The Authoritative NSS Page (NAKED)

[GrooveMaster]

My shirts are still filthy...:(

[Stock]

No tickee, no laundee. That what I arrways say ;)

[GrooveMaster]

Are you suggesting the shirts need to be done by Thursday?

[olandug]

Thank everyone here for their clear explanations. Much appreciated .

[Stock]

Janice is correct. Fails to deliver (at the end of one trading day) can be both short, and long.

This is why the settlement process, as a routine, takes more than one day. Currently, it's trade date + 3 days (T+3).

A lot of people have trouble grasping the concept of a long failure to deliver.

I have yet to read a short, easy explanation that most iHubbers could understand. To me, it's like this:

=====

Imagine you take your laundry to a cleaners that requires you pre-pay when you drop it off. You walk in at 10 a.m. and pay $20 and they promise you 10 clean shirts in 3 days.

You tell the cleaners, no, you need your shirts today. If you're lucky, the lady in the back can clean and press your shirts today. You come back at 5 p.m. and your shirts aren't ready; the lady in the back was too busy, so the owner sent your shirts off site to their central processing location, and the owner promises your shirts will be in tomorrow.

You come back the next day at 5 p.m., all 10 shirts are ready. You got your shirts in 2 days. The owner tells you that you are lucky, you got them a day early, because he rushed things along. He doesn't charge you any more, but you got your shirts for the same $20 you paid up front.

You are satisfied with the clean shirts and good customer service and leave the store happy.

---

So, the cleaners FAILED TO DELIVER your shirts on day one.

Does that mean you don't own the shirts?

NO. They are your shirts. You just don't have them yet.

===========

Sometimes, the market participant that processed your trade can't settle your trade on the same day, either because the shares (long or short) did not come from their OWN inventory, or from the electronic inventory (the DTCC).

The market participant has to get the (long) shares into the electronic inventory for your broker dealer, or wait for settlement somewhere else to process your trade.

Many, MANY long fails to deliver happen with new shares being introduced to the market by low dollar volume microcap companies. Those trades rarely settle on the same day for a LOT of reasons.

Imagine this happening thousands or millions of times per day on high volume stocks. They have three days to get your trade settled in the back office. Because they need it.

Hope this helps...

[janice shell]

The daily short volume reports are meaningless.

Follow the bi-monthly short INTEREST reports.

Or call FINRA; they'll tell you the same thing.

[olandug]

Anyone know how to enforce the new FINRA rules?

OTOW had 50% 'fails to deliver' today according to FINRA

We now need to monitor 13 days from now and make sure these 3,102,910 shares are covered.

We should also somehow be able to determine who shorted these shares.

Does anyone know what we should do?

Is the 13 days rule 13 trading days or 13 days straight?

Thanks

[Stock]

Not authoritative, but worth mentioning, in that this will likely be a non-event event.

It's been re-posted on iHub like 100 times

http://investorshub.advfn.com/boards/msgsearch.aspx?SearchStr=%22New%20Rules%20Will%20Cause%20Panic%20For%20Shorts%22

This will take 13 business days anyway for the OATS reporting to bring the desired outcome anyway. So it's not like some switch being flipped...

Most of the reporting has been in place for some time, it's just legally required now... and the SEC can start fining for non-compliance.

New Rules Will Cause Panic For Shorts

Posted: Feb 25 2011

By: Jim Sinclair

Edited: February 25, 2011 at 9:12 pm

Filed under: General Editorial

Dear Friends,

Between now and Monday, February 28th be prepared for panicked short sellers who cannot make delivery to try every trick in the book to buy back their short positions.

The following is information from Dr. Jim Decosta:

Here is the URL:

http://www.finra.org/Industry/Regulation/RuleFilings/2010/P121892?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+FINRARuleFilings+(FINRA+Rule+Filings)

Quote: 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.

The verbiage in 4320 is especially well done as it FINALLY puts the clearing firms that aid and abet this crime wave on the spot. With the FFETF, which is made up of 25 different agencies, now on the scene the transparency has increased markedly. You can imagine how critical the lack of transparency is to a crime involving selling nonexistent securities and then refusing to ever deliver that which you sold AFTER being allowed access to the funds of the investor being defrauded.

Here are the links to the rules SR-FINRA-2010-028 and SR-FINRA-2010-043:
http://www.finra.org/Industry/Regulation/RuleFilings/2010/P121522

Notice the part I marked in bold in the quote above:
"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."

http://jsmineset.com/2011/02/25/new-rules-will-cause-panic-for-shorts/

[Bull Finch]

The Thirty Niners dug a DEEP HOLE!

2011 will not be the year for the SHORTMAN!

Cover now while you can!

BMFL<OE

next week(s) is here

[AlanC]

BullFinch: 39 different Hedge Funds all a tad short, imagine that?

[Bull Finch]

Nice to see the New Year begin

with the Naked Shortman on the run!

Keep running Shortman this is just the beginning!

BMFL<OE

next week(s) is here

[AlanC]

Awesome! The naked shorters don't like to lose! They are going to be losing a lot more in 2011!

[Bull Finch]

Porsche wins $2 billion

U.S. hedge fund suit's dismissal
By Christiaan Hetzner and Jonathan Stempel Christiaan Hetzner And Jonathan Stempel – Fri Dec 31, 4:41 am ET
BERLIN/NEW YORK (Reuters) – A U.S. federal judge dismissed a lawsuit by 10 hedge fund groups accusing German automaker Porsche SE (PSHG_p.DE) of cornering the market in shares of Volkswagen AG (VOWG_p.DE), resulting in more than $2 billion of damages.

U.S. District Judge Harold Baer said the funds, led by Elliott Associates and Black Diamond Offshore Ltd, could not maintain securities fraud claims based on Porsche's alleged "short squeeze."

He cited a June ruling by the U.S. Supreme Court, in Morrison v. National Australia Bank Ltd (NAB.AX), that narrowed the ability of plaintiffs to use U.S. courts to pursue claims involving non-U.S. conduct.

Claims were also dismissed against former Porsche Chief Executive Wendelin Wiedeking and his deputy Holger Haerter, Porsche said.

It is unclear whether the hedge funds might appeal.

"Obviously, we're disappointed," said Jim Sabella, a lawyer representing the Black Diamond hedge fund group. "While we disagree with Judge Baer, the real problem is Morrison, which is a disaster for investors."

Kaspar Stoffelmayr, a lawyer representing the hedge funds led by Elliott, declined to comment. An outside spokeswoman for that group did not immediately return a call for a comment.

The hedge funds alleged they were victimized when Porsche quietly bought nearly all the freely traded ordinary shares of Volkswagen as part of a plan to take over the company, contrary to its public statements that it had no plans to do so.

When Porsche revealed its holdings in October 2008, shares of VW soared, briefly making the company the world's biggest by market value.

This caused losses for the hedge funds, which had entered swap agreements and would have benefited from a decline in price.

"Plaintiffs' swaps were the functional equivalent of trading the underlying VW shares on a German exchange," Baer wrote.

"The economic reality is that plaintiffs' swap agreements are essentially 'transactions conducted upon foreign exchanges and markets,' and not 'domestic transactions'" warranting U.S. court protection, he added.

Baer dismissed most of the plaintiffs' claims with prejudice, meaning they cannot be brought again.

The claims had posed a risk for Volkswagen, which wants to merge Porsche into its operations next year.

