Replies to post #163459 on KMA Global Solutions International (KMAG)

[lucky, mydog]

47.2% of today's volume was short sales!

finra didn't tell you that alan. what did they tell you when you called?

[Hardworkingfool]

Thanks Alan, I love to see the short numbers you post.

[DragonBear]

FINRA short sales of KMAG - Wrong!

47.2% of today's volume was short sales!

Given it's illegal for any broker or MM to participate in Shorting an illiquid stock, the numbers you are excited about have nothing to do with someone taking a Short position in KMAG. The data only shows "ownership" data on the initial leg of the transaction in accordance with SEC rule 200.

You need to understand what the data you are posting really means. And probably a very good source is the poster BigBake1, who knows more than all of us combined on this forum on how FINRA works. The example he gives for another stock still holds for a grey, with maybe the mention of the ECN:

BigBake1 example

Typical everyday trade, I have 500,000 shares of MDIN for sale on the Ask, you however want to purchase 250,000 of the shares at my price. So you enter your order and it is sent to your broker to execute. First thing is a broker electronically checks to see if there are current sell orders that match your request within their brokerage, if not it is off to the ECN. As I stated earlier each broker has an MM working for them to execute trades, the MM for your broker sees your order and knows I have 500,000 shares for trade. Here is where MMs “create” liquidity and order flow, in this case you only want 250,000 shares, so immediately the MM sells your broker 250,000 shares short and marks the trade as “short” although you are long in the trade, this gets reported to the Daily Reg SHO report and also on the consolidated tape.

Now nearly simultaneously on a separate leg of the very same trade transaction the MM is buying the cover from my 500,000 share block, and purchases 250,000 shares from me. This gets reported in the Non Tape Transactions Report and both Non Tape and consolidated tape are both sent to FINRA for balancing and reconciliation.

[BigBake1]

So what? You do realize this is a GREY MARKET security and the MMs cannot make a market here in KMAG? But due to the OTC being a quotation service all trades must be repped by an MM in order to be completed and reported, for each matched trade transaction that occurs. Due to the MM not owning the shares in question SEC Rule 200 requires the trade to be marked "short" due to ownership requirements. If your broker cannot complete the order "In House" the order has to be sent to an MM in order to complete the trade. If it can be completed in house it is still sent to an MM for reporting requirements as per FINRA.


So yesterday 52.8% shares were within the same brokerage, while the 47.2 had to go externally to an MM to complete the sale. nobody cares about these Riskless Principle transactions, all that matters is what appears on the FTD report continuosly in the aggregate if there is one showing delivery issues.

Currently the aggregate is 0 shares as it zeroed out 09AUG2013 by the delivery of that 135147 shares:

 20130805 482542107 KMAG 50742 KMA Global Solutions Internati 1 
 20130806 482542107 KMAG 135147 KMA Global Solutions Internati 1 
 20130807 482542107 KMAG 135147 KMA Global Solutions Internati 1 
 20130808 482542107 KMAG 135147 KMA Global Solutions Internati 1 
 

So no shorts here, no NSS, just a crappy grey sheet security that was suspended a year ago. The Short Volume report is in fact meaningless as those within FINRA have stated that the data doesnt really say anything of value due to it containing Riskless Principle transactions, there isnt a true Short Volume displayed because of this. Last, the FTD report picks up where the Short Volume leaves off, at the end of T+3 if the shares are not delivered an FTD is generated by the NSCC. That is all that matters.