VirExit Technologies Inc (VXIT)

[alwaysthankfull]

will this happen? a short squeeze?

Naked Short Selling Reckoning
On the last day of March 2021, the Options Clearing Corporation (OCC) filed a rule change to the Securities and Exchange Commission (SEC). OCC is a clearing house, just like Depository Trust Company (DTC), except the OCC is in charge of options while DTC is in charge of clearing stocks. Clearing houses are critical cogs between traders and brokerages, making sure that all parties settle their trades, thus avoiding unwelcome FTD scenarios.

To that end, both Robinhood and Citadel Securities are members of DTC and OCC, along with every bank and hedge fund you ever heard of. If members default on their settlements, OCC takes a hold of their assets to put on an auction. Then, when the bidding finalizes, OCC repays the loans that covered for the losses of a defaulted member. The proposed rule change, which will enter into effect on May 21 if not delayed by the SEC, is all about smoothing out this process by increasing the number of bidders.

The filed rule change states:

“Competitive bids are necessary for OCC to sell the portfolio at a market price that minimizes the loss to OCC and its Clearing Members, and enable OCC to successfully complete an auction in a timely manner and thereby manage a Clearing Member default in a timely manner.”

More tellingly, OCC issued memorandum #48718 to all clearing members, on May 17th, 2021, notifying them of a “temporary increase to clearing fund size”:

“The temporary increase would result in an increase of $588,378,155 to the Clearing Fund, which will be allocated proportionately among Clearing Members.”

The OCC rule change also made it possible for non-members to bid for the assets of defaulted members. This would include entities such as BlackRock, the world’s largest asset manager in partnership with the Federal Reserve.

Let’s say Robinhood/Citadel default to this new clearing threshold. In accordance with established bankruptcy rule — 190.00(c)(3)(ii) — Robinhood’s trades would become the property of the bidder:

https://tokenist.com/recent-occ-regulatory-moves-indicate-gme-amc-short-sellers-may-go-bust/