I have heard the 'air share' version of the fantasy several times but don't really understand it.
it is found in selling air shares (non existant or fake shares)by unscrupulous market makers rather than raise pps to obtain real shares at market driven prices.
I am still not understanding how these 'air shares' can be settled once they get into investors accounts. If the air shares are generated by the MM's how do they get settled by the brokers that maintain the investors accounts?
The reason I ask;
.. but if I (we) am (are) correct, we will see a real scramble when the air shares have to be made good.
Now everybody understands that brokers and MMs are not the same thing, right? They are two completely different things.
Here is the thing. If it is the brokers that have to say the shares are settled when a trade is completed, it is also the responsibility of the broker to make good on any shares that aren't really there. So if ever there is a squeeze because there aren't real shares in the settled accounts it is the brokers that will have to cover.
How does that work?
If the MMs are the ones creating these 'so called' air shares and pocketing the money, why would the brokers, who don't get any of that money, but would have to pay to cover them, pretend that they have 'settled'?
Doesn't make sense to me. How do you explain it?
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