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[ThePennyGuru]

SEC Preliminary Guidelines of Naked Short and Fail-To-Deliver Reform(condensed highlights in rough draft form)

DTCC & NSCC Federal order to open their books via DOJ, ICC, and SEC

To protect the privacy and practices of current trading strategies, a new regulation (Regulation FTD) will be mandated to provide a daily list indicating all open fails on every security where one exists in the marketplace. The total of fails shall be updated daily on each security. No equity or derivative shall allow any borrow from any entity until all current and past fails are eradicated.

Immediate buy in on all current and existing fails out side of 13 days. Current fails have up to the mandated 13 days per Regulation SHO to "buy-in" and be covered.

Going back to introduction of SHO, any fails never bought in and covered will be "busted" and accounts disgorged with fines. Current fails listed on the Regulation SHO list outside of 13 days will be bought back in at market effective immediately.

All fails since the introduction of Regulation SHO will be reposited to every broker-dealer, market maker, hedge fund, and individual account as a short sale by cusip replication on a journal basis for the extent of time they were in fail status. No actual trade will occur. The fail will remain in the account affected for the entire time the position was in fail status. The position must be covered in such time or shall be "bought in" by the SEC and DOJ. Example: If the fail occurred exactly 3 years ago, it will remain in the client account for three years.

No additional short position shall be allowed on any particular security or derivative in which a journal entry exists or a current fail is open until that position is either bought in by the party involved or by the deadline of the fail period noted.

Any party affected with a particular fail can and may buy in to cover the open ledger entry fail at any time before the end of the period of original fail.

When fails are recovered on the open market, subsequent journal entries will be made affecting every equity or derivative to retire those securities from circulation and return those companies affected back to their exact oustanding and authorized shares.

By way of example, if the market maker SBSH or NITE or UBSS has net fails of 1.2 trillion shares over the past 3 years since the introduction of SHO, then those parties that traded those shares in net fail status shall have 1.2 trillion shares placed back in their account net short. They may not execute a short on that particular security at any time until the exisiting fail is covered by an order to buy on the open market. Each market maker will take the proper measures necessary to clear the fails recorded and report the transactions accordingly to their corresponding broker dealers. In finality, each broker dealer has 24 hours to accurately report the journal entries and "buy to covers" to their associated client accounts. No individual client may affect the buy-in on their own. The transaction must come at the broker-dealer level as prescribed by the commission.

http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_O/threadview?m=tm&bn=24012&tid=158792&mid=158792&tof=18&rt=2&frt=2&off=1