The cases are Elliott Associates et al v. Porsche Automobil Holding SE et al, U.S. District Court, Southern District of New York, Nos. 10-00532, and Black Diamond Offshore Ltd et al v. Porsche Automobil Holding SE in the same court, No. 10-04155.

(Editing by Robert MacMillan and Steve Orlofsky)

BMFL<OE

next week(s) is here

[Bull Finch]

TIMELINE-Porsche's pursuit of Volkswagen

Mon Jan 3, 2011 9:42am EST

Jan. 25, 2010 - A group of investment funds sue Porsche SE and two of its former top executives accusing them of fraud in a "short squeeze" that caused the funds to lose more than $1 billion from Porsche's attempted takeover of Volkswagen AG (VOWG_p.DE) in 2008.

March 25 - Volkswagen says it will raise net proceeds of about 4.1 billion euros after issuing 64.9 million new preferred shares at a price of 65 euros each in its rights issue.

April 29 - Elliott Associates, L.P. says securities fraud and manipulation lawsuit against Porsche SE expands to more than $2 billion in losses and says 18 investment funds have joined the lawsuit against Porsche SE.

July 29 - Volkswagen CFO says Porsche sees lawsuits without merit so 2011 timetable for Porsche SE integration remains.

- Volkswagen CFO says Porsche SE preferred shareholders will receive Volkswagen preferred shares in 2011 integration.

Oct. 19 - Financially troubled auto holding Porsche SE says it may not be absorbed into Volkswagen by the end of 2011, as planned, due to some unresolved legal and tax issues related to the deal, the chief executive of both companies says.

Nov. 30 - Porsche CEO says there are tax risks of 1-2 billion euros related to any merger with Volkswagen before 2014.

Dec. 30 - A U.S. federal judge dismisses a lawsuit by 10 hedge fund groups accusing German automaker Porsche of cornering the market in shares of Volkswagen, resulting in more than $2 billion of damages.

(Compiled by Michelle Martin in Frankfurt)

BMFL<OE

next week(s) is here

[Stock]

PHONIENEWS is the web site that is on. Get it?

phony (comparative phonier, superlative phoniest)

Fraudulent; fake; having a misleading appearance.

A good jeweler should be able to tell a real stone from a phony one.

http://en.wiktionary.org/wiki/phony

[wrenchman]

Hey Generic what do you think of this do you think its legite,someone posted on another board and then i found the original!!



http://www.phonienews.com/12316/the-nail-in-wallstreets-coffin/

[Stock]

This particular page may help you broaden your understanding of OATS and all the various people impacted by the regulatory change

http://www.finra.org/Industry/Compliance/MarketTransparency/OATS/FAQ/P085540

[Stock]

I'm going to have to explain what OATS is to answer, I suppose.

Without getting too complicated, OATS is the audit trail on trade activity. Trades are required -- first and foremost -- to be timely reported, and then flagged as the correct type of trade secondarily, along with other tertiary data that corresponds with quotes and trades.

The issue here appears to be with trade REPORTING from the point in time this new reg is implemented, not historical trade reporting. FINRA wants the data stream to be organized and reported a certain way, and compliance may have been technically too difficult or time consuming or costly for all broker-dealers to implement. That would be a reason to delay.

The past is irrelevant in the realm of this regulation, as far as I can see. So if you are thinking this would make a difference in the way PAST trades were flagged or reported (short or long, for instance), the regulation will not be retroactive -- as far as I can see.

In summary: It's a computer thing. Some broker-dealers probably haven't been able to get it right yet. So the deadline was extended.

----

Here's FINRA's page on OATS if you want to read all about it.

http://www.finra.org/Industry/Compliance/MarketTransparency/OATS/index.htm

Order Audit Trail System (OATS TM)

FINRA has established the Order Audit Trail System (OATS), as an integrated audit trail of order, quote, and trade information for Nasdaq and OTC equity securities. FINRA uses this audit trail system to recreate events in the life cycle of orders and more completely monitor the trading practices of member firms. Under FINRA Rules 7410 - 7470, FINRA member firms are required to develop a means for electronically capturing and reporting to OATS specific data elements related to the handling or execution of orders, including recording all times of these events in hours, minutes, and seconds, and to synchronize their business clocks. These Rules were approved by the SEC on March 6, 1998.

---------

Here's the link to the document you are quoting:

http://www.finra.org/Industry/Compliance/MarketTransparency/OATS/TechnicalSpecifications/

OATS Technical Specifications

The OATS Reporting Technical Specifications document covers the requirements and procedures for clock synchronization; system access requirements for supplying OATS files to FINRA; order reporting scenarios that describe, from a business perspective, responsibilities for reporting to OATS; details regarding the required layout of OATS files; procedures for providing corrections to OATS data and for receiving feedback from FINRA; and the procedures for registration, self administration, and testing and certification. It also contains a data dictionary that describes all of the data elements in OATS files; a list of report formats, including field names, data types, and lists of permissible values; examples of order reports; and a glossary.

The OATS Reporting Technical Specifications is not intended to provide information about how to develop an electronic system that reports order information; it is only intended to describe what such a system must deliver to FINRA.

FINRA released a new edition of the OATS Reporting Technical Specifications dated November 8, 2010. View more details on the OATS Reporting Technical Specifications changes.
OATS Reporting Technical Specifications (11/08/10 edition)

View PDF file (PDF 1.13 MB)

View our archive of past specifications.

If you are having problems accessing these files, please contact FINRA Business and Technology Support Services at 1-800-321-6273

[wrenchman]

It seems like at the last moment they were extended maybe to give time to some what do you think?

[wrenchman]

What do you think about this as far as effect on stocks and otc?

n light of today's announcement by the SEC that it is extending the compliance date for amendments to Rule 201 and Rule 200(g) of SEC Regulation SHO, FINRA intends to file a proposed rule change to delay the effective date of changes to OATS to coincide with the new compliance date of these amendments to SEC Regulation SHO, which is currently anticipated to be February 28, 2011. Accordingly, FINRA will not release the code changes described in the August 30, 2010 version of the OATS Reporting Technical Specifications on Monday, November 8, 2010. Rather, these changes will be released in the OATS production environment on Monday, February 28, 2011. FINRA will announce a new date for the availability of such changes in the OATS test environment shortly.

[Stock]

No, it was implemented, as scheduled.

Had no impact whatsoever on any stocks that I am aware of.

[wrenchman]

hi, Was this reg date amended also to a later date,cuz i know a stock that has a sig amount of ftds but yet is not moving am i understanding this wrong.TIA

[Stock]

10-35 SEC Approval and Effective Date for New Consolidated FINRA Rule; Effective Date: October 15, 2010

View PDF

SEC Approves New Consolidated FINRA Rule

Regulatory Notice
Notice Type

Consolidated Rulebook
Rule Approval Referenced Rules & Notices

FINRA Rule 4320
Information Notice 03/12/08
Information Notice 10/06/08
Regulatory Notice 08-57
Regulation SHO
Suggested Routing

Compliance
Legal
Operations
Senior Management
Trading and Market Making Key Topics

Short Sale Delivery
Short Sales

Executive Summary

Following the consolidation of NASD and the member regulation, enforcement and arbitration functions of NYSE Regulation into FINRA, FINRA established a process to develop a new consolidated rulebook (Consolidated FINRA Rulebook), which FINRA has discussed in previous Information Notices.1 FINRA is proposing new consolidated rules in phases for approval by the Securities and Exchange Commission (SEC) as part of the Consolidated FINRA Rulebook.2 In June and July, the SEC approved five new consolidated FINRA Rules.3 This Regulatory Notice specifically addresses the approval and effective date of new FINRA Rule 4320 (Short Sale Delivery Requirements).4

Text of new FINRA Rule 4320 is available in the online FINRA Manual at www.finra.org/finramanual/rules/r4320.5

Questions regarding this Notice should be directed to Racquel Russell, Assistant General Counsel, Office of General Counsel, at [phone].

