Not a problem and a good question as I did not cover trade reporting in that Short Volume explanation. So the first type of trade the "internalized" order is pretty straight forward, it just gets reported to the consolidated tape and that is it for that one. The seconds type of trade was the Riskless Principle transaction, in which the Broker Dealer is used to complete the transaction, well use an example:
You sold 10,000 shares of XXXX at .10 per share
The Initial Leg in which the MM first sells short is recorded to the consolidated tape and it is also reported to the Reg SHO for the Daily report. The cover transaction however, the purchase of your 10,000 shares by the MM is reported in a regulatory report called a NON TAPE TRANSACTION report. This prevents duplication of volume from being reported since there is no difference in price between both legs of the transaction.
10,000 Shares at .10 reported to the consolidated tape/Reg SHO 10,000 Shares at .10 reported to FINRA Non Tape Transaction report, with Riskless Principle designation
The dilution type trades are reported differently. Selling from a block trade 10,000,000 shares at .10 per share for example. Each trade made at market price is recorded to the consolidated tape at market price of .10. Then a Weighted Average Price Transaction is recorded on the consolidated tape also, because the commission is removed the price is different than all of the market transactions through the day. So two consolidated tape reports on the SAME VOLUME, but at the two different prices.
All reported separately to the consolidated tape and Reg SHO as Short, then later in the day or even after market close one single transaction reported to the consolidated tape:
10,000,000 @ .0985
This reflects all 10 million shares averaged @ .10 per share and then minus the typical 1.5% commission fee for the entire transaction. As you can see this transaction duplicates the volume reported even though the trade is over the same shares, this is due to the price difference between what the MM sold at market price and then their purchase from the Block Position.
You will see variations of that same trade depending on the agreement between the broker and the customer. A good example is the the following:
These mirrored trades are in fact the very same thing, but the broker chooses to report after each transaction on the block as opposed to waiting to report them all in one transaction.
If a broker purchase directly from the block position for their customer and has the reporting responsibility you can see the following:
So what happened here? The broker did their normal operation but included an additional fee tacked on for transactions involving the sale of securities below .15. Some of the brokers charge additional fees when dealing with newly issued shares into the market. Scottsdale Capital for example charges .00001 per share, but that is negotiable on a case by case basis, it can be less for established customers that deposit with them.
Something to note, the consolidated tape only displays the first 4 digits past the decimal, although MM's report up to 6 digits past the decimal to FINRA. Common thing to see on sub penny OTC's is the following:
Bid .0003 and Ask .0004
2,000,000 @ .0003 2,000,000 @ .0002
The cries of FOUL come out of the wood work... "They Skipped my Bid and it was the best Bid"..... lol... No they didn't skip your Bid, the shares were sold at market price for the Bid at .0003 and then they recorded the averaged transaction minus commission right behind it for .000296, but because the consolidated tape only shows the first 4 digits past the decimal all you see is .0002. FINRA however has the entire transaction at .000296
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