Replies to post #38270 on Old Copper Co. Inc. (f/k/a CPPRQ/JCPNQ JC Penney)

[TenKay]

Market makers use their exemption from Regsho to maintain liquidity in the OTC market. 99.9% of the “shorting” done by market makers is covered in seconds. They are simply executing the first leg of a LONG transaction as a short sale to the buyer before covering from the seller in the offsetting leg. There is no short interest created or open short position maintained

It’s called riskless principle..

If market makers where not allowed to do that then the OTC would shut down.

Understanding how trades are actually executed in the OTC can help avoid erroneous assumptions.