Background & Discussion

On July 20, 2010, the SEC approved a FINRA proposed rule change to adopt NASD Rule 3210, with minor changes, as FINRA Rule 4320 in the Consolidated FINRA Rulebook.6 FINRA Rule 4320 applies short sale delivery requirements to equity securities not otherwise covered by the close-out requirements of Regulation SHO.7 Among other things, FINRA Rule 4320 requires participants of registered clearing agencies to take action on failures to deliver that exist for 13 consecutive settlement days in certain non-reporting securities. In addition, if the fail to deliver position is not closed out in the requisite time period, a participant of a registered clearing agency or any broker-dealer for which it clears transactions is prohibited from effecting further short sales in the particular specified security without borrowing, or entering into a bona fide arrangement to borrow, the security until the fail to deliver position is closed out.8

With a few exceptions, new FINRA Rule 4320 is identical to former NASD Rule 3210, and the changes made to the text do not alter the operation and application of the rule. For example, the new FINRA rule omits language that provided allowances for "grandfathered" securities during the initial implementation period of NASD Rule 3210 which no longer is relevant. In addition, FINRA Rule 4320 clarifies, consistent with Regulation SHO, the borrowing requirements for clearing agency participants—including broker-dealers for which they clear transactions—that sell short non-reporting threshold securities for which a fail to deliver position has not been closed out in the requisite time.9

In addition, FINRA will apply to FINRA Rule 4320 all interpretive positions issued by the SEC and its staff with respect to the parallel provisions of Regulation SHO (i.e., Rule 203(b)(3) of Regulation SHO), as was the case with NASD Rule 3210. Therefore, FINRA continues to expect firms to observe all interpretive views issued by the SEC and its staff with respect to Rule 203(b)(3) and apply such positions to FINRA Rule 4320.10

Rule Conversion Charts

As discussed in additional detail in Information Notice 10/06/08 and Regulatory Notice 08-57, FINRA has posted three Rule Conversion Charts on its website to help firms become familiar with the new rules and show how the new rules relate to the NASD and/or Incorporated NYSE Rules in the Transitional Rulebook that they will replace.

Firms should be aware that the charts are intended as a reference aid only. FINRA reminds firms that the charts do not in any way serve as a substitute for diligent review of the relevant new rule language. The Rule Conversion Charts are located at www.finra.org/ruleconversionchart.

--------------------------------------------------------------------------------

1 See Information Notice 10/06/08 (Rulebook Consolidation Process: Effective Dates of New Consolidated Rules; Introduction of Rule Conversion Chart); see also Information Notice 03/12/08 (Rulebook Consolidation Process).

2 The current FINRA rulebook consists of (1) FINRA Rules; (2) NASD Rules; and (3) rules incorporated from NYSE (Incorporated NYSE Rules) (together the NASD Rules and Incorporated NYSE Rules are referred to as the Transitional Rulebook). While the NASD Rules generally apply to all FINRA member firms, the Incorporated NYSE Rules apply only to those members of FINRA that are also members of the NYSE (Dual Members). The new FINRA Rules apply to all member firms, unless such rules have a more limited application by their terms. As the Consolidated FINRA Rulebook expands with the SEC's approval and with the new FINRA Rules taking effect, the rules in the Transitional Rulebook that address the same subject matter of regulation will be eliminated. When the Consolidated FINRA Rulebook is completed, the Transitional Rulebook will have been eliminated in its entirety.

3 In July 2010, the SEC approved three FINRA proposed rule changes to adopt five new rules in the Consolidated FINRA Rulebook. See Securities Exchange Act Release No. 62482 (July 12, 2010), 75 FR 41562 (July 16, 2010) (SR-FINRA-2010-024); Securities Exchange Act Release No. 62533 (July 20, 2010), 75 FR 43588 (July 26, 2010) (SR-FINRA-2010-028); and Securities Exchange Act Release No. 62539 (July 21, 2010), 75 FR 44033 (July 27, 2010) (SR-FINRA-2010-029).

4 See Securities Exchange Act Release No. 62533 (July 20, 2010), 75 FR 43588 (July 26, 2010) (SR-FINRA-2010-028). FINRA will issue separate Regulatory Notices announcing the effective dates of the approved rules set forth in SR-FINRA-2010-024 and SR-FINRA-2010-029. See supra note 3.

5 FINRA updates the rule text on its online Manual within two business days of SEC approval of changes to the rule text.

6 See Securities Exchange Act Release No. 62533 (July 20, 2010), 75 FR 43588 (July 26, 2010) (SR-FINRA-2010-028).

7 The Regulation SHO close-out requirements apply only to "reporting" securities (i.e., issuers that are registered pursuant to Section 12 of the Exchange Act or that are required to file reports pursuant to Section 15(d) of the Exchange Act).

8 In July 2009, the SEC adopted Rule 204 under Regulation SHO as a permanent rule. This rule is intended to further the goal of reducing fails to deliver and addressing potentially abusive "naked" short selling in all equity securities by requiring the delivery of securities by settlement date or, in connection with a short sale, the immediate purchase or borrow of such securities to close out the fail to deliver position by no later than the beginning of regular trading hours on the following settlement day.

Notwithstanding the SEC's adoption of Rule 204, the provisions of NASD Rule 3210 continue to be necessary to provide regulatory coverage for fails to deliver in non-reporting over-the-counter equity securities that pre-exist the SEC's implementation of temporary Rule 204 in September 2008. Thus, FINRA has adopted NASD Rule 3210 with minor changes as FINRA Rule 4320.

9 Specifically, if a fail to deliver position is not closed out in accordance with FINRA Rule 4320(a), the clearing agency participant and any broker-dealer for which it clears, including market makers otherwise entitled to rely on the Rule 203(b)(2)(iii) exception of Regulation SHO, would not be able to short sell the non-reporting threshold security either for itself or for the account of another, unless it has previously arranged to borrow or borrowed the security, until the participant closes out the fail to deliver position by purchasing securities of like kind and quantity and that purchase has cleared and settled at a registered clearing agency.

10 For example, with respect to the requirement that participants "immediately" close out a fail to deliver position by purchasing securities of like kind and quantity, the SEC has clarified that "immediately" should be interpreted to mean that close out is required no later than the morning of the fourteenth business day. Likewise FINRA expects that, under FINRA Rule 4320, firms "immediately" close out fail to deliver positions no later than the morning of the fourteenth business day.

http://finra.complinet.com/en/display/display.html?rbid=2403&element_id=9462

[Stock]

Rule 4320. Short Sale Delivery Requirements

This version of the rule (or interpretive material) does not become effective until Oct 15 2010.

This rule was introduced with the filing of SR-FINRA-2010-028, which has been approved by the SEC. This rule becomes effective on October 15, 2010.

