Posted On: 02/24/2014 6:14:25 PM
Post# of 36729
Naked shorting made easy? The NSCC Stock Borrow Program seems to grease the skids for naked shorters. Maybe DTC and the brokers had good intentions in 1981 to put this in place in order to avoid disruption at the brokerage houses, but we all know the the road to hell is paved with good intentions. Ending this program could, I believe, put a monkey wrench into naked shorters' monkey business.
"The NSCC Stock Borrow program was created in 1981 with the approval of the SEC to help reduce potential problems caused by fails, by enabling NSCC to make deliveries of shares to brokers who bought them when there is a 'fail to deliver' by the delivering broker.
However, it doesn’t in any way relieve the broker who fails to deliver from that obligation. Even if a 'fail to receive' is handled by Stock Borrow, the 'fail to deliver' continues to exist, and is counted as part of the total 'fails to deliver.' If the total fails to deliver for that issue exceeds 10,000 shares, it gets reported to the markets and the SEC."
"The NSCC Stock Borrow program was created in 1981 with the approval of the SEC to help reduce potential problems caused by fails, by enabling NSCC to make deliveries of shares to brokers who bought them when there is a 'fail to deliver' by the delivering broker.
However, it doesn’t in any way relieve the broker who fails to deliver from that obligation. Even if a 'fail to receive' is handled by Stock Borrow, the 'fail to deliver' continues to exist, and is counted as part of the total 'fails to deliver.' If the total fails to deliver for that issue exceeds 10,000 shares, it gets reported to the markets and the SEC."
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