NO QUARTER FOR CORRUPTION (Focussing on The Fed./FRBS)

[Telephonics]

The issue is not about stopping all shorting. The issue is to force brokers to deliver the certificates to the buyer as our regulated exchanges require. Do you understand how a naked shorter gets his profits?? In very simple terms. To short a stock the shorter must have a margin account. In that account he must hold asses (stocks,cash bonds etc) with a face Bale of 150% of the value of the short position he wishes to establish. When those shares are not delivered by the broker to the buyer it creates a naked short and synthetically increases the apparent float. With the number of shares now apparently available for trading being increase the share value drops. As the share value drops so does the security requirement in the shorters margin account. He can at that point withdraw cash from his account or use the unused security to back more short sales. No only is this contrary to SECV regulations but is also contrary to our regulated exchange trading regulations. It is interesting to note that today on our regulated exchanges about 25% of all trades are shorts. On our rapidly growing electronic exchanges which provide much better anonymity to traders the similar short trading statistic is now 40% and growing.