(a) If a participant of a registered clearing agency has a fail to deliver position at a registered clearing agency in a non-reporting threshold security for 13 consecutive settlement days, the participant shall immediately thereafter close out the fail to deliver position by purchasing securities of like kind and quantity.

(1) Provided, however, if a participant of a registered clearing agency has a fail to deliver position at a registered clearing agency for thirty-five consecutive settlement days in a non-reporting threshold security that was sold pursuant to SEC Rule 144, the participant shall immediately thereafter close out the fail to deliver position in the security by purchasing securities of like kind and quantity. The requirements in paragraph (b) shall apply to all such fails to deliver that are not closed out in conformance with this paragraph (a)(1).

(b) If a participant of a registered clearing agency has a fail to deliver position at a registered clearing agency in a non-reporting threshold security for 13 consecutive settlement days (or 35 consecutive settlement days if entitled to rely on paragraph (a)(1)), the participant and any broker or dealer for which it clears transactions, including any market maker that would otherwise be entitled to rely on the exception provided in paragraph (b)(2)(iii) of Rule 203 of SEC Regulation SHO, may not accept a short sale order in the non-reporting threshold security from another person, or effect a short sale in the non-reporting threshold security for its own account, without borrowing the security or entering into a bona-fide arrangement to borrow the security, until the participant closes out the fail to deliver position by purchasing securities of like kind and quantity and that purchase has cleared and settled at a registered clearing agency.

(c) If a participant of a registered clearing agency reasonably allocates a portion of a fail to deliver position to another registered broker or dealer for which it clears trades or for which it is responsible for settlement, based on such broker or dealer's short position, then the provisions of this Rule relating to such fail to deliver position shall apply to the portion of the fail to deliver position allocated to such registered broker or dealer, and not to the participant.

(d) A participant of a registered clearing agency shall not be deemed to have fulfilled the requirements of this Rule where the participant enters into an arrangement with another person to purchase securities as required by this Rule, and the participant knows or has reason to know that the other person will not deliver securities in settlement of the purchase.

(e) For the purposes of this Rule, the following terms shall have the meanings below:

(1) the term “market maker” has the same meaning as in Section 3(a)(38) of the Exchange Act.

(2) the term “non-reporting threshold security” means any equity security of an issuer that is not registered pursuant to Section 12 of the Exchange Act and for which the issuer is not required to file reports pursuant to Section 15(d) of the Exchange Act:

(A) for which there is an aggregate fail to deliver position for five consecutive settlement days at a registered clearing agency of 10,000 shares or more and for which on each settlement day during the five consecutive settlement day period, the reported last sale during normal market hours for the security on that settlement day that would value the aggregate fail to deliver position at $50,000 or more, provided that if there is no reported last sale on a particular settlement day, then the price used to value the position on such settlement day would be the previously reported last sale; and

(B) is included on a list published by FINRA.

A security shall cease to be a non-reporting threshold security if the aggregate fail to deliver position at a registered clearing agency does not meet or exceed either of the threshold tests specified in paragraph (e)(2)(A) of this Rule for five consecutive settlement days.

(3) the term “participant” means a participant as defined in Section 3(a)(24) of the Exchange Act, that is a FINRA member.

(4) the term “registered clearing agency” means a clearing agency, as defined in Section 3(a)(23)(A) of the Exchange Act, that is registered with the SEC pursuant to Section 17A of the Exchange Act.

(5) the term “settlement day” means any business day on which deliveries of securities and payments of money may be made through the facilities of a registered clearing agency.

(f) Pursuant to the Rule 9600 Series, the staff, for good cause shown after taking into consideration all relevant factors, may grant an exemption from the provisions of this Rule, either unconditionally or on specified terms and conditions, to any transaction or class of transactions, or to any security or class of securities, or to any person or class of persons, if such exemption is consistent with the protection of investors and the public interest.

Amended by SR-FINRA-2010-028 eff. Oct. 15, 2010.
Amended by SR-FINRA-2007-013 eff. Oct. 15, 2007.
Amended by SR-NASD-2006-071 eff. July 3, 2006.
Amended by SR-NASD-2004-044 eff. July 3, 2006.
Amended by SR-NASD-2004-175 eff. Jan. 3, 2005.
Amended by SR-NASD-97-28 eff. Aug. 7, 1997.
Deleted and replaced with former Appendix B by SR-NASD-93-48 eff. Mar. 8, 1994.
Added eff. Sept. 24, 1973.

Selected Notices: 73-05, 73-45, 73-54, 73-67, 06-28, 07-45, 10-35.

http://finra.complinet.com/en/display/display.html?rbid=2403&element_id=9398

[Stock]

SECURITIES AND EXCHANGE COMMISSION
17 CFR PART 242
Release No. 34-61595;
File No. S7-08-09
RIN 3235-AK35

Amendments to Regulation SHO

AGENCY: Securities and Exchange Commission.

ACTION: Final rule.

SUMMARY: The Securities and Exchange Commission (“Commission”) is adopting amendments to Regulation SHO under the Securities Exchange Act of 1934 (“Exchange Act”). We are adopting a short sale-related circuit breaker that, if triggered, will impose a restriction on the prices at which securities may be sold short (“short sale price test” or “short sale price test restriction”). Specifically, the Rule requires that a trading center establish, maintain, and enforce written policies and procedures reasonably designed to prevent the execution or display of a short sale order of a covered security at a price that is less than or equal to the current national best bid if the price of that covered security decreases by 10% or more from the covered security’s closing price as determined by the listing market for the covered security as of the end of regular trading hours on the prior day. In addition, the Rule requires that the trading center establish, maintain, and enforce written policies and procedures reasonably designed to impose this short sale price test restriction for the remainder of the day and the following day when a national best bid for the covered security is calculated and disseminated on a current and continuing basis by a plan processor pursuant to an effective national market system plan. We believe it is appropriate at this time to adopt a short sale-related circuit breaker because, when triggered, it will prevent short selling, including potentially manipulative or abusive short selling, from driving down further the price of a security that has already experienced a significant intra-day price decline, and will facilitate the ability of long sellers to sell first upon such a decline. This approach establishes a narrowly-tailored Rule that will target only those securities that are experiencing significant intra-day price declines. We believe that addressing short selling in connection with such declines in individual securities will help address erosion of investor confidence in our markets generally.

In addition, we are amending Regulation SHO to provide that a broker-dealer may mark certain qualifying sell orders “short exempt.” In particular, if the broker-dealer chooses to rely on its own determination that it is submitting the short sale order to the trading center at a price that is above the current national best bid at the time of submission or to rely on an exception specified in the Rule, it must mark the order as “short exempt.” This “short exempt” marking requirement will aid surveillance by self-regulatory organizations (“SROs”) and the Commission for compliance with the provisions of Rule 201 of Regulation SHO.

DATES: Effective Date: May 10, 2010

Compliance Date: November 10, 2010

FOR FURTHER INFORMATION CONTACT: Josephine J. Tao, Assistant Director; Victoria Crane, Branch Chief; Katrina Wilson, Staff Attorney; and Angela Moudy, Staff Attorney, Division of Trading and Markets, at [phone], at the Commission, 100 F Street, NE, Washington, DC 20549-6628.

