LMRI T/A You answered your own question and
contradicted yourself in the same paragraph...
Quoting from your last post:
"Now do you understand what he/she is talking about here? If you do, help me out because I can't. I can't understand what "infinite spread" he/she's talking about. When the offer is sitting at .0001, the bid's not ACTUALLY at .0000. Nobody puts in an actual bid of .0000. The actual bid, instead, is also at .0001. So what kind of "infinite spread" is he/she talking about?? It sounded like he/she's trying to say that a MM can sell his offer from a buyer at .0001 and turns around and buys from a seller at .00001 or .00003 or .00005 etc etc. You know very well that does not happen. Again I know of one person who sold at market order at .00008. Besides him, I know no other."
In fact your contradiction occurs one sentence after the other.
Your next to last sentence, and the one before it, do just that.
As you stated yourself, and from what I offered in my post yesterday, MM's CAN and DO trade 5 numbers behind the decimal.
Also, naked shorting exists in a legal form on a temporary basis in order to close trades and books at the end of the day.
The ABUSE of naked short selling is also real. You're inferring that "naked short selling" is mythical. I have no clue how you can think this in light of the Hanover Brokerage prosecution in the late 90's or Atty Quinn's current suit, which is still in the beginning stages of trial.
If you don't believe me, then read it from Forbes.com and the San Antonio business journal.
From the San Antonio Business Journal in a 2-2-04 article by Michael W. Thomas:
"In certain cases involving legitimate market makers, naked short selling is a legal practice. However, Ward claims more and more small companies are being victimized by illegal naked-shorting schemes carried out by unscrupulous players."
From Forbes.com in a 10-6-03 article by Rob Wherry:
"The fuss is over naked shorting, a practice that's been around for decades and that is sometimes legal. Normal short-selling involves borrowing real certificates for stock, selling the stock, buying new shares at a later date, and using the new certificates to replace the ones borrowed. Naked short-selling differs in that no real certificates change hands. Instead, the short-seller creates a paper entry showing that it owes shares to the stock buyer and will get around to delivering them later.
Naked short-selling is legal if done by a marketmaker in a temporary arrangement; it's normal for a marketmaker to be net short for a day or two and then close out the position by buying real shares later. Naked shorting can be illegal if done with the conscious intention of leaving the short position as a paper entry indefinitely."
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It's still all about the diamonds, but I just wanted to help clarify erroneous comments from your posts on this subject.
Be well, Bo
AI
