Friday, March 24, 2017 4:49:11 PM
The thing about naked short sales is they can’t stay naked forever.
Even if you don’t have the stock when you sell it, at some point it is expected that you hand it over.
And even with its market-maker exemption, Market Makers is required by SEC rules to eventually deliver the shares in a naked short transaction to the buyer and close out the trade.
Not doing so results in a “fail to deliver,” which is described as the securities version of an IOU. And that IOU comes with rules: Under the SEC’s Regulation SHO, short sellers have to cough up the stock within one day of incurring the fail. Routine failures to deliver can lead to fines by the SEC, or even a ban from the securities markets.
Instead of complying with the rule, Market Makers circumvented it by manipulating an obscure process within the machinery of the nation’s clearing system known as the “Obligation Warehouse.”
www.dtcc.com/clearing-services/equities-clearing-services/ow
leverages NSCC's existing systems and enhances its current fail clearance system, known as the Reconfirmation and Pricing Service (RECAPS), to automate the matching and confirmation of broker-to-broker ex-clearing trades, replacing the highly manual and error-prone processes, including phone calls and faxes, currently used by financial firms to manage these transactions.
In addition, O.W. will track, store and maintain certain unsettled obligations in a central location, and make these obligations available for RECAPS processing until they are settled, cancelled or otherwise closed in the system.
Transactions eligible to be tracked, stored and maintained in OW include failed or unsettled broker-to-broker obligations that are compared through OW and obligations forwarded to OW from other NSCC services, including securities exited from NSCC's Continuous Net Settlement (CNS), Non-CNS Automated Customer Account Transfer Service (ACATS) items and NSCC Balance Order transactions.
Nothing I state is intended to be a recommendation to buy or sell, opinion only. Readers are solely responsible for how they use the information.
Avant Technologies Engages Wired4Tech to Evaluate the Performance of Next Generation AI Server Technology • AVAI • May 23, 2024 8:00 AM
Branded Legacy, Inc. Unveils Collaboration with Celebrity Tattoo Artist Kat Tat for New Tattoo Aftercare Product • BLEG • May 22, 2024 8:30 AM
"Defo's Morning Briefing" Set to Debut for "GreenliteTV" • GRNL • May 21, 2024 2:28 PM
North Bay Resources Announces 50/50 JV at Fran Gold Project, British Columbia; Initiates NI 43-101 Resources Estimate and Bulk Sample • NBRI • May 21, 2024 9:07 AM
Greenlite Ventures Inks Deal to Acquire No Limit Technology • GRNL • May 17, 2024 3:00 PM
Music Licensing, Inc. (OTC: SONG) Subsidiary Pro Music Rights Secures Final Judgment of $114,081.30 USD, Demonstrating Strength of Licensing Agreements • SONGD • May 17, 2024 11:00 AM