=============

This is a very large document.
A total of 354 pages.
Feel free to read the whole thing at:

http://www.sec.gov/rules/final/2010/34-61595.pdf

[Stock]

Equity Technical Update #2010 - 15

NASDAQ ACT to Offer Testing for Reg SHO Changes on Saturday, September 25, 2010

What you need to know:

NASDAQ ACTSM will offer testing this Saturday, September 25, 2010, for its support of amendments to Regulation SHO (Reg SHO) announced in Equity Technical Update #2010-11.

Firms should email NASDAQ OMX Trading Services to register for the test.

What will be offered?

On Saturday, September 25, 2010, NASDAQ ACT will offer testing for its support of the amendments to Reg SHO announced in Equity Technical Update #2010-11.

Firms should email NASDAQ OMX Trading Services to register for the test.

What is changing?

The Securities and Exchange Commission (SEC) amended Reg SHO effective May 10, 2010 (Release 34-61595), to provide for the ability to mark qualifying short sale orders as “short exempt.”

Effective November 1, 2010, the NASDAQ ACT System will reintroduce support of the Short Sale Exempt codes ahead of the SEC compliance date of November 10th. This change applies to the FINRA/NASDAQ Trade Reporting FacilityTM (TRFTM), the Over-the-Counter Reporting Facility (ORF) and The NASDAQ Stock Market® (NASDAQ®).

What will the test include?

The NASDAQ ACT System test will support full ACT functionality, including trade entry and unsolicited message (UM) generation through trade dissemination.

Is testing available in the NTF?

Yes, firms are able to test using the new short sale exempt values within the NASDAQ Testing Facility (NTF).

Effective September 24, 2010, the NTF will also offer testing for the Financial Industry Regulatory AuthorityTM (FINRATM) 30 second trade reporting requirement change as announced in FINRA Notice 10-24.

Where can I get more information?

Refer to the NASDAQ technical specifications.
Contact NASDAQ OMX Trading Services to register for the test.
Refer to FINRA Notice 10-24 regarding 30 second trade reporting.
Contact NASDAQ OMX Technical Support at [phone].

--------------------------------------------------------------------------------

FINRA™, Trade Reporting Facility™ and TRF™ are trademarks of Financial Industry Regulatory Authority, Inc.

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http://www.nasdaqtrader.com/TraderNews.aspx?id=ETU2010-15

[relikwie]

DTCC refused to clear the company's shares unless the company supplied sufficient shares to the DTCC to cover the counterfeit shares it had allowed to enter the market by its gross negligence as well as supporting a tide of naked short selling by its client owners and brokers [..]

Don't think DTCC will lift the lock unless company provides the 245 million counterfeit shares for cover.

[AlanC]

zoomniac: Add BCIT to your list. The DTC imposed a global lock on BCIT after the company was hijacked by Mario Pino who issued and sold counterfeit certificates into the market. A huge naked short was created when legitimate management filed complaints with both the SEC and the FBI. In my opinion the global lock was implemented to prevent the brokerage firms who had sold a huge number of non existant shares from suffering huge losses by having to buy back the non existant shares they sold. The SEC did find against Pino and the original management was cleared however the DTC has prevented trading since. You may want to visit this site to gain more insight: http://www.let-bcit-trade.com/

[janice shell]

I think "trading irregularities" would be it. BCIT had a global lock on for years before its registration was finally revoked.

[Stock]

DTC Service Guide

Security Eligibility (Page 29)

DTC-Eligible Securities

DTC accepts deposits of all issues of securities eligible to trade and settle at a U. S. depository. If the security you wish to deposit has a CUSIP number, as do all securities or families of securities issued after 1970, it is probably DTC-eligible. If the security is not DTC-eligible, a message to that effect will appear on your PTS screen when you enter the CUSIP number when making a DAM deposit.

You can also check DTC eligibility by reviewing any of the following sources:

• The DTC Reference Directory, a hard-copy listing of eligible securities that is printed quarterly and can be ordered by using the PTS function FORM

• DTC Important Notices, which you can access on our Web site, https://login.dtcc.com/dtcorg

• The PTS function GWIZ.

DTC's Custody service was established to allow participants to deposit securities that were previously ineligible for depository services because of registration requirements and other restrictions. For more information on custody, please refer to the Custody Service Guide.

DTC's Underwriting service reviews eligibility requests from participants and other industry sources for corporate and municipal securities previously distributed outside the depository. For more information, refer to the Older Issue Eligibility section of the Underwriting Service Guide.

Eligible Securities Status

Corporate actions or temporary service problems with a transfer agent may affect deposits of DTC-eligible securities. During these periods, DTC places securities under one of the status categories in the table and descriptions that follow. You can use the PTS functions GWIZ and RIPS to determine the reasons and deadlines for these events.



-----------------

REVISED -- RULE FILING SR-NSCC-2010-02—AGGREGATION OF TRADE-FOR-TRADE TRANSACTIONS
Date: March 4, 2010
From: GENERAL COUNSEL’S OFFICE

On March 4, 2010, National Securities Clearing Corporation (“NSCC”) filed a rule change (SR-NSCC-2010-02) with the Securities and Exchange Commission (the “SEC”) pursuant to Section
19(b)(3)(A) of the Securities Exchange Act of 1934, as amended.

As more fully described below, the rule change provides for the aggregation of receive and deliver orders for transactions that NSCC designates to settle on a trade-for-trade basis.

When transactions in a particular security are designated to settle on a trade-for-trade basis, Members with transactions in that security may be required to individually settle multiple transactions in that security.

In order to simplify this process and mitigate the processing burden on Members, effective Friday, March 5, 2010, NSCC will amend its Rules in order that it may aggregate trade-for-trade obligations, bi-laterally between counterparties, so that the parties would be required to settle just one receive order and one deliver order between them in a given security rather than having to settle multiple transactions.

Buys and sells will not be netted against each other. For example, if Broker A had fifteen buys against Broker B in Security X, these items would be aggregated into one receive obligation for A and one deliver obligation for B for the total amount of shares for the 15 transactions in Security X. Likewise if Broker A had 20 sells with Broker B on that same day for the same security, those items would also be aggregated into one deliver obligation for A and one receive obligation for B. In this example, A and B would each have two settlement obligations with the other for Security X rather than the 35 obligations they would each have without aggregation.

NSCC will issue aggregated receive and deliver orders only for those transactions that it designates to settle on a trade-for-trade basis. Receive and deliver orders for transactions designated by Members as Special Trades will continue to be issued on an individual transaction basis. As is currently the case for trade-for-trade items, NSCC will not guaranty the settlement of transactions aggregated pursuant to this rule change.

The rule change will be implemented for obligations reported on the Consolidated Trade Summary beginning on the night of Friday, March 5, 2010, for transactions settling Monday, March 8 and Tuesday, March 9, 2010.

The full text of this rule change (SR-NSCC-2010-02) may be obtained by visiting DTCC’s website at
www.dtcc.com.

Written comments on the proposed rule filing may be addressed to Lisa T. Siebold, Assistant Secretary, National Securities Clearing Corporation, 55 Water Street, New York, New York 10041, and your comments will be forwarded to the SEC. You may also address your written comments to the Secretary of the Commission, Securities and Exchange Commission, 100 F Street NE, Washington DC 20549-1090. We request that you provide NSCC with a copy of your comments.

