've read tons of posts about it.
if this has never happend to you how would you know this to be the case? "Probably you're just being pinged. Happens automatically, for a variety of reasons, and has nothing to do with IHub."
Germany to ban naked short selling
Germany's Chancellor Merkel to ban naked short sell 5/19/10
Who's next
It's pretty easily explained, but once more, this is not the FFGO board.
With out a doubt.
There's been some crazy trading for along time. The type you can't explain.
News: this is not the FFGO board. Take it over there, if you must.
I thought he was on a cross??? lol.
One more time: Christ on a crutch.
so you think ffgo is being shorted too? I think it is.
We've got it happening at FFGO right now
probally the sec and finra wanted to keep them off the SHO list to keep the panic level down....they were not being shorted normally at all and you know it. Insane volatility all rolling out the red carpets for these hedsge funds and such....and it is nice to see they got punished for it...
good one thanks for sharing these Elia.
WANT MORE? May 13, 2010, 1:22 pm Deutsche Bank's naked wrist slap
Regulators impose another minuscule fine for short-selling transgressions by giant firms.
Securities industries watchdogs have had it with naked short selling -- and if the biggest securities firms don't watch out, they could be left with some unsightly welts on their wrists.
Thursday's sort-of crackdown comes courtesy of the Financial Industry Regulatory Authority, the industry group that kind of watches over the biggest broker-dealers. It slapped Deutsche Bank (DB) with a $575,000 fine for five years' worth of violations of rules against naked shorting, the practice of selling a stock without making an effort to find shares to sell.
Where are the teeth?
Finra hit National Financial Services, a unit of Boston-based fund giant Fidelity, with a $350,000 fine for similar violations.
Securities rules say brokers can't do a short sale, in which a trader borrows and sells a stock in hopes of repurchasing it later at a lower price and pocketing the difference, without first identifying "reasonable grounds to believe that the security can be borrowed," in Finra's words.
Both Deutsche and National Financial virtuously set up systems to prevent this from happening, Finra said. The idea is to prevent abusive short sales that manipulate the market.
But as luck would have it, Deutsche then "disabled its system in certain instances." National, going one better, "created a separate system for certain customers," Finra said.
Deutsche and National Financial, which neither admitted nor denied Finra's findings, aren't the only ones playing this game. So is Goldman Sachs (GS). It got fined $450,000 last week by the Securities and Exchange Commission and NYSE Regulation for 521 violations of short-selling rules -- including several instances in which the firm found itself in the SEC's short-selling "penalty box."
The censures of the three firms come as the SEC seeks to crack down on naked short-selling with what you might describe as mixed results. Yes, fines and bad publicity are always useful tools. On the other hand, three giant players managed to settle cases by spending just $1.4 million -- a mere fraction of Wall Street's ever- increasing trading profits.
"The SEC has done a fantastic job identifying naked short-selling as a destroyer of shareholder value," said John Tabacco, who runs the locatestock.com electronic stock-locating service. "But when you compare $1 million in fines with hundreds of millions of dollars in execution and clearing profits, you can see where the firms just see this as a cost of doing business."
Back to main column
I see you didn't actually read my post. They were NOT being shorted naked. If they had been in any significant way, they'd have been on the SHO list. They were just being shorted. Quite normally.
The shorts were right, and should not have been punished for that. People should indeed have noticed the increasing short interest, and should have realized that something was badly wrong with the companies in question.
But never mind. You don't understand a word I'm saying, do you?
"traders broke short selling rules on 385 separate occasions"
WE SHOULD REQUEST THE DATA FROM THE SEC FOUND BASED ON THE FOIA AND SEE WHAT STOCKS THEY WERE TARGETING!!
another claim!!! good job and theres plenty more out there...we all know NSS and cellar boxing and all these other tactics are out there. ANything for people to make a quick buck and screw over the majority. Dont belive it look at the financial crisis in late 2008...hahaha yes.
that sounds more like an excuse to me...and of course they were being NSS those financials were they were dropping like no tomorrow....
SEC says two Boca men performed illegal short saleslatest .By Jeff Ostrowski Palm Beach Post Staff Writer
Posted: 4:34 p.m. Tuesday, May 11, 2010
The Securities and Exchange Commission on Tuesday accused two Boca Raton men of illegal short selling of securities to make illicit profits.
Accused of violating the SEC's Rule 105, designed to prevent abusive short selling and market manipulation, were Peter G. Grabler who made $636,123, and Leonard Adams, who made $331,387. Grabler and Adams participated in numerous secondary offerings of stock in public companies to improve their access to initial public offerings underwritten by the same broker-dealers the SEC said.
Grabler and Adams, who both lived in Massachusetts during the period of the wrongdoing, agreed to pay a combined $1.5 million to settle the SEC's charges.
jeff_ostrowski@pbpost.com
That is not an appropriate reply to my post.
Yes, the SEC slapped a shorting ban on 19 financial stocks, only one of which--Deutsche Bank--was even on the SHO list. No naked shorting at all. That was one of Chris Cox's very worst moments; he sounded like a sleazy penny stock CEO.
The FACT was that the financial companies were in enormous trouble. Trouble of their own making. They deserved to be shorted into the ground. That's what shorting's FOR: to detect and correct mispricings.
And even Cox admitted months later that his shorting ban had only made a bad situation worse.
f'ing slapp on the wrist considering the profts
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If Your Government Says It, It Must Be True.
All posts about naked short selling of listed stocks, how to do it, and why it's a good idea are welcome.
If you have that kind of information, after all, The Government wants to speak with you.
What got this board started?
Cox, Paulson and Bernanke went before Congess and suggested a short selling ban.
They helped perpetuate the "illegal naked short selling" myth...
The myth of "NSS" is everywhere on stock message boards.
It's like people think there is a secret vault somewhere hiding mythical naked shorts from the markeplace.
If that's true, somebody with AUTHORITY should PLEASE FIND IT!
To those who want to post about a stock that they claim has a Naked Short Position:
1. Prove it. (It is highly doubtful you can provide any verifiable proof, since short data is only published twice a month, and you would have to have information from a SRO).
2. Company claims in press releases are not a legitimate source of naked short claims or information. (Don't bother calling this "proof" of anything).
3. Posts about Patrick Byrne and his conspiracy theories are well covered elsewhere. No Sith Lord posts, please.
4. Mark Faulk and his get shorty campaign? Forget it.
5. Any more conspiracy nutjob people out there that claim to have proprietary models that produce daily short position data on stocks? Again, not interested.
This board was created to discuss PROVEN naked short positions in LISTED STOCKS.
This means using REGULATORY or GOVERNMENT data on naked short interest in a stock.
You got that? Post it.
P.S. Open invitation to the ANY SEC EMPLOYEE or REGULATORY AUTHORITY -- PLEASE join iHub and post about all these mythical naked short positions.
Bring your unicorn!
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