SHORTS data explained by FINRA...phone call 3 minutes ago i spoke to FINRA regarding their daily SHO list which seems to show 30-70 % off all the volume in thousands of stocks as 'short sales'. they explained the 2 factors which tend to inflate the short sale data beyond what is normally considered a short sale, i.e. a person or firm borrowing shares which are then sold.
all marketmaker sells to buyers for which the MM doesnt at that moment possess the stock would go onto the list. the shorts data is sent to SEC at time of execution, so during the course of a day, a MM may trade 20M shares of company xyz, of which 10M of those shares were initiated as short sales and the other 10M were buys to cover those shorts. despite the fact that their net position at the end of the day is flat, the data would show 10M shares as having been short sales.
this applies even to grey sheet stocks. despite the fact there is no MM making bids and asks, MM's can and do call around to other MM's to find willing sellers to match buy orders and vice-versa.
the other factor that could affect the daily short figure is very interesting. if a sale is being initiated by the holder of restricted 144 stock, even though the owner of those shares is technically a long, the sale is listed as a short sale because the actual certificates are not yet "clean" via the transfer agent.
they confirmed that in order to ascertain the true "open short" position one should look at the bi-monthly short report. it was also stated that any of the daily shorts which were not delivered within the prescribed time would definitely end up on the FTD list.
And here is a short explanation of the function and how MMs work.
All market makers sells to buyers for which the MM doesn't at that moment possess the stock would go onto the daily list. The short sales data is sent to SEC at time of execution, so during the course of a day, a MM may trade 20M shares of company xyz, of which 10M of those shares were initiated as short sales and the other 10M were buys to cover those short sales. Despite the fact that their net position at the end of the day is flat, the data would show 10M shares as having been short sales.
This applies even to grey sheet stocks. Despite the fact there is no MM making bids and asks, MM's can and do call around to other MM's to find willing sellers to match buy orders and vice-versa.
The other factor that could affect the daily short figure is very interesting. If a sale is being initiated by the holder of restricted 144 stock, even though the owner of those shares is technically a long, the sale is listed as a short sale because the actual certificates are not yet "clean" via the transfer agent.
They confirmed that in order to ascertain the true "open short" position one should look at the Bi-Monthly short report. It was also stated that any of the daily shorts which were not delivered within the prescribed time would definitely end up on the FTD list. And as you can see there are ZERO FTDs with SKTO.
I hope this clears up your confusion about the short sales data and gives you a better understanding of how the MMs operate. Their main function is to provide liquidity to the market.
You do know that
OTCShortreport.com is a website for penny stock promoters - so they can explain why the PPS is headed South.
On every scam there are always a couple of people posting this information to divert attention away from the company that is dumping shares.
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