true.Name Change will have big effect on shorts
rozzy Tuesday, 04/29/14 04:30:08 PM
Re: philipt631 post# 120864
Post # of 121091
TTDZ,, Name change will have
big effect on shorts
A CUSIP change could force the cover of NSS positons if the change is done in conjunction with a name change. It is my understanding that the mechanics of the CUSIP change (with name change) would effectively prevent trading shares of the old CUSIP # and would create an entirely new set of shares through the DTC. By doing this, the DTC is forced to account for ALL of the old shares exchanged for the new shares. Without the name change, the old shares would simply be renamed. With the name change, they are physically exchanged which will isolate phantom shares and force covering.
Because of the CUSIP # change, the MMs will be required to account for each of the old shares with the new shares. Because of the name change, it's important because it forces the DTC to play a more finite role by not only accounting for the old shares to equal the new shares electronically, but forces them to match a "new inventory" of shares that have been given to them from the CUSIP Service Bureau as the new official/approved inventory by way of the shares given from the company/TA.
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