Questions regarding this Important Notice should be directed to Vincent Mc Devitt, Director, Product Management, at 212-855-5694, or Peter J. Smith, Product Management, at 212-855-7621. Questions regarding the rule filing should be directed to John Petrofsky, Associate Counsel, at 212-855-7634.

http://www.dtcc.com/downloads/products/learning/Deposits.pdf

=====================

#: Z0025
Date: March 10, 2010
To: ALL DTC & NSCC PARTICIPANTS
Attention: MANAGING PARTNER/OFFICER, OPERATIONS PARTNER/OFFICER, COMPLIANCE OFFICER
From: Relationship Management

Subject: Informational Update on DTC and NSCC Securities Restrictions

DTCC has experienced an increase in the number of customer queries regarding transaction restrictions, generally referred to as “chills” that DTC places on a relatively small number of eligible securities. Occasionally, DTC may need to “chill” certain transactions such as deposits, withdrawals-by-transfers (WTs), deliver orders (DOs) or restrict all these services (commonly referred to as a “global lock”) for operational, risk management or regulatory and compliance reasons. These restrictions may have an impact on Continuous Net Settlement (CNS) eligibility. DTCC recognizes that these actions may create additional operational processing among the member firms and between participants and their customers. The purpose of this notice is to clarify some of the conditions that may cause DTCC to take such action and to communicate DTCC’s intentions to reduce the additional operational processing these necessary actions may cause.

DTC applies certain transaction restrictions in the normal course of processing. For instance, DTC chills physical deposits and WTs for Book-Entry Only (BEO) securities. DTC may need to temporarily chill physical WTs if notified by the transfer agent that it is temporarily out of blank certificates. If DTC learns that the issuer no longer has a designated transfer agent (i.e., the security is non-transferable), DTC will chill WT transactions. At times, non-transferable issues may have certain deposit restrictions as well; only participants subscribing to DTC’s “non-transferable” programs may avail themselves of these services if an issue is designated non-transferable.

During certain reorganizations, redemptions and maturities, DTC will chill the security for book entry activities to ‘close the books’ with the transfer agent in order to stabilize positions while the event is occurring. This may cause NSCC to exit the security from CNS eligibility. In a limited number of cases where a Money Market Instruments (MMI) issuer defaults, all MMI securities associated with the issuer are chilled for all future MMI issuances and maturities.

DTC will place certain restrictions on Limited Eligibility securities, which are not freely transferable or otherwise not eligible for the full range of DTC services. (Participants must subscribe to DTC’s Custody program in order to avail themselves of Custody services.) In addition, Participants can only transact book entry deliveries with certain Canadian securities which are not registered with the SEC, but are part of the DTC Canadian Dollar Settlement Service.

From a legal and regulatory perspective, securities that are subject to sanctions imposed by the Office of Foreign Assets Control (OFAC), for example Cuban Bonds are globally locked.

Restrictions may also be placed on securities in situations where DTC has been informed by the issuer or its agent, regulators or law enforcement, or has other compliance concerns that its Cede & Co certificate inventory has been compromised due to unauthorized, altered, fraudulent or counterfeit share issuance. If DTC reasonably suspects that all or a portion of its street name holdings are not fungible and freely transferable, it may decide to chill one or more of its services as it deems appropriate.

To assist the industry in alleviating additional operational processing, NSCC has implemented an additional service as of March 5, 2010 that will aggregate non-CNS eligible trade-for-trade obligations, bi-laterally between counterparties. Counterparties will now be required to settle just one receive order and one deliver order in a given security rather than having to settle multiple transactions. As is currently the case with all trade-for-trade obligations, these items are not guaranteed by NSCC. For more information regarding this service please refer to NSCC Important Notice #6958.

Please contact your DTCC relationship manager if you have any further questions regarding this notice.

http://www.dtcc.com/downloads/legal/imp_notices/2010/dtcc/z0025.pdf

[zomniac]

DTCC Global Lock ?
http://www.dtcc.com/downloads/legal/imp_notices/2010/dtc/ope/7309-10.pdf
Having never heard of this before, I now have two stocks I'm following, that have a DTCC lock. SPNG (SPNGQ) and now BEDA.

There is speculation that it's because of NSS, trading irregularities.

Any thoughts ?

[Stock]

thanks for the post. otc derivatives aren't listed stocks.

[basserdan]

Naked Short-Sales, OTC Derivatives Face EU Limits

By Ben Moshinsky
September 15, 2010, 10:22 AM EDT

(Updates with comments from hedge-fund group in 15th paragraph.)

Sept. 15 (Bloomberg) -- Naked short-sales of shares and government bonds would be limited and some over-the-counter derivatives trades forced through clearinghouses under European Commission proposals to safeguard financial markets.

Frequent traders of some OTC derivatives in Europe will be forced to use central clearinghouses to close sales, while naked short-sellers would be required to submit proof they can access the underlying security to settle a trade designed to profit from falling prices, under two separate initiatives announced in Brussels today.

“In distressed markets, short selling can amplify price falls, leading to disorderly markets and systemic risks,” Michel Barnier, the European Union’s financial services commissioner, said in an e-mailed statement.

The rules on short-selling would bring the EU closer to the stance taken by Germany, where Chancellor Angela Merkel banned some naked short-selling in May. Merkel and French President Nicolas Sarkozy argued that some bets against stocks and government bonds should be curbed as the Greek debt crisis made markets more volatile.

The EU bill on derivatives clearing is part of a package of laws to strengthen regulation following the worst financial crisis since the Great Depression. The plan is aimed at limiting losses in the event of a default by a major counterparty.

‘Wild West’

“No financial market can afford to remain a Wild West territory,” Barnier said. “OTC derivatives have a big impact on the real economy, from mortgages to food prices.”

The commission, the executive arm of the 27-nation EU, announced the proposals for discussion by the European Parliament and member states. U.S. and European regulators are pushing for tighter oversight of the $605 trillion over-the- counter derivatives market.

To encourage traders to use central counterparties, OTC derivatives not cleared centrally will face increased capital charges, to be outlined in a revision of the EU’s rules on bank reserves at the end of the year.

The capital rules will implement agreements made by the central bankers and regulators of the Basel Committee on Banking Supervision announced on Sept. 12.

Banks are “concerned about requirements for potentially higher levels of collateral and capital,” the European Banking Federation, a Brussels-based trade group, said in an e-mailed statement.

‘Crucial Points’

“These measures are crucial points in the strict regulatory agenda banks are facing and must be carefully weighed, both individually and as a whole,” Guido Ravoet, secretary general EBF, said in the statement.

The proposed law on short-selling would require traders to notify authorities of any short position exceeding 0.2 percent of issued capital, and tell the market of positions exceeding 0.5 percent.

“We have a concern about public disclosure at low thresholds,” Kevin McNulty, chief executive of the International Securities Lending Association, said in a telephone interview. “At that level, it artificially reduces short-selling.”

The rules would also give regulators emergency powers to require more disclosure or temporarily ban short-sales of equities and credit-default swaps on bonds.

“We do hope however that new powers to ban short selling are never used,” Andrew Baker, chief executive of the Alternative Investment Managers Association, said in an e-mailed statement. “Such bans have never worked.”

‘Therapeutic Effect’

“These proposals will have a very therapeutic effect,” said Michael Greenberger, a professor at the University of Maryland School of Law, said in a telephone interview earlier this week. “The problems speculators pose in markets far outweigh concerns about liquidity and financial costs.”

