I guess my issue is no one can show that naked shorting actually occurs in pink sheet stocks. that buyin site my understanding uses his formula for estimating the short positin which several broekrs i know state is not accurate as it not based on factual data. having said that i have in the past looked at that site just to gather information.
i guess perhaps a definition is in order. yes market makers can sell stock and not cover for three days,and my understanding of rules is they can ask for extension to 7 days and worst case 15 days- but market makers do not wish to past 3 days becasue it invites FNRA scrutiny and reduces their trading ability as short position reduced their net working capital position.i think problem retail investors have in understanding the system is they think market makers think like them- simply market makers make money off the spread and volume and are very very short term orientated. so if they sell a stock in the morning, knowing that they have a place they buy cheaper in afternoon, or they want to take short term bet the sale will drive down the price on the bid, i have no doubt that occurs at times.
the idea the average market maker is out taking risks to short stocks under $.05, invite FNRA scrutiny, to most market makers is not credible.
if i am wrong all it would take is concrete evidence that this regularly occurs.
then if it does occur in stocks under $.05, then discussion about whether it helps or not promote orderly makets.
same discussion applies to convertible dept operations, so caled toxic financing. every one i know in that business also laughs at the idea they are shorting sub penny stocks, why ? they get their discount regardless. if you coudl make 50% automatically with every trade, why would you take risk on shorting stocks ?however closer to cnversion date once they decide to convert they may sell a stock and cover 3 days later, when there is volume.
i am open minded but for years i hear people talking about naked shorting pink sheet stocks as rampant in the market, yet no one shows me a broker who will do this for a client.
