Dewmar International BMC Inc (DEWM)

[Odessa99]

RE: Shorting on the OTC

For those interested in the most common form of shorting engaged in within the OTC market, here's something I've written and posted previously on other board(s).

Short Interest Unmasked: For those interested in understanding the apparent discrepancy between the bi-weekly FINRA short report and daily share shorting tallies, I'll do my best to explain the difference.

Market makers, operating within their obligation to keep an orderly and liquid market in a stock, often sell shares they do not currently own. Most of those sell transactions will not show up in the bi-weekly FINRA short report because it shows net short positions. Since it is very common for the market makers to buy those shares back later in the same day (to cover the shares that they shorted earlier in the day), short transactions of that type will never appear on a bi-weekly net shares short report (although these shares do show up in the reporting of daily shorting totals).

So if an OTC market maker covers most of their short sales within the same day, why should it even be of a concern to the shareholders of that OTC stock? Here's why. Due to the low level of investor confidence on most OTC companies, a market maker can create the impression of lack-of-demand for a stock by selling short against many of the retail buys as they are coming in at the ask, which keeps the ask from rising. As a result, other retail investors tend to become nervous and some lose confidence in their otherwise long holding, and as a result sell into the bid. It is at this time that the original market makers that sold short at the ask can then cover at the bid. That allows the market makers to make money for their work. But it also generally leads to the stock going lower. But because the short sold shares were covered during the same day, the will have no visibility on a bi-weekly net short report. And IMO, this common MM driven process undoubtedly contributes to the downward slide experienced by many OTC stocks.

As always, simply my opinion.

Hopefully the info above is helpful in shedding some light on the DEWM daily short data below.



DEMW