In the U.S., regulators and Congress rejected a proposed ban on naked swaps last year, with House Financial Services Committee Chairman Barney Frank saying “there was concern that a broad grant to ban abusive swaps would be unsettling,” and U.S. Treasury Secretary Timothy F. Geithner saying he doesn’t think such a measure would have merit.

‘Nefarious Practice’

The EU proposals were criticized by some groups for failing to require an outright ban on naked short-selling.

The commission “failed to grasp the nettle” to “ban this nefarious practice,” Pascal Canfin, a French Green party member of the European Parliament, said in an e-mailed statement.

Short sellers borrow assets and sell them, betting the price will fall, buying them later and pocketing the difference. In naked short-selling, traders never borrow the assets, so betting is unlimited.

Credit-default swaps are derivatives that pay the buyer face value if a borrower -- a country or a company -- defaults. In exchange, the swap seller gets the underlying securities or the cash equivalent. Traders in naked credit-default swaps buy insurance on bonds they don’t own.

The rules on OTC derivatives would force traders to record contracts with a central data bank known as a trade repository, and hand powers to European regulators to decide what type of derivatives must be cleared by a central counterparty.

A derivative is a contract between two parties linked to the future value or status of the underlying asset to which it refers, including the development of interest rates or price of commodities such as oil or wheat. An OTC derivative is one privately negotiated between two parties, rather than being traded on an exchange.

Clearinghouses operate as central counterparties for every buy and sell order executed by their members, who post collateral, reducing the risk that a trader defaults on a deal.

--With assistance from Abigail Moses in London. Editors: Peter Chapman, Christopher Scinta

To contact the reporters on this story: Ben Moshinsky in Brussels at [e-mail];

http://www.businessweek.com/news/2010-09-15/naked-short-sales-otc-derivatives-face-eu-limits.html

[Stock]

I understood the topic some time ago #msg-30987634

Thanks for the link, but it's pretty old.

[breezin_chs]

Exactly. You're beginning to understand my point, which is that the system is ripe (designed?) for abuse.

Even a seemingly simple question such as percentage of total fails long/short can't be answered because, in the words of the prof's, market participants are not required to identify naked short sales, which makes them difficult to study.

So the next best thing is to count the FTD's. Groan, but ok.

Next, and perhaps most difficult, is to try and understand the nooks and crannies of the trading and settlement systems: Broker-level netting, pre-netting, Stock Borrow Program, ex-clearing and off-shore failures. Who knows what else.

If anyone is interested, Patrick Byrne and Floyd Norris continue to have a somewhat civilized email discussion about all this in the NYTimes.

http://norris.blogs.nytimes.com/2009/04/30/is-naked-shorting-gone/
April 30, 2009
Is Naked Shorting Gone?

[Stock]

The question, among many, is WHAT PERCENTAGE of TOTAL FAILS are long/short?

Go ahead. Make my day. Answer your own question.

Truth is, you can't.

[breezin_chs]

Nice dancin'. Why didn't you answer the poster's question?

MrBusiness: I was wondering if a list has been made for this board of PROVEN (if any) NSS stocks?

He was asking about stocks that have been naked shorted, not about short interest, a different (legitmate) animal.

Since you brought it up, yes, fails can be (and are) both long and short. The question, among many, is WHAT PERCENTAGE of TOTAL FAILS are long/short?

The funny part is that since NSS has attracted so much attention, it's now getting scrutiny by serious academics. The old lame excuses of human error and my-dog-ate-the-certs are laughable.

Although FTDs occur for reasons other than naked short selling, including processing errors and delays in delivering securities held in certificate form, we argue that persistent FTDs that lead to threshold listings are highly correlated with naked short selling.

The requirements for appearing on a threshold list–aggregate, open FTDs equal to, or greater than, 10,000 shares and 0.5% of the total shares outstanding for 5 consecutive settlement days–make it unlikely that processing errors and inadvertent delivery delays are the genesis of many threshold listings. We expect that the rare instances where processing errors and delivery delays do contribute to threshold listings are random and do not systematically bias our results.
- Profs. Boulton and Braga-Alves

[Stock]

What does a list of fails tell you about short interest in the stocks listed?

Fails can be (and are) both long and short.

All sizzle, no steak.

[breezin_chs]

MrBusiness, why am I not surprised that you were steered towards the NYSE data.

PROVEN (if any) NSS stocks?

You might want to start with the wealth of info avail from the SEC:
http://www.sec.gov/foia/docs/failsdata.htm
Fails-to-Deliver Data

Report for the first half of August 2010:
60,952 issues
Total number of FTD's: 4,682,963,532 shares

Note: If you throw the text file into a spreadsheet, you'll get FTD's 4,682,895,271. Not sure why the discrepancy.

Next, you may want to pay a visit to the Reg SHO and Rule 3210 list:
http://www.nasdaqtrader.com/trader.aspx?id=RegSHOThreshold

Regulation SHO Threshold Data Field Definitions:
http://www.nasdaqtrader.com/Trader.aspx?id=RegShoDefs#note1

If you're new to NasdaqTrader, it's basically a data and info repository for NASDAQ members and information providers.

Good luck on the learning curve. Bring aspirin, education and a healthy dose of blank-page thinking to many (most?) of the posts you'll see on the subject.

[Pure Adrenaline]

There’s no "strong evidence" that short selling led to falling prices during the crisis, the IMF said. Most of the “adverse market movement can be attributed to fundamental factors and to uncertainty due to partial or inadequate disclosures.

.

"Strong evidence" is to subjective.

I'm not sure how a database full of specific, factual shorting data is any less evidentiary than a survey given to investors asking why they sold their positions. Was the survey multiple choice? Did the investors understand shorting causes prices to drop and were they informed if there particular investment was shorted (naked or otherwise)? Most investors don't have the time to look for discrepancies in filings, they decide to buy or sell based on price fluctuations, past price history, media reports, broker recommendations and word of mouth (friends,family). What is most alarming is the author of this blog and especially the IMF can make these kind of statements without "strong evidence" supporting them.

[Stock]

SEC making news today on proxy voting; this I thought was an interesting headline:

SEC's Schapiro: Shareholders Can't Borrow Stock To Gain Proxy Access
Last update: 8/25/2010 10:24:19 AM

[Stock]

(psst, just not to totally frustrate you, here's the NYSE ARCA list for yesterday... it's a lot longer)

