gitonwithit
Don't really know enough facts about your question to answer the step by step process. But US clearing agencies can't check share balances over seas. So all M&Ms needs to do, when a failure to deliver shows up, is report those missing shares, were transferred to their Germany accounts, to justify trading inventory requirements.
I have been told German brokers "must" have inventory to cover every trade. And there is no naked shorting allowed ever! Have no idea how to find out share levels reported there.
That's why it's so easy for US dealers to hide their naked positions. But as for amounts being traded on the German exchanges, I feel that has nothing to do with where the naked short position comes from. I don't believe there is a naked short problem there. They do monitor inventory levels to trading volume and enforce their law. I don't think the shorting is happening there, but happening on the US market and hidden because of a clearing report loophole.
The problem is US clearing agencies can't confirm where US dealers, share traded volumes, come from or go to. If the company stock is not listed or the shorting dealer is not licensed on the German exchange. This loop hole is closed and naked shorting of the stock on the US market is reduced & very hard to hide.
Probably see larger volume & PPs runs on OTC stocks listed in Germany, then ones not. But since the SEC doesn't enforce REG SHO laws anyway. M&Ms still naked short, but on a smaller level.
IMO
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