Also, NSS is very profitable for Market Makers.
Anyone Claiming NSS will show up on the RegSho is purposely misleading you.
Here is the entire post i saved about how easy it is and how i feel RCCH is being NSSed....
(sorry for last post of day, im on a limit banning)
Posted by: GeeMoneyDollar Date: Saturday, January 17, 2009 11:00:38 AM
In reply to: None Post # of 46355 [Send a link via email]
Let me give you a 'theory' here.
We have a situation where it is believed that there are 250-300mm shorts. Only a part of that needs to be NS. We also have a situation where many certs are being called in.
So let's assume the total short is 250, 150mm is naked, 100mm is legit.
Now why isn't that 100mm reported on the regular short lists? Because hedgefunds/brokers can play the same game with legit shorts as they can with NS.
Ameritrade, for example, will enter into a repo agreement with a hedgefund so they can legitimately short Ameritrade's customer's shares (whether they're in a cash account, non-marginable, doesn't matter). Ameritrade receives an interest rate from the hedge during the time the shares are lent out. Good money for them. This transaction avoids being shown on the legit short report. Why? Because the SEC still considers the hedge fund's strategy to be confidential and protects them. They allow and support this type of transaction. Imagine you owned your own hedgefund, you looked up the legit short report for a low float stock with 100mm shares shorted by another hedgefund? You could absolutely crush that hedgefund.
So now we have 100+mm certs gradually being pulled out of the market. Ameritrade can no longer repo out those 100mm, now they only have 50mm say.
So the noose gets tightened around the short hedgefund. Now 50mm of those 100mm legitimately shorted shares become naked. They still need to hide their strategy, and even more importantly, they have to keep off reg sho and alerting the SEC/FINRA.
So they're forced to 'move' short positions back and forth between friendly hedge funds (ie, they arrange with another hedgefund to buy shares to 'close out' their short position, however that second hedgefund really doesn't have those shares, so now they're the naked short. rinse and repeat) This is achieved during regular trading throughout the day, and accounts for the majority of late block posts. When the two friendly hedgefunds 'swap' their position throughout the day, they intentionally push the stock price down. You'll noticed that over the last week or two, this size of those blocks has essentially tripled. Coincidentally, over the last few weeks, many certs have been pulled.
Again, it is not always the primary intention of a short hedgefund just to push the stock price down. That is a nice-to-have for them. When they short, they obviously receive all of the funds from the person that bought that short. They basically use their short as a source of financing. So as long as the stock price stays about where it is, or lower, they continue to use the stock as a loan to themselves.
My theory, the noose is tightening. It sucks that the price is down, but this is only adding fuel to the fire. And makes some huge invent more probably.
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