Symbol Security Description
BGU Direxion Daily Large Cap Bull 3X Shares
BLV Vanguard Long-Term Bond ETF
BRXX Emerging Global Shares INDXX Brazil Infrastructure Index Fund
BSCD Claymore BulletShares 2013 Corporate Bond ETF
DRV Direxion Daily Real Estate Bear 3x Shares
DRW WisdomTree International Real Estate Fund
DSI iShares FTSE KLD 400 Social Index Fund
DWX SPDR S&P International Dividend ETF
EDZ Direxion Daily Emerging Markets Bear 3X Shares
EFZ ProShares Short MSCI EAFE
FAS Direxion Daily Financial Bull 3X Shares
FAZ Direxion Daily Financial Bear 3X Shares
FGD First Trust DJ Global Select Dividend Index Fund
FIO iShares FTSE NAREIT Industrial/Office Capped Index Fund
FRN Claymore/BNY Mellon Frontier Markets ETF
FTA First Trust Large Cap Value Opportunities AlphaDEX Fund
GML SPDR S&P Emerging Latin America ETF
GMM SPDR S&P Emerging Markets ETF
GXC SPDR S&P China ETF
HEDJ WisdomTree International Hedged Equity Fund
IPS SPDR S&P INTERNATIONAL CONSUME
IWM iShares Russell 2000 Index Fund
IYM iShares Dow Jones US Basic Materials Sector Index Fund
IYT iShares Dow Jones Transportation Average Index Fund
JKJ iShares Morningstar Small Core Index Fund
KIE SPDR KBW Insurance ETF
KRE SPDR KBW Regional Banking ETF
KRS ProShares Short KBW Regional Banking
LIT Global X Lithium ETF
MLPN Credit Suisse Cushing 30 MLP Index ETN
MZZ ProShares UltraShort MidCap400
PDN PowerShares FTSE RAFI Developed Markets ex-US Small-Mid Portfolio
PEY Powershares High Yield Equity Dividend Achievers Portfolio
PIE PowerShares DWA Emerging Markets Technical Leaders Portfolio
PIZ PowerShares DWA Developed Markets Technical Leaders Portfolio
PSQ ProShares Short QQQ
PTJ PowerShares Dynamic Healthcare Services Portfolio
QID ProShares UltraShort QQQ
RWM ProShares Short Russell2000
SKK ProShares UltraShort Russell2000 Growth
SMH Semiconductor HOLDRs Trust
SMN ProShares UltraShort Basic Materials
SRTY ProShares UltraPro Short Russell2000
TAN Claymore/MAC Global Solar Energy Index ETF
TLO SPDR Barclays Capital Long Term Treasury ETF
TNA Direxion Daily Small Cap Bull 3X Shares
TYH Direxion Daily Technology Bull 3X Shares
UPRO ProShares UltraPro S&P 500
USCI United States Commodity Index Fund
USD ProShares Ultra Semiconductors
UWM PROSHARES ULTRA RUSSELL 2000
WCAT Jeffries TR/J CRB Wildcatters Exploration & Production Equity ETF
XLB Materials Select Sector SPDR Fund
XRT SPDR SERIES TR SPDR S&P RETAIL
ZSL ProShares UltraShort Silver

[Stock]

Threshold Securities lists are posted every day by the SROs.

Unfortunately, you can't see the number of shares every day. That's only published twice a month, several days in arrears.

That's the way the regs currently work.

I'll post yesterday's NYSE Threshold Securities List as an example of a list of stock that have unsettled short interest, here, below.

On August 23, no securities met the threshold. None. Zero.

---------------

The U.S. Securities and Exchange Commission adopted Regulation SHO on June 28, 2004, and compliance began on January 3, 2005. Reg SHO requires that every self-regulatory organization disseminate a daily list of its threshold securities.

Select a market below to access daily and archived lists of threshold securities, and learn more.

Threshold Securities - NYSE
Here is where you can access lists for the New York Stock Exchange.

Threshold Securities - NYSE Arca
Access lists of Regulation SHO threshold securities files for NYSE Arca.

Threshold Securities - NYSE Amex
Reg SHO lists for NYSE Amex (formerly the American Stock Exchange) can be found here.

Monthly Short Sale Data - NYSE Arca
NYSE Arca short sale data is available monthly by subscription. To subscribe to NYSE Arca short sale data, please e-mail [e-mail].

Daily Short Sale Data - NYSE Arca
NYSE Arca Reg SHO Short Volume is available by web or FTP at: www.nyxdata.com/page/875.

http://www.nyse.com/regulation/nyse/1114512102403.html

--------------------------------------

Threshold Securities - NYSE

A Threshold Security is defined by Rule 203(c)(6) of the SEC's Regulation SHO as any equity security of an issuer that is registered under Section 12, or that is required to file reports pursuant to Section 15(d) of the Exchange Act where for five consecutive settlement days: (1) there are aggregate fails to deliver at a registered clearing agency of 10,000 shares or more per security; (2) the level of fails is equal to at least one-half of one percent of the issuer's total shares outstanding; and (3) the security is included on a list published by a self regulatory organization.

Reg SHO is designed to fulfill several objectives, including: (a) the establishment of uniform locate and delivery requirements in order to address problems associated with failures to deliver, and (b) the creation of uniform marking requirements for sales of all equity securities.

Accordingly, NYSE will post a list of threshold securities on this site for every settlement day.

Note: the Threshold List will not be generated on bank holidays when the Depository Trust & Clearing Corporation is closed but equity exchanges are open.

Data processed on 08/23/2010

http://www.nyse.com/regulation/nyse/Threshold_Securities.shtml?date=20100823

Symbol Security Description

Available data for NYSE - listed securities indicate that no NYSE - listed securities currently meet the requirements for publication on the NYSE Threshold List on 23 August, 2010.

====================

On the 19th, there was one: EXD.

Symbol Security Description
EXD Eaton Vance Tax-Advantaged Bond and Options Strategies Fund

http://www.nyse.com/regulation/nyse/Threshold_Securities.shtml?date=20100819

[MrBusiness]

Hello everyone, I was wondering if a list has been made for this board of PROVEN (if any) NSS stocks? I would be curious to see!

[Stock]

Judy, any comment re: the recent spike in OSTK fails?

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=53637535

[Stock]

By popular request, I updated the iBox here this evening.

Just to make things clear... and whatnot.

[nWo]

we need more regulation, like all the manipulation that goes on in the pinks and all the scams the pinks should be closed if you want to trade you need to be a reporting company and go to the otcbb, have to have more regualtion and people stop making quick bucks cheating, and scamming. There are always honest people getting ripped off somewhere along the way....

[Stock]

"(not MMs)" being the operative comment there...

If an MM extends their privilege to an important client where NO STOCK IS AVAILABLE TO LOAN, I would agree. That's what the regs are supposed to be putting an end to... There are 3 and 13 day periods in which the mechanics of the market should take care of that (a FTD warning, and a forced cover after 13, if they ever get that right!).

As for the second point, there would be less market activity, which some describe as "liquidity" -- I'm being simplistic... but if there's no DUMB ASS that can SHORT a stupid company with too few shares of stock free trading, how can any market ever get any shares to slosh around?

Reality is, the market participant that's handling new shares coming to market KNOWS that shares are coming, and it's not rocket science to call around and figure out that a borrow won't be hard in a few days on a stock, if one isn't available today... they earn COMMISSIONS from those trades, so YES they are going to try and make that kind of scenario happen.

This is what drives people nuts about the current system -- it's still that X factor -- there are still those who can anticipate what's coming, and actively seek a market to profit from the reality as they see it. If it doesn't work out, the players are forced to cover (as they should be).

As I said, this is simplistic, and mostly based on old views of the way things used to be. The borrow system is not global, or automated, STILL to this day, nor do I personally ever expect to see that in my lifetime....

[TEX]

Doesn't make sense to me that a ban on naked shorts (not MMs) would harm a market.

In the first place, I've never understood how anyone except a market maker could enter a naked short sale.

In the second place, if it doesn't exist, how could banning it hurt a market?

[Stock]

Less regulation is better than more, as far as efficient market theory operates.

It was a given there would be regulatory overreach. It's good to see some retrenchment on the early posturing.

As for illigal short selling actions:

Penalties for miscreants are increasing in frequency, if not overall dollar amounts (I haven't seen any aggregate date on fines and penalties lately). It would be helpful to see more swift action in these cases.

But again, we are dealing with an outmanned and underfunded agency that points their nose at the strongest smell.