I am no expert, but imagine that the FTD numbers are not really the ones we think of when we speak of naked shorting. The FTDs are countable and within the system and therefore of know origin and the responsible party is on the hook should things go wrong. The much bigger problem are those shorts that are totally off the radar screen.
In any case, can someone clarify what happens once these shorts are declared FTDs? Are they immediately forced to cover those shorts by the authorities? Or are they allowed to sit on the books as FTDs without any action to compel setting the books straight? If so, for how long